PARLIAMENTARY DEBATE
Autumn Statement Resolutions - 22 November 2023 (Commons/Commons Chamber)
Debate Detail
Contributions from Dame Meg Hillier, are highlighted with a yellow border.
Dame Eleanor Laing
Madam Deputy Speaker
We now come to motion No. 1 on the resolutions paper. It is on this motion that the debate will take place today and on succeeding days. The questions on this motion and on the remaining motions will be put at the end of the debate on the autumn statement on Monday 27 November.
Rates of tobacco products duty
Rates of tobacco products duty
12:56:44
Laura Trott
The Chief Secretary to the Treasury
I beg to move,
That—
(1) In Schedule 1 to the Tobacco Products Duty Act 1979 (table of rates of tobacco products duty), for the Table substitute—
“TABLE
(2) In consequence of the provision made by paragraph (1), in Schedule 2 to the Travellers’ Allowances Order 1994 (which provides in certain circumstances for a simplified calculation of excise duty on goods brought into Great Britain)—
(a) in the entry relating to cigarettes, for “£393.45” substitute “£422.80”,
(b) in the entry relating to hand rolling tobacco, for “£351.03” substitute “£412.32”,
(c) in the entry relating to other smoking tobacco and chewing tobacco, for “£161.62” substitute “£173.68”,
(d) in the entry relating to cigars, for “£367.61” substitute “£395.03”,
(e) in the entry relating to cigarillos, for “£367.61” substitute “£395.03”, and
(f) in the entry relating to tobacco for heating, for “£90.88” substitute “£97.66”.
(3) The amendments made by this Resolution come into force at 6pm on 22 November 2023.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
As a country, we are in a very different position from the one we were in a year ago. Back then, the Office for Budget Responsibility and the Bank of England were predicting a recession, but we have had growth. Debt was predicted to rise to almost 100% of GDP by the end of the forecast, but headline debt is now predicted to be more than 5% lower. Rather than falling, average real incomes have risen.
None of that happened by accident. It happened because of the difficult decisions we have made, which have turned the economy around. We have learned the lessons of what happened a year ago, but the Opposition have not. Today, we set out a plan for the economy that will grow our potential, reduce debt and reduce taxes, yet all Labour wants to do is reverse this progress by borrowing £28 billion. It is the same old Labour party.
Let me begin with what we have achieved.
That—
(1) In Schedule 1 to the Tobacco Products Duty Act 1979 (table of rates of tobacco products duty), for the Table substitute—
“TABLE
1 Cigarettes | An amount equal to the higher of— 16.5% of the retail price plus £316.70 per thousand cigarettes, or £422.80 per thousand cigarettes. |
2 Cigars | £395.03 per kilogram |
3 Hand-rolling tobacco | £412.32 per kilogram |
4 Other smoking tobacco and chewing tobacco | £173.68 per kilogram |
5 Tobacco for heating | £325.53 per kilogram”. |
(2) In consequence of the provision made by paragraph (1), in Schedule 2 to the Travellers’ Allowances Order 1994 (which provides in certain circumstances for a simplified calculation of excise duty on goods brought into Great Britain)—
(a) in the entry relating to cigarettes, for “£393.45” substitute “£422.80”,
(b) in the entry relating to hand rolling tobacco, for “£351.03” substitute “£412.32”,
(c) in the entry relating to other smoking tobacco and chewing tobacco, for “£161.62” substitute “£173.68”,
(d) in the entry relating to cigars, for “£367.61” substitute “£395.03”,
(e) in the entry relating to cigarillos, for “£367.61” substitute “£395.03”, and
(f) in the entry relating to tobacco for heating, for “£90.88” substitute “£97.66”.
(3) The amendments made by this Resolution come into force at 6pm on 22 November 2023.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
As a country, we are in a very different position from the one we were in a year ago. Back then, the Office for Budget Responsibility and the Bank of England were predicting a recession, but we have had growth. Debt was predicted to rise to almost 100% of GDP by the end of the forecast, but headline debt is now predicted to be more than 5% lower. Rather than falling, average real incomes have risen.
None of that happened by accident. It happened because of the difficult decisions we have made, which have turned the economy around. We have learned the lessons of what happened a year ago, but the Opposition have not. Today, we set out a plan for the economy that will grow our potential, reduce debt and reduce taxes, yet all Labour wants to do is reverse this progress by borrowing £28 billion. It is the same old Labour party.
Let me begin with what we have achieved.
14:44:44
Dame Angela Eagle
Wallasey
On that point, will the hon. Lady give way?
14:45:27
Laura Trott
Let me make some progress. It has been a difficult few years for all families, up and down this country. We have had to tackle a once in a lifetime global pandemic and another period of global turmoil, caused by Putin’s invasion of Ukraine and the pressure that put on energy prices, driving inflation around the world.
When the Prime Minister took office, inflation was at 11.1%, but because of the difficult decisions taken by the Prime Minister, the Chancellor and the Bank of England, inflation is now down to 4.6%—a promise delivered. The OBR says that headline inflation will fall to 2.8% by the end of 2024 and we will therefore reach our 2% target by the middle of 2025, something I am sure that the hon. Member for Wallasey (Dame Angela Eagle) is about to welcome.
When the Prime Minister took office, inflation was at 11.1%, but because of the difficult decisions taken by the Prime Minister, the Chancellor and the Bank of England, inflation is now down to 4.6%—a promise delivered. The OBR says that headline inflation will fall to 2.8% by the end of 2024 and we will therefore reach our 2% target by the middle of 2025, something I am sure that the hon. Member for Wallasey (Dame Angela Eagle) is about to welcome.
14:46:04
Dame Angela Eagle
I welcome the hon. Lady to her new post. I hope she has an enjoyable time at the Treasury, as I did when I was there. Will she confirm that figures show that this Parliament is the highest tax-raising Parliament since records began, in all our history, even after today’s statement?
14:49:16
Laura Trott
I am sure the hon. Lady will be interested to know that taxes for the average worker have gone down by £1,000. However, those on higher incomes have had to pay more, which I am sure she will agree is the right approach in a difficult period.
On growth, in 2010 we were facing the worst recession since the second world war, but this Conservative Government have turned things around. Since 2010, we have grown our economy faster than many in the G7, including France, Germany, Italy, Spain and Japan. Following the pandemic and the energy crisis, which were predicted to take us into recession, the economy has recovered more quickly than previously thought and is now 1.8% larger than its pre-pandemic size, growing faster than Germany. Looking ahead, the economy will continue to grow, boosted by 0.5% through the measures taken in the autumn statement and spring Budget.
Perhaps most critically of all, debt is down. I know the Members on the Opposition Front Bench are concerned about that, but reducing debt and borrowing is essential to controlling inflation, keeping mortgage rates down and taxes low. Let me be clear: Labour’s plans would send us all the way back to square one. Labour’s inflationary £28 billion borrowing commitment will drive up inflation, cause interest rates to spiral and hammer families up and down the country. That is a fundamental difference between this Government and the Opposition.
By contrast, look at what my right hon. Friend the Chancellor has achieved. Before he took the difficult decisions in last year’s autumn statement, headline debt was predicted to rise to 99.6% of GDP by the end of the forecast. Labour’s approach would see that number rising but, in contrast, our approach has seen debt predicted to be 5.5 percentage points lower as a proportion of GDP by the end of the forecast.
We will therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared to the OBR’s March forecast. That headroom allows us to take the actions we are proposing in the autumn statement, because the job is not yet done. Debt and inflation are heading the right way, but we must keep pushing.
While growth is better than it could be, it is not as high as it should be. Our solution is not simply to borrow more, as the Labour party would, but to back British business and invest in areas that will create growth, driven by our values: living within our means, protecting the poorest and rewarding work. We are attracting an extra £20 billion a year from business investment, reducing taxes on working people and increasing the national living wage to give workers £1,800 year on average, and we are freezing alcohol duties until August next year.
Our announcement to make full expensing permanent means that we now have not just the lowest headline corporation tax rate in the G7, but the most generous capital allowances, too. For every £1 million that a company invests, it will get £250,000 off its tax bill at the end of the year. This will make a huge difference to investment, as more than 200 business leaders and industry bodies across the country have pointed out. We can do this only because—in case anybody is in any doubt—this Conservative Government have more than halved inflation, have met our borrowing rules three years early and are seeing our debt lower every single year.
Meanwhile, our small and medium-sized businesses, which account for more than 99% of private business in the country, remain the backbone of the economy. Our business rates support saves the average independent shop more than £20,000. We continue to back those businesses by extending the 75% business rates discount for retail, hospitality and leisure businesses for another year, and by tackling late payments.
We are reforming our welfare system, so that it supports those who cannot work and helps those who can find work. The list does not end there. With this hard-earned fiscal headroom now secured, we have a final measure: to implement a tax cut for 27 million employed people, worth an average of £450 per year; and to simplify and cut taxes for nearly 2 million self-employed people, while protecting the interests of those on the lowest pay by saving self-employed people an average of £350 a year from April.
We have always said that, when it is responsible to do so, we will cut taxes, and, because we keep our word, we are cutting the main rate of employee national insurance from 12% to 10%. That makes somebody on the average salary of £35,000 more than £450 better off, which is something that hon. Members will welcome. As we want people to see that benefit on their payslip soon, we will immediately introduce legislation to bring in this new rate from 6 January. This is the biggest cut to employee and self-employed tax ever, and the biggest tax cut implemented since 1988. These measures, however, are not by chance. This is what happens when we take tough decisions early, when we take responsibility for those decisions and when we deliver on them in good time and on budget, as the Prime Minister said we would.
Things have been really tough, but the economy is on the right track and the future is growing brighter. We have made: tax cuts for big businesses to drive investment; tax cuts for smaller businesses to drive growth; tax cuts for self-employed people to reward hard work; and tax cuts for 27 million working people who make our country what it is.
As we debate these measures in the next few days, I leave Members with a few reflections. We have halved inflation and we have avoided recession, but growth is not achieved by burning our businesses or our people, as the Labour party would have us believe. Instead, in this autumn statement we have—and let me repeat this—delivered the biggest ever cut to employee and self-employed tax; the biggest tax cut since 1988.
On growth, in 2010 we were facing the worst recession since the second world war, but this Conservative Government have turned things around. Since 2010, we have grown our economy faster than many in the G7, including France, Germany, Italy, Spain and Japan. Following the pandemic and the energy crisis, which were predicted to take us into recession, the economy has recovered more quickly than previously thought and is now 1.8% larger than its pre-pandemic size, growing faster than Germany. Looking ahead, the economy will continue to grow, boosted by 0.5% through the measures taken in the autumn statement and spring Budget.
Perhaps most critically of all, debt is down. I know the Members on the Opposition Front Bench are concerned about that, but reducing debt and borrowing is essential to controlling inflation, keeping mortgage rates down and taxes low. Let me be clear: Labour’s plans would send us all the way back to square one. Labour’s inflationary £28 billion borrowing commitment will drive up inflation, cause interest rates to spiral and hammer families up and down the country. That is a fundamental difference between this Government and the Opposition.
By contrast, look at what my right hon. Friend the Chancellor has achieved. Before he took the difficult decisions in last year’s autumn statement, headline debt was predicted to rise to 99.6% of GDP by the end of the forecast. Labour’s approach would see that number rising but, in contrast, our approach has seen debt predicted to be 5.5 percentage points lower as a proportion of GDP by the end of the forecast.
We will therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared to the OBR’s March forecast. That headroom allows us to take the actions we are proposing in the autumn statement, because the job is not yet done. Debt and inflation are heading the right way, but we must keep pushing.
While growth is better than it could be, it is not as high as it should be. Our solution is not simply to borrow more, as the Labour party would, but to back British business and invest in areas that will create growth, driven by our values: living within our means, protecting the poorest and rewarding work. We are attracting an extra £20 billion a year from business investment, reducing taxes on working people and increasing the national living wage to give workers £1,800 year on average, and we are freezing alcohol duties until August next year.
Our announcement to make full expensing permanent means that we now have not just the lowest headline corporation tax rate in the G7, but the most generous capital allowances, too. For every £1 million that a company invests, it will get £250,000 off its tax bill at the end of the year. This will make a huge difference to investment, as more than 200 business leaders and industry bodies across the country have pointed out. We can do this only because—in case anybody is in any doubt—this Conservative Government have more than halved inflation, have met our borrowing rules three years early and are seeing our debt lower every single year.
Meanwhile, our small and medium-sized businesses, which account for more than 99% of private business in the country, remain the backbone of the economy. Our business rates support saves the average independent shop more than £20,000. We continue to back those businesses by extending the 75% business rates discount for retail, hospitality and leisure businesses for another year, and by tackling late payments.
We are reforming our welfare system, so that it supports those who cannot work and helps those who can find work. The list does not end there. With this hard-earned fiscal headroom now secured, we have a final measure: to implement a tax cut for 27 million employed people, worth an average of £450 per year; and to simplify and cut taxes for nearly 2 million self-employed people, while protecting the interests of those on the lowest pay by saving self-employed people an average of £350 a year from April.
We have always said that, when it is responsible to do so, we will cut taxes, and, because we keep our word, we are cutting the main rate of employee national insurance from 12% to 10%. That makes somebody on the average salary of £35,000 more than £450 better off, which is something that hon. Members will welcome. As we want people to see that benefit on their payslip soon, we will immediately introduce legislation to bring in this new rate from 6 January. This is the biggest cut to employee and self-employed tax ever, and the biggest tax cut implemented since 1988. These measures, however, are not by chance. This is what happens when we take tough decisions early, when we take responsibility for those decisions and when we deliver on them in good time and on budget, as the Prime Minister said we would.
Things have been really tough, but the economy is on the right track and the future is growing brighter. We have made: tax cuts for big businesses to drive investment; tax cuts for smaller businesses to drive growth; tax cuts for self-employed people to reward hard work; and tax cuts for 27 million working people who make our country what it is.
As we debate these measures in the next few days, I leave Members with a few reflections. We have halved inflation and we have avoided recession, but growth is not achieved by burning our businesses or our people, as the Labour party would have us believe. Instead, in this autumn statement we have—and let me repeat this—delivered the biggest ever cut to employee and self-employed tax; the biggest tax cut since 1988.
Dame Angela Eagle
You’ve said that already.
14:52:58
Laura Trott
I will say it lots of times, believe me.
This Conservative Government are the party of business. This Conservative Government are the party of workers. This Conservative Government are the party of working people. The Government have a plan to keep delivering, and it is presented to this country and to this House in today’s autumn statement. It is a plan that permanently increases the size of the economy, that backs Britain and Britain’s businesses, that rewards work and improves pay and that will deliver growth in every part of this United Kingdom.
This Conservative Government are the party of business. This Conservative Government are the party of workers. This Conservative Government are the party of working people. The Government have a plan to keep delivering, and it is presented to this country and to this House in today’s autumn statement. It is a plan that permanently increases the size of the economy, that backs Britain and Britain’s businesses, that rewards work and improves pay and that will deliver growth in every part of this United Kingdom.
Dame Eleanor Laing
Madam Deputy Speaker
I call the Opposition spokesman.
14:54:36
James Murray
Ealing North
Today, the Chancellor confirmed what the British people already know—that there is nothing the Conservatives can say or do to hide their 13 years of failure. Government Members may have been patting each other on the back during the Chancellor’s statement, but the British people will not be celebrating. After everything that we have heard today: taxes will still be at their highest during peacetime; inflation is forecast to be higher in the years ahead than it was according to the Office for Budget Responsibility’s forecast in March; mortgage payments will still be rising for millions as their deals end; and after 13 years of low growth, we are still on a path of decline, with economic growth forecast for next year slashed by more than half.
Nothing that the Conservatives have said today will overcome the damage that they have done over the past 13 years. Nothing that they have said will overcome the cost of living crisis that families across the country are facing. Household incomes will still be 3.5% lower next year in real terms than before the pandemic, the biggest hit to living standards on record. Inflation has been upgraded in every year of the forecast period, with prices now set to be 7% higher at the end of the forecast period than the OBR forecast them to be in March. The truth is that working people are worse off under this Conservative Government.
I am sure the Chancellor will want people to focus on his announcement of a cut in the main rate of employee national insurance, but, frankly, coming after 25 tax rises in this Parliament alone, it is insulting to suggest that the British people will be fooled. Under the Conservatives, the tax burden is set to increase by £4,300 per household. Let us not forget, that, just two years ago, the Chancellor and the now Chief Secretary to the Treasury walked through the Division Lobby to put national insurance up. They may wish to forget that, but the British people will not. It is as if the Tories have nicked your car, but expect you to be grateful when they pay for your bus fare home.
After 13 years of low growth, and with taxes already at their highest level in more than 70 years, the British people will see straight through this Government’s desperate attempts to woo them. It had been rumoured that the Government were planning to cut inheritance tax in this statement. Of course, people want to be able to pass on what they have worked hard for to their children, but in the middle of a cost of living crisis, when families face rises in mortgage costs, in prices across the board, and in NHS waiting lists, we simply could not understand how the Conservatives saw that tax cut for the wealthiest 4% as a priority. The truth is that this would have been the wrong tax cut—
Nothing that the Conservatives have said today will overcome the damage that they have done over the past 13 years. Nothing that they have said will overcome the cost of living crisis that families across the country are facing. Household incomes will still be 3.5% lower next year in real terms than before the pandemic, the biggest hit to living standards on record. Inflation has been upgraded in every year of the forecast period, with prices now set to be 7% higher at the end of the forecast period than the OBR forecast them to be in March. The truth is that working people are worse off under this Conservative Government.
I am sure the Chancellor will want people to focus on his announcement of a cut in the main rate of employee national insurance, but, frankly, coming after 25 tax rises in this Parliament alone, it is insulting to suggest that the British people will be fooled. Under the Conservatives, the tax burden is set to increase by £4,300 per household. Let us not forget, that, just two years ago, the Chancellor and the now Chief Secretary to the Treasury walked through the Division Lobby to put national insurance up. They may wish to forget that, but the British people will not. It is as if the Tories have nicked your car, but expect you to be grateful when they pay for your bus fare home.
After 13 years of low growth, and with taxes already at their highest level in more than 70 years, the British people will see straight through this Government’s desperate attempts to woo them. It had been rumoured that the Government were planning to cut inheritance tax in this statement. Of course, people want to be able to pass on what they have worked hard for to their children, but in the middle of a cost of living crisis, when families face rises in mortgage costs, in prices across the board, and in NHS waiting lists, we simply could not understand how the Conservatives saw that tax cut for the wealthiest 4% as a priority. The truth is that this would have been the wrong tax cut—
Harriett Baldwin
West Worcestershire
On a point of order, Madam Deputy Speaker. Is it appropriate for the Opposition spokesman to be talking about measures that were actually not announced today?
Dame Eleanor Laing
Madam Deputy Speaker
That is a perfectly reasonable point of order and I am grateful to the hon. Lady for raising it. I was listening carefully to the hon. Gentleman’s speech and had begun to think to myself, “That’s strange. The hon. Gentleman is addressing a point that was not in the Chancellor’s statement.” However, I have not stopped him, because—[Interruption.] I do not need any help, thank you very much. I have not stopped the hon. Gentleman because this is a very wide-ranging debate, and I have made the assumption that he was using an example of something that the Government decided not to do. Possibly he was about to state his agreement with the Government, or something along those lines. I was waiting to hear what he had to say.
14:58:13
James Murray
Thank you very much for your guidance, Madam Deputy Speaker. In fact, I was about to say that we welcome the fact that the Government appear to have finally realised that it would have been the wrong tax cut at the wrong time. I am sorry that it makes the hon. Lady so uncomfortable to talk about this, because, frankly, it speaks volumes about this Government’s instincts that they entertained that plan for so long.
My central point is that Government should not be wasting time daydreaming about an inheritance tax cut. With inflation still double the Bank of England’s target, they should be resolutely focused on what they can do now to tackle the cost of living crisis. The truth is that anything they offer now is far too little, far too late. The Conservatives simply cannot tackle the cost of living crisis that their fingerprints are all over.
Ten years ago, the Conservatives slashed energy efficiency programmes, after which insulation rates plummeted by 92%. As a result, millions of households across the country have had to pay energy bills £500 a year greater than they should be.
Last year, the Conservatives’ utterly reckless approach to the economy set off market chaos and interest rate rises. The Bank of England has said that those re-mortgaging will see their monthly payments rise by £220, and 1.5 million families will be hit by this Tory mortgage penalty next year.
My central point is that Government should not be wasting time daydreaming about an inheritance tax cut. With inflation still double the Bank of England’s target, they should be resolutely focused on what they can do now to tackle the cost of living crisis. The truth is that anything they offer now is far too little, far too late. The Conservatives simply cannot tackle the cost of living crisis that their fingerprints are all over.
Ten years ago, the Conservatives slashed energy efficiency programmes, after which insulation rates plummeted by 92%. As a result, millions of households across the country have had to pay energy bills £500 a year greater than they should be.
Last year, the Conservatives’ utterly reckless approach to the economy set off market chaos and interest rate rises. The Bank of England has said that those re-mortgaging will see their monthly payments rise by £220, and 1.5 million families will be hit by this Tory mortgage penalty next year.
12:39:16
Harriett Baldwin
All our constituents who pay mortgages are concerned about the increase in rates. Did the hon. Member hear the Governor of the Bank of England accept yesterday, as he has in earlier Treasury Committee sessions, that it is the Bank of England taking independent decisions to tackle inflation that has led to those increases? The hon. Member is wrong to label them “Tory” mortgage increases.
James Murray
The Opposition accept the independence of the Bank of England, unlike some Government Members, but frankly that was a fairly shameless attempt by the hon. Member to distance herself from what the Government did to the economy last year in their disastrous mini-Budget. The British people will not forget, as they are still paying the price.
Dame Angela Eagle
My hon. Friend is making some important points. Does he agree that, if it is the decisions of the Bank of England that have halved inflation, as the Opposition think, the Government cannot go around claiming credit for it?
James Murray
As always, my right hon. Friend makes an important point. The Government are trying to have it both ways. When inflation goes up, it is someone else’s fault. When it comes down, they claim the credit. I think that we can trust the British people to see through whatever way they try to distort the truth.
Dr Liam Fox
North Somerset
Will the hon. Member give way?
15:04:13
James Murray
No, I will make some progress.
The truth is that the Conservatives’ fingerprints are all over the cost of living crisis, and it would be ludicrous for anyone to expect the prime suspect to be asked to solve the crime. It is clear that we cannot trust the Government with the cost of living crisis. It is also clear that we cannot trust them with our money. No wonder they want to run from their record in office when they have wasted taxpayers’ money so badly. The levels of fraud and waste on their watch make the 25 tax rises over this Parliament all the more galling, and even harder for hard-pressed families to stomach. From the £7.2 billion of public money that was lost on fraud during the pandemic to the £50 million spent on a new helicopter for the Prime Minister to make the short trips that he is so fond of, it is clear that the Conservatives are incapable of spending public money wisely.
Labour will set up an office of value for money as part of our pledge to put fiscal and economic responsibility at the heart of our approach if we win the next election. On that foundation, we will get the economy growing after 13 years of stagnation, as we know that economic growth is the key to making people across Britain better off. Had the UK economy grown since 2010 at the same rate that it did under Labour in the years before, it would be £150 billion bigger today—£5,000 more for every household, every year. That is why Labour’s plan to provide the stability, certainty and critical infrastructure improvements that businesses value so greatly is so important.
Our new fiscal lock, which the Conservatives voted against last week, will strengthen the Office for Budget Responsibility, helping to ensure that the disastrous mini-Budget of this time last year could never happen again. Our new road map for business taxation will give businesses from the UK and around the world the certainty and predictability that they need to invest in Britain. That need for certainty has been behind our calls to make full expensing permanent, which the Government have finally announced—though with this Government, businesses may well be left wondering how long their latest position will last. While small businesses and the retail, hospitality and leisure industries will no doubt welcome any further help with business rates, again the Government have failed to provide the fundamental reform promised at the general election.
Where the Conservatives have failed, Labour will deliver. Our proposals to overhaul the planning system will fast-track the decisions that we need to deliver clean energy, critical infrastructure, and the factories and workplaces of the future. Our national wealth fund will provide catalytic public investment to leverage three times as much private sector investment into jobs and industries across our country. Our approach will be one of a pro-business, pro-worker Government, ready to grow Britain’s economy and make working people better off. Governments in other countries around the world know that businesses want their support in growing new industries and making the transition to a low-carbon economy. As the chief executive of the UK Sustainable Investment and Finance Association said just yesterday, the Chancellor needs to
“urgently set out the UK’s overdue response to the”
US approach
“and similar measures in other jurisdictions, such as the EU, Canada and Japan”.
The truth is that through their lack of ideas, lack of ambition, and lack of the industrial strategy that we need, the Government are holding British businesses back. Ministers are making Britain the outlier, while the Governments of similar nations around the world are supporting their national industries to attract jobs and investment. The Conservatives cannot deliver what our economy needs, and people and businesses across Britain know that it is time for a change. Even the Prime Minister has conceded that our country needs change. Maybe that is why he still has misplaced confidence in the Conservatives: he thinks that because they have changed their Cabinet so much and so often, they must be on to a good thing. It is true that their record on changing who is sat around the Cabinet table is remarkable. To have had five Prime Ministers, seven Chancellors, and an astonishing 16 Housing Ministers is noteworthy—but not, of course, for the right reasons.
The problem for the Conservatives is that whatever they try to do now, they know, and the British people know, that they cannot be the change that we need. Nothing can compensate for the damage that they have already done. What on earth will they put on their election leaflets, I wonder? Will they say, “We may have increased taxes 25 times, but things will be different now—honest!” or will they say, “Don’t worry—0% growth is actually better than what it could have been.”? Maybe they will play it straight with something like: “We may have failed for 13 years, but we’d like another chance.”
We all know that that simply will not wash. The Conservatives are out of touch and, increasingly, out of time. After 13 years, working people have had enough of paying higher taxes, enough of seeing their wages stagnate, enough of their public services falling apart, and enough of Britain’s economy falling behind. The change that our country needs can only come from our changed Labour party—one that is ready to serve, ready to get the economy growing, and ready to make people across Britain better off. The truth is that people in our country should be given the chance to get Britain its future back. That is why a general election cannot come soon enough.
The truth is that the Conservatives’ fingerprints are all over the cost of living crisis, and it would be ludicrous for anyone to expect the prime suspect to be asked to solve the crime. It is clear that we cannot trust the Government with the cost of living crisis. It is also clear that we cannot trust them with our money. No wonder they want to run from their record in office when they have wasted taxpayers’ money so badly. The levels of fraud and waste on their watch make the 25 tax rises over this Parliament all the more galling, and even harder for hard-pressed families to stomach. From the £7.2 billion of public money that was lost on fraud during the pandemic to the £50 million spent on a new helicopter for the Prime Minister to make the short trips that he is so fond of, it is clear that the Conservatives are incapable of spending public money wisely.
Labour will set up an office of value for money as part of our pledge to put fiscal and economic responsibility at the heart of our approach if we win the next election. On that foundation, we will get the economy growing after 13 years of stagnation, as we know that economic growth is the key to making people across Britain better off. Had the UK economy grown since 2010 at the same rate that it did under Labour in the years before, it would be £150 billion bigger today—£5,000 more for every household, every year. That is why Labour’s plan to provide the stability, certainty and critical infrastructure improvements that businesses value so greatly is so important.
Our new fiscal lock, which the Conservatives voted against last week, will strengthen the Office for Budget Responsibility, helping to ensure that the disastrous mini-Budget of this time last year could never happen again. Our new road map for business taxation will give businesses from the UK and around the world the certainty and predictability that they need to invest in Britain. That need for certainty has been behind our calls to make full expensing permanent, which the Government have finally announced—though with this Government, businesses may well be left wondering how long their latest position will last. While small businesses and the retail, hospitality and leisure industries will no doubt welcome any further help with business rates, again the Government have failed to provide the fundamental reform promised at the general election.
Where the Conservatives have failed, Labour will deliver. Our proposals to overhaul the planning system will fast-track the decisions that we need to deliver clean energy, critical infrastructure, and the factories and workplaces of the future. Our national wealth fund will provide catalytic public investment to leverage three times as much private sector investment into jobs and industries across our country. Our approach will be one of a pro-business, pro-worker Government, ready to grow Britain’s economy and make working people better off. Governments in other countries around the world know that businesses want their support in growing new industries and making the transition to a low-carbon economy. As the chief executive of the UK Sustainable Investment and Finance Association said just yesterday, the Chancellor needs to
“urgently set out the UK’s overdue response to the”
US approach
“and similar measures in other jurisdictions, such as the EU, Canada and Japan”.
The truth is that through their lack of ideas, lack of ambition, and lack of the industrial strategy that we need, the Government are holding British businesses back. Ministers are making Britain the outlier, while the Governments of similar nations around the world are supporting their national industries to attract jobs and investment. The Conservatives cannot deliver what our economy needs, and people and businesses across Britain know that it is time for a change. Even the Prime Minister has conceded that our country needs change. Maybe that is why he still has misplaced confidence in the Conservatives: he thinks that because they have changed their Cabinet so much and so often, they must be on to a good thing. It is true that their record on changing who is sat around the Cabinet table is remarkable. To have had five Prime Ministers, seven Chancellors, and an astonishing 16 Housing Ministers is noteworthy—but not, of course, for the right reasons.
The problem for the Conservatives is that whatever they try to do now, they know, and the British people know, that they cannot be the change that we need. Nothing can compensate for the damage that they have already done. What on earth will they put on their election leaflets, I wonder? Will they say, “We may have increased taxes 25 times, but things will be different now—honest!” or will they say, “Don’t worry—0% growth is actually better than what it could have been.”? Maybe they will play it straight with something like: “We may have failed for 13 years, but we’d like another chance.”
We all know that that simply will not wash. The Conservatives are out of touch and, increasingly, out of time. After 13 years, working people have had enough of paying higher taxes, enough of seeing their wages stagnate, enough of their public services falling apart, and enough of Britain’s economy falling behind. The change that our country needs can only come from our changed Labour party—one that is ready to serve, ready to get the economy growing, and ready to make people across Britain better off. The truth is that people in our country should be given the chance to get Britain its future back. That is why a general election cannot come soon enough.
15:09:36
Harriett Baldwin
West Worcestershire
What a difference a year has made to this country’s finances and to the economy. Last year, our inflation rate was 11.1%; it is now down to 4.6%. It is still too high, but that is enormous progress, thanks to the independent Bank of England and the decisions taken in this Chamber a year ago to manage the public finances prudently, in a way that would not increase inflation. We need to reflect on the progress that we have made in our economy. From listening to the—I am not going to use unparliamentary language—speech of the Opposition spokesperson, the hon. Member for Ealing North (James Murray), we would not think that anything had changed from a year ago. Things have changed enormously.
This time last year, our economy was reeling from the energy shock caused by Putin’s evil invasion of Ukraine. It was thanks to the help given through the energy price cap that households were able to get through last winter. I do not need to remind the House how serious inflation is for the poorest households. It is the worst tax on our economy, our businesses, and people’s budgets. It is a truly evil problem, and it is right that it has been the No. 1 focus of the Prime Minister and the Government this year.
Clearly, with inflation at 4.6% there is still more to do. Yesterday, the Treasury Committee heard from the Governor of the Bank of England. The Bank of England is forecasting that we will get to a 2% handle, probably by the end of next year. That is in line with what the Office for Budget Responsibility is saying. Clearly, there are still risks to the upside. Energy prices continue to be volatile, but the Governor told our Committee yesterday that it is the inflation-busting hikes in rates that have generated the increased payments that our constituents are facing on their mortgages. Therefore, when the hon. Member for Ealing North says that these are Tory mortgage hikes, that is just throwing mud and trying to make it stick. It will not stick, however, because I am hopeful that rates are now high enough to bring inflation back down under control. In the analogy the Bank of England uses, we have marched to the top of Table mountain and are now walking across the top of the mountain, and the markets are now forecasting that the next rate change will be a decrease.
This time last year, our economy was reeling from the energy shock caused by Putin’s evil invasion of Ukraine. It was thanks to the help given through the energy price cap that households were able to get through last winter. I do not need to remind the House how serious inflation is for the poorest households. It is the worst tax on our economy, our businesses, and people’s budgets. It is a truly evil problem, and it is right that it has been the No. 1 focus of the Prime Minister and the Government this year.
Clearly, with inflation at 4.6% there is still more to do. Yesterday, the Treasury Committee heard from the Governor of the Bank of England. The Bank of England is forecasting that we will get to a 2% handle, probably by the end of next year. That is in line with what the Office for Budget Responsibility is saying. Clearly, there are still risks to the upside. Energy prices continue to be volatile, but the Governor told our Committee yesterday that it is the inflation-busting hikes in rates that have generated the increased payments that our constituents are facing on their mortgages. Therefore, when the hon. Member for Ealing North says that these are Tory mortgage hikes, that is just throwing mud and trying to make it stick. It will not stick, however, because I am hopeful that rates are now high enough to bring inflation back down under control. In the analogy the Bank of England uses, we have marched to the top of Table mountain and are now walking across the top of the mountain, and the markets are now forecasting that the next rate change will be a decrease.
15:10:41
Ian Blackford
Ross, Skye and Lochaber
Does the hon. Lady remember the Budget of just over a year ago, which crashed the economy, sent interest rates spiralling and sent mortgage rates up? We must not forget that there is an interest rate premium in the UK over much of the rest of the western world, and that is forecast to remain for years to come because, sadly, it is down to the long-term mismanagement of the UK economy, which the Tory Government must take responsibility for.
15:11:35
Harriett Baldwin
I am very glad the right hon. Gentleman made that intervention because it allows me to repeat the point of my argument. Of course I remember what happened, and we all saw it; it is thanks to the new Prime Minister and the measures that the Chancellor took this time last year that those effects have been worked through. We can see the progress not only in reduced inflation but in the OBR’s increasing its growth expectations—a year ago it was expecting a recession and now it is forecasting growth. The right hon. Gentleman makes my point: we have heard from the Governor, on the record, that those effects have dissipated and that the year has made all the difference.
15:11:48
Kevin Foster
Torbay
Does my hon. Friend reflect, as I do, that the US federal rate is currently very similar to our own interest rate? Can Opposition Members explain what was the effect on the US economy?
15:12:17
Harriett Baldwin
My hon. Friend is absolutely right. Central banks around the world have lessons to learn from this recent bout of inflation, but I am comforted by the evidence we got yesterday from the Governor, which, while acknowledging there are still risks to the upside, shows that the world is on a trajectory of having dealt with this.
15:12:17
Ian Blackford
I am grateful to the hon. Lady and the hon. Member for Torbay (Kevin Foster) because they have made key points. We have heard lots today about growth, but the US has grown at an average rate of about 1% more than us over the last decade, and forecasts for its growth for the years to come are also higher. We need to get real about what growth looks like and what sustainable economic growth is, but the fact remains that UK interest rates are above those in the European Union and have remained above those of the western world for most of the last decade, and will remain above those of the rest of the world for many years to come.
Harriett Baldwin
The right hon. Gentleman might think the UK should join the euro, but I shall fight strongly against him on that campaign.
I want to return to the theme of what a difference a year has made in terms of the public finances. It is remarkable to see how the priorities in the autumn statement are being delivered. First, that is seen in reducing debt, something all on this side of the House are keen on otherwise we are just passing on the costs to our children and grandchildren. Last year’s forecast was 94.6%, which still feels uncomfortably high to me, and that is why I welcome that in today’s autumn statement debt is falling to 92.7% in the same year. I encourage the Chancellor to keep on moving in that direction.
The challenge now is to support growth, and non-inflationary growth above all. The Chancellor announced 110 measures. I have gone through the small print of the documentation, and I do not think I have got to the bottom of all 110 of them yet, but I hope we shall do so when we take evidence from him, the OBR and independent economists next week. I welcome that the OBR is revising growth up this year, however, and that the measures announced in the statement were taken through the lens of making sure inflation continues to decline.
Cutting tax is also an important priority because it rewards hard work, and it is good that earnings are again growing faster than inflation, which means households up and down the country are seeing disposable incomes rise once again.
We all know that work is the best route out of poverty. I cannot stress how important the announcement on the national living wage is, because it means that those working full time on the national living wage now have an income of over £22,000, taking them over the poverty line. With so many vacancies in our economy, that will give more people the opportunity to work their way out of poverty. So I thank the Chancellor for that reform, and for the fact that now the income of the lowest paid comes predominantly from work, whereas in 2010 the income of those on the lowest pay was primarily from welfare. We can be proud of that real shift.
I was pleased to hear measures about the grid in the autumn statement. Building sustainable domestic energy will require improving our grid, and building more renewables and new nuclear and domestic oil and gas.
I was very pleased to see the measures backing British businesses as well, because ultimately it is British businesses that will help our country grow and tackle the important productivity challenge and deliver more jobs and prosperity for the British people.
I look forward to encouraging the Chancellor to think about simplifying even more. There were some simplifications that I welcome in today’s autumn statement, particularly in terms of national insurance for the self-employed. I look forward to seeing the detail of the measures that will help our constituents invest their savings and get better rewarded for their pensions by being able to access advice more easily. Measures the Chancellor can take in terms of the advice guidance boundary will help enormously.
I welcome, too, the funding for a world class education. Schools in my constituency will welcome that record level of per pupil funding in real terms.
In conclusion, I am delighted to see many of these measures and look forward to scrutinising more of them in detail, and I am particularly pleased that the Chancellor did not heed the Opposition’s advice to borrow £28 billion more every year.
I want to return to the theme of what a difference a year has made in terms of the public finances. It is remarkable to see how the priorities in the autumn statement are being delivered. First, that is seen in reducing debt, something all on this side of the House are keen on otherwise we are just passing on the costs to our children and grandchildren. Last year’s forecast was 94.6%, which still feels uncomfortably high to me, and that is why I welcome that in today’s autumn statement debt is falling to 92.7% in the same year. I encourage the Chancellor to keep on moving in that direction.
The challenge now is to support growth, and non-inflationary growth above all. The Chancellor announced 110 measures. I have gone through the small print of the documentation, and I do not think I have got to the bottom of all 110 of them yet, but I hope we shall do so when we take evidence from him, the OBR and independent economists next week. I welcome that the OBR is revising growth up this year, however, and that the measures announced in the statement were taken through the lens of making sure inflation continues to decline.
Cutting tax is also an important priority because it rewards hard work, and it is good that earnings are again growing faster than inflation, which means households up and down the country are seeing disposable incomes rise once again.
We all know that work is the best route out of poverty. I cannot stress how important the announcement on the national living wage is, because it means that those working full time on the national living wage now have an income of over £22,000, taking them over the poverty line. With so many vacancies in our economy, that will give more people the opportunity to work their way out of poverty. So I thank the Chancellor for that reform, and for the fact that now the income of the lowest paid comes predominantly from work, whereas in 2010 the income of those on the lowest pay was primarily from welfare. We can be proud of that real shift.
I was pleased to hear measures about the grid in the autumn statement. Building sustainable domestic energy will require improving our grid, and building more renewables and new nuclear and domestic oil and gas.
I was very pleased to see the measures backing British businesses as well, because ultimately it is British businesses that will help our country grow and tackle the important productivity challenge and deliver more jobs and prosperity for the British people.
I look forward to encouraging the Chancellor to think about simplifying even more. There were some simplifications that I welcome in today’s autumn statement, particularly in terms of national insurance for the self-employed. I look forward to seeing the detail of the measures that will help our constituents invest their savings and get better rewarded for their pensions by being able to access advice more easily. Measures the Chancellor can take in terms of the advice guidance boundary will help enormously.
I welcome, too, the funding for a world class education. Schools in my constituency will welcome that record level of per pupil funding in real terms.
In conclusion, I am delighted to see many of these measures and look forward to scrutinising more of them in detail, and I am particularly pleased that the Chancellor did not heed the Opposition’s advice to borrow £28 billion more every year.
15:17:32
Dame Eleanor Laing
Madam Deputy Speaker
I call Scottish National party spokesman Drew Hendry.
15:17:37
Drew Hendry
Inverness, Nairn, Badenoch and Strathspey
It is a pleasure to follow the hon. Member for West Worcestershire (Harriett Baldwin), the Chair of the Treasury Committee, which I have recently joined.
I shall concentrate on the choices the Chancellor and his Government have made. Government is about choices; it is about choosing priorities and who to help, and choosing the future we want to create. Today the Chancellor chose his priorities, and he chose to ignore the millions struggling with the cost of living crisis. The OBR has confirmed this afternoon that the UK is still on course for the largest reduction in living standards since the 1950s. Of all those struggling or who cannot pay their bills or are worried about heating their homes, the decision today was pretty much to ignore them. The Chancellor is either offering no comfort or cold comfort. The BMJ warned last month that the cost of living crisis “will cut lives short”. The Chancellor’s choices mean the Government are saying to millions of people, “We don’t care.”
The Chancellor could have looked at VAT cuts, especially in tourism and hospitality, to boost spending and lower inflation. He could have taken action to reduce the level of the energy price cap or introduced an energy social tariff; he has not done so. The national insurance measures announced today will not make up for the inflationary price increases in mortgages, rents and food and energy bills, which will still be higher than last year. I misspoke earlier when I said that the UK is still paying the highest tax for seven years; it is paying the highest tax for 70 years. No action today on people’s housing costs, no action on food prices, no action on energy costs, but never mind—at least bankers’ bonuses are now unlimited.
Let us start with food costs. Food prices in the UK are still climbing at an alarming rate and the trend of increasing costs remains. The UK’s food price inflation is double that of Ireland and Estonia, for example. The Centre for Inclusive Trade Policy notes Brexit’s role in increasing UK import prices by 11% and analysis by the London School of Economics earlier this year showed that the UK had the highest food price inflation in the industrialised world. It remains sky-high.
The Chancellor’s inaction on food prices is glaring. As people worry at the checkout, companies such as Marks & Spencer are reporting record profits on food sales. Consumer rights organisation Which? has expressed concerns over dodgy pricing and loyalty card practices, yet the Government remain silent on discussing food bills with supermarkets. There is nothing from Labour either; when Labour goes shopping at Sainsbury’s, it is for millions in donations. The SNP is left to fight for families over food costs.
The Joseph Rowntree Foundation paints a grim picture of the impact of those inflated costs, with many struggling to afford basic food items. The foundation’s chief economist emphasises the severity of the situation for lower-income households, with essential goods unaffordable for millions. That unaffordability is creeping upwards, with those who previously saw themselves as relatively comfortable now also feeling the squeeze.
The Chancellor had a choice. The Government could have heeded the Bank of England’s warnings about skyrocketing food inflation and they did not do so. France got companies to commit to freezing or cutting prices on 5,000 everyday products. In Canada, the five largest grocery chains made an initial commitment to help to stabilise food prices and say that that is just the beginning of their work. For six months, the Greek Government covered 10% of food expenses for households, funded by a windfall tax on two oil refineries.
Here in the UK, we have the Joseph Rowntree Foundation’s stark warning that millions cannot afford basic food items. Food bank use has grown a further 10%, according to the Trussell Trust, and donations to food banks, usually collected at supermarkets, are also dramatically down. We have a situation where not only do more people need food, but fewer people have the spare money to donate food. Unlike the Chancellor, people using food banks do not have choices.
The Chancellor could have made some choices on energy costs this winter. Before his speech today, one in four social housing households had already reduced their heating to save costs. He decided not to reinstate the energy bill rebate. It is not enough. Before his speech today, energy bills still remained double what they were in 2021, and Cornwall Insight predicts that energy prices will remain high until the 2030s. Where does the Chancellor think folk are getting the money from? It is not coming from any long-term measures today—there is no social tariff, he has not decoupled gas prices from renewables, and the SNP’s call for the reinstatement of the £400 energy bill rebate, which would have gone a long way to help in the short term, has been ignored.
The Chancellor could have chosen to act on that and he chose not to. He chose not to help the two thirds of people who live in a household where someone is suffering from a pre-existing health condition or is disabled and worried about being cold this winter. He should have committed to increasing working-age benefits in line with inflation next year as well and legislated for an essentials guarantee, giving basic necessities to those who need them most. Instead, as we heard, he intends to punish the sick. People who are sick and unable to work are already regularly being referred to work coaches. I have had constituents of mine, who were listed as having cancer or indeed as being terminally ill, being told to report to a work coach. This is just another step further to the right for the nasty party.
The Chancellor chose not to help the more than one third of households with children under five, the pregnant, or people over 65 with pre-existing health conditions who think they will not or may not be able to afford to put the heating on at all this winter. He chose not to help the millions of people already struggling with mounting energy debts. Citizens Advice expects that the number of people unable to top up their prepayment meters will be nearly half as high again as it was in 2022. Meanwhile, National Energy Action found that more than one third of adults are expected to struggle to afford to pay their heating bills this winter.
The Chancellor did not even listen to the pleas of charities. Ofgem has reported that energy debt has reached £2.6 billion—its highest level ever. A quarter of people are now behind on at least one bill, and we are not even in the heart of winter. Does anybody think that that figure is going to be lower come January? Energy bills and council tax arrears are the most commonly encountered debts for households.
What does that mean for the Scottish people? According to Ofgem, northern and southern Scotland, which are colder, rural areas, pay two of the four highest standing rates of all the regions of the UK.
I shall concentrate on the choices the Chancellor and his Government have made. Government is about choices; it is about choosing priorities and who to help, and choosing the future we want to create. Today the Chancellor chose his priorities, and he chose to ignore the millions struggling with the cost of living crisis. The OBR has confirmed this afternoon that the UK is still on course for the largest reduction in living standards since the 1950s. Of all those struggling or who cannot pay their bills or are worried about heating their homes, the decision today was pretty much to ignore them. The Chancellor is either offering no comfort or cold comfort. The BMJ warned last month that the cost of living crisis “will cut lives short”. The Chancellor’s choices mean the Government are saying to millions of people, “We don’t care.”
The Chancellor could have looked at VAT cuts, especially in tourism and hospitality, to boost spending and lower inflation. He could have taken action to reduce the level of the energy price cap or introduced an energy social tariff; he has not done so. The national insurance measures announced today will not make up for the inflationary price increases in mortgages, rents and food and energy bills, which will still be higher than last year. I misspoke earlier when I said that the UK is still paying the highest tax for seven years; it is paying the highest tax for 70 years. No action today on people’s housing costs, no action on food prices, no action on energy costs, but never mind—at least bankers’ bonuses are now unlimited.
Let us start with food costs. Food prices in the UK are still climbing at an alarming rate and the trend of increasing costs remains. The UK’s food price inflation is double that of Ireland and Estonia, for example. The Centre for Inclusive Trade Policy notes Brexit’s role in increasing UK import prices by 11% and analysis by the London School of Economics earlier this year showed that the UK had the highest food price inflation in the industrialised world. It remains sky-high.
The Chancellor’s inaction on food prices is glaring. As people worry at the checkout, companies such as Marks & Spencer are reporting record profits on food sales. Consumer rights organisation Which? has expressed concerns over dodgy pricing and loyalty card practices, yet the Government remain silent on discussing food bills with supermarkets. There is nothing from Labour either; when Labour goes shopping at Sainsbury’s, it is for millions in donations. The SNP is left to fight for families over food costs.
The Joseph Rowntree Foundation paints a grim picture of the impact of those inflated costs, with many struggling to afford basic food items. The foundation’s chief economist emphasises the severity of the situation for lower-income households, with essential goods unaffordable for millions. That unaffordability is creeping upwards, with those who previously saw themselves as relatively comfortable now also feeling the squeeze.
The Chancellor had a choice. The Government could have heeded the Bank of England’s warnings about skyrocketing food inflation and they did not do so. France got companies to commit to freezing or cutting prices on 5,000 everyday products. In Canada, the five largest grocery chains made an initial commitment to help to stabilise food prices and say that that is just the beginning of their work. For six months, the Greek Government covered 10% of food expenses for households, funded by a windfall tax on two oil refineries.
Here in the UK, we have the Joseph Rowntree Foundation’s stark warning that millions cannot afford basic food items. Food bank use has grown a further 10%, according to the Trussell Trust, and donations to food banks, usually collected at supermarkets, are also dramatically down. We have a situation where not only do more people need food, but fewer people have the spare money to donate food. Unlike the Chancellor, people using food banks do not have choices.
The Chancellor could have made some choices on energy costs this winter. Before his speech today, one in four social housing households had already reduced their heating to save costs. He decided not to reinstate the energy bill rebate. It is not enough. Before his speech today, energy bills still remained double what they were in 2021, and Cornwall Insight predicts that energy prices will remain high until the 2030s. Where does the Chancellor think folk are getting the money from? It is not coming from any long-term measures today—there is no social tariff, he has not decoupled gas prices from renewables, and the SNP’s call for the reinstatement of the £400 energy bill rebate, which would have gone a long way to help in the short term, has been ignored.
The Chancellor could have chosen to act on that and he chose not to. He chose not to help the two thirds of people who live in a household where someone is suffering from a pre-existing health condition or is disabled and worried about being cold this winter. He should have committed to increasing working-age benefits in line with inflation next year as well and legislated for an essentials guarantee, giving basic necessities to those who need them most. Instead, as we heard, he intends to punish the sick. People who are sick and unable to work are already regularly being referred to work coaches. I have had constituents of mine, who were listed as having cancer or indeed as being terminally ill, being told to report to a work coach. This is just another step further to the right for the nasty party.
The Chancellor chose not to help the more than one third of households with children under five, the pregnant, or people over 65 with pre-existing health conditions who think they will not or may not be able to afford to put the heating on at all this winter. He chose not to help the millions of people already struggling with mounting energy debts. Citizens Advice expects that the number of people unable to top up their prepayment meters will be nearly half as high again as it was in 2022. Meanwhile, National Energy Action found that more than one third of adults are expected to struggle to afford to pay their heating bills this winter.
The Chancellor did not even listen to the pleas of charities. Ofgem has reported that energy debt has reached £2.6 billion—its highest level ever. A quarter of people are now behind on at least one bill, and we are not even in the heart of winter. Does anybody think that that figure is going to be lower come January? Energy bills and council tax arrears are the most commonly encountered debts for households.
What does that mean for the Scottish people? According to Ofgem, northern and southern Scotland, which are colder, rural areas, pay two of the four highest standing rates of all the regions of the UK.
Ian Blackford
One of the inequities we suffer from is the regional distribution market, which means that people in the highlands—the coldest, wettest and windiest part of the United Kingdom—pay the highest prices. The real scandal is the fact that the highlands is a net exporter of energy, and we get charged to export the energy from the highlands. That is the reality of Westminster control over Scotland’s energy. We have the energy, they have the power and we pay the price.
Drew Hendry
I could not agree more with my right hon. Friend. According to the House of Commons Library, in energy-rich, energy-exporting Scotland, energy costs make up 5.3% of total spending, while in England they make up only 4.4%. We have an energy-rich country, a centre of excellence for renewables where many people can literally look out of their windows and see the energy being generated, yet some of them cannot even afford to put on the heating. It is unacceptable. Reinstating the energy bill rebate was a necessary short-term policy that the Chancellor chose to ignore. He should go back and reconsider that decision. In independent Ireland, the Government will introduce €450 in energy bills support to all households to help them through the winter.
Now let us look at housing. More than 300,000 Scottish homeowners have seen their mortgage payments skyrocket, soaring by an average of £2,500 per year. That is a direct result of the choices of this Chancellor’s predecessor—choices that drove interest rates to punishing heights. Nor does the pain stop with homeowners; despite what has been announced today to help renters, they are equally trapped, as rents will continue to surge despite those measures. Today’s measures are a drop in the ocean compared with the pressure they face.
The majority of buy-to-let landlords, grappling with those interest hikes, have no choice but to pass the costs on. The result is rent increases that outpace inflation, squeezing every last penny from tenants. Of course, the Chancellor is no stranger to hiking rents for his own tenants well above inflation rates, as has been reported this week. If he had delivered the extra funding across the UK to fund public services and fair public sector pay awards, we could all do a bit more to help—but, of course, he chose not to. That will not change the fact that UK households now spend a fifth of their disposable income on housing, surpassing the EU average of 17.4%. For renters, the figure is even more alarming: it is almost a quarter of their income. Yet while other European countries similar in size or smaller than Scotland implement welfare policies to reduce poverty, the UK Government’s response, as we have heard today, is to punish the most vulnerable.
The statement should have been about helping people to survive and helping our economy towards proper growth. Instead, growth is barely above zero and is not expected to climb by more than fractions—if indeed it does not decline. The Chancellor could have increased the Scottish Government’s capital budget in line with inflation, which would have helped us to build even more social housing and vital infrastructure. He chose not to.
Costs for insurance, mobile phone bills and other household basic requirements are also ballooning at the moment. A House of Commons Library report found that since January 2022, UK car insurance inflation grew exponentially, peaking at 43.1% in May this year. Before the Conservatives tell us that that is not down to their Brexit fixation, let me add that our European neighbours saw either no rise, or limited rises of only up to 6%, while car insurance inflation in both Belgium and Ireland has actually reduced. Here, households face cost rise after cost rise after cost rise, and people are begging for it to stop.
The Chancellor still wants us to believe that we are on the path to sound fiscal management. How many times will the Conservatives tell us that there is no money to support people with the cost of living—that there is no money tree—while they find room for what they want to do? Let us have a look at some of the priorities they have managed to fund while they have been in office. The infamous mini-Budget managed to overshadow some staggering stories of fiscal mismanagement. It is a showcase for how not to spend taxpayer money.
First, there was High Speed 2, which started as a £32 billion rail project, exploded into an eye-watering £100 billion project, and then, in a twist, was cancelled—from a dream to a debt nightmare for taxpayers. Despite cutting the project, the Government somehow lost £2.3 billion on a Manchester to Birmingham line that leads nowhere. There was the £5.6 billion on tanks that are 12 years late and not in service; the £2 billion supposedly for aircraft carriers, but which turned out to be £6 billion when one of them had to be stripped for parts for the others; and let us not overlook the £105.6 million splurged on now redundant architectural plans for Euston station—those plans are now as useful as a chocolate teapot. The Elizabeth line is a classic case of too little, too late—five years delayed and £4 billion over budget. And who can forget the covid supplies fiasco? A staggering £15 billion was spent on unusable personal protective equipment, tests and the rest—a fast-track to profits for a few, including an infamous inhabitant of the House of Lords, and a financial burden for our people to share.
The Ministry of Justice was not far behind with its £98 million electronic tagging misadventure. There was the £900,000 paint job for the Prime Minister’s aeroplane, because fiscal responsibility means flying in style, obviously; the £5 million spent to confirm what we already knew, that MPs must vacate the Palace of Westminster for renovations—paying double for the privilege of checking; and the £120 million spent on the Brexit festival. I have no words to add to that. Finally, let us not forget the £100,000 spent on a fake bell-bonging mechanism for Big Ben—try saying that, let alone paying £100,000 for it. Those are choices that those in Westminster make time and again—choices that speak volumes about their priorities—while our constituents struggle with the cost of living. They are disconnected from the harsh realities faced by the public. They do not just misspend money; they throw it out of the plane they have just repainted.
What of choices for a better future? Where is the ambition on net zero? The Conservatives have chucked it. It is utterly bizarre that, as other advanced economies invest in net zero and jobs, the UK goes backwards. Instead of grasping the gold rush of renewables, they dither and delay, just as they did for carbon capture at Peterhead. UK business investment has grown by just under 1% a year since 2016, and 6% overall; by comparison, it has grown 25% in the US. Right now in the US, the Inflation Reduction Act is helping businesses and communities to grow through radical plans to invest in renewables and hydrogen. Are the UK Government looking to maximise the supply chain benefits for Scotland and elsewhere? No. They are focused on their climate change culture war, costing Scotland millions, if not billions, in potential investment.
The SNP Scottish Government choose differently. We value investing in our future—in green energy, in a fairer society. That is another reason why the UK Government should have focused on funding net zero, at the very least matched the Scottish Government’s £500 million fund for a just transition in the north-east of Scotland, and included funding for offshore wind projects in Scotland. Our values lead us to want to alleviate poverty. We seek measures now and in the future to help people with that: a council tax freeze, investment in childcare, no tuition fees, and using our limited powers to mitigate the cruel policies from this place, such as the rape clause and the bedroom tax. We choose to put people first; those are our values—values that build a fairer, more prosperous Scotland.
The Scottish Government have taken the steps that they can to help alleviate the worst impacts of poverty, offering people a degree of stability through the council tax freeze and a cap on rent increases. We would do more, but the fiscal powers needed are here. If we had the power to help people today, we would. The Chancellor has the power to help people, but he refused to lift a finger to right some of the wrongs that his Government have inflicted on people. People are not this Government’s priority—we see who goes through their priority lanes.
The UK Government have little to offer Scotland. Our route out of the chaos that Westminster has created—perma-austerity and the cost of living nightmare that people are having to endure—is through independence and re-joining the European Union.
Now let us look at housing. More than 300,000 Scottish homeowners have seen their mortgage payments skyrocket, soaring by an average of £2,500 per year. That is a direct result of the choices of this Chancellor’s predecessor—choices that drove interest rates to punishing heights. Nor does the pain stop with homeowners; despite what has been announced today to help renters, they are equally trapped, as rents will continue to surge despite those measures. Today’s measures are a drop in the ocean compared with the pressure they face.
The majority of buy-to-let landlords, grappling with those interest hikes, have no choice but to pass the costs on. The result is rent increases that outpace inflation, squeezing every last penny from tenants. Of course, the Chancellor is no stranger to hiking rents for his own tenants well above inflation rates, as has been reported this week. If he had delivered the extra funding across the UK to fund public services and fair public sector pay awards, we could all do a bit more to help—but, of course, he chose not to. That will not change the fact that UK households now spend a fifth of their disposable income on housing, surpassing the EU average of 17.4%. For renters, the figure is even more alarming: it is almost a quarter of their income. Yet while other European countries similar in size or smaller than Scotland implement welfare policies to reduce poverty, the UK Government’s response, as we have heard today, is to punish the most vulnerable.
The statement should have been about helping people to survive and helping our economy towards proper growth. Instead, growth is barely above zero and is not expected to climb by more than fractions—if indeed it does not decline. The Chancellor could have increased the Scottish Government’s capital budget in line with inflation, which would have helped us to build even more social housing and vital infrastructure. He chose not to.
Costs for insurance, mobile phone bills and other household basic requirements are also ballooning at the moment. A House of Commons Library report found that since January 2022, UK car insurance inflation grew exponentially, peaking at 43.1% in May this year. Before the Conservatives tell us that that is not down to their Brexit fixation, let me add that our European neighbours saw either no rise, or limited rises of only up to 6%, while car insurance inflation in both Belgium and Ireland has actually reduced. Here, households face cost rise after cost rise after cost rise, and people are begging for it to stop.
The Chancellor still wants us to believe that we are on the path to sound fiscal management. How many times will the Conservatives tell us that there is no money to support people with the cost of living—that there is no money tree—while they find room for what they want to do? Let us have a look at some of the priorities they have managed to fund while they have been in office. The infamous mini-Budget managed to overshadow some staggering stories of fiscal mismanagement. It is a showcase for how not to spend taxpayer money.
First, there was High Speed 2, which started as a £32 billion rail project, exploded into an eye-watering £100 billion project, and then, in a twist, was cancelled—from a dream to a debt nightmare for taxpayers. Despite cutting the project, the Government somehow lost £2.3 billion on a Manchester to Birmingham line that leads nowhere. There was the £5.6 billion on tanks that are 12 years late and not in service; the £2 billion supposedly for aircraft carriers, but which turned out to be £6 billion when one of them had to be stripped for parts for the others; and let us not overlook the £105.6 million splurged on now redundant architectural plans for Euston station—those plans are now as useful as a chocolate teapot. The Elizabeth line is a classic case of too little, too late—five years delayed and £4 billion over budget. And who can forget the covid supplies fiasco? A staggering £15 billion was spent on unusable personal protective equipment, tests and the rest—a fast-track to profits for a few, including an infamous inhabitant of the House of Lords, and a financial burden for our people to share.
The Ministry of Justice was not far behind with its £98 million electronic tagging misadventure. There was the £900,000 paint job for the Prime Minister’s aeroplane, because fiscal responsibility means flying in style, obviously; the £5 million spent to confirm what we already knew, that MPs must vacate the Palace of Westminster for renovations—paying double for the privilege of checking; and the £120 million spent on the Brexit festival. I have no words to add to that. Finally, let us not forget the £100,000 spent on a fake bell-bonging mechanism for Big Ben—try saying that, let alone paying £100,000 for it. Those are choices that those in Westminster make time and again—choices that speak volumes about their priorities—while our constituents struggle with the cost of living. They are disconnected from the harsh realities faced by the public. They do not just misspend money; they throw it out of the plane they have just repainted.
What of choices for a better future? Where is the ambition on net zero? The Conservatives have chucked it. It is utterly bizarre that, as other advanced economies invest in net zero and jobs, the UK goes backwards. Instead of grasping the gold rush of renewables, they dither and delay, just as they did for carbon capture at Peterhead. UK business investment has grown by just under 1% a year since 2016, and 6% overall; by comparison, it has grown 25% in the US. Right now in the US, the Inflation Reduction Act is helping businesses and communities to grow through radical plans to invest in renewables and hydrogen. Are the UK Government looking to maximise the supply chain benefits for Scotland and elsewhere? No. They are focused on their climate change culture war, costing Scotland millions, if not billions, in potential investment.
The SNP Scottish Government choose differently. We value investing in our future—in green energy, in a fairer society. That is another reason why the UK Government should have focused on funding net zero, at the very least matched the Scottish Government’s £500 million fund for a just transition in the north-east of Scotland, and included funding for offshore wind projects in Scotland. Our values lead us to want to alleviate poverty. We seek measures now and in the future to help people with that: a council tax freeze, investment in childcare, no tuition fees, and using our limited powers to mitigate the cruel policies from this place, such as the rape clause and the bedroom tax. We choose to put people first; those are our values—values that build a fairer, more prosperous Scotland.
The Scottish Government have taken the steps that they can to help alleviate the worst impacts of poverty, offering people a degree of stability through the council tax freeze and a cap on rent increases. We would do more, but the fiscal powers needed are here. If we had the power to help people today, we would. The Chancellor has the power to help people, but he refused to lift a finger to right some of the wrongs that his Government have inflicted on people. People are not this Government’s priority—we see who goes through their priority lanes.
The UK Government have little to offer Scotland. Our route out of the chaos that Westminster has created—perma-austerity and the cost of living nightmare that people are having to endure—is through independence and re-joining the European Union.
15:35:45
Dr Liam Fox
North Somerset
I warmly welcome the Chancellor’s statement as a move back towards some sound Conservative principles that have been somewhat lacking in recent years. I would have liked his language to have been even more explicit, because the No. 1 principle that underpinned what the Chancellor was saying—if not expressed so explicitly—was that there is no such thing as public money, or Government money: there is only taxpayers’ money, whether they are personal taxpayers or business taxpayers. We are beginning to get away from the sterile tax and spend debate that has bedevilled our country and, I would argue, our party for too long, and to get back to the territory of how to create wealth.
It was right of the Chancellor to remind us of Nigel Lawson’s maxim that borrowing is just the deferred taxation of the next generation. No one would think it was reasonable behaviour to max out their credit card and then give the bills to their offspring, but that is exactly what overspending and over-borrowing leads to, and it is exactly the same recipe that the Labour party is putting to the British public all over again. Like the shadow Minister, the hon. Member for Ealing North (James Murray), I very much look forward to a general election: we will be able to expose the fact that the Labour party cannot even tell us as a matter of fact—as a matter of its credibility—what proportion of current inflation it thinks is due to, for example, the commodity price shock that resulted from the invasion of Ukraine. Labour Members absolutely refuse to accept that anything is responsible for inflation other than UK domestic pressures and domestic policy. If they believe that that gives their party credibility in the markets, they have got another think coming. We will want to make sure that the electorate understand that analysis very well.
It was right of the Chancellor to remind us of Nigel Lawson’s maxim that borrowing is just the deferred taxation of the next generation. No one would think it was reasonable behaviour to max out their credit card and then give the bills to their offspring, but that is exactly what overspending and over-borrowing leads to, and it is exactly the same recipe that the Labour party is putting to the British public all over again. Like the shadow Minister, the hon. Member for Ealing North (James Murray), I very much look forward to a general election: we will be able to expose the fact that the Labour party cannot even tell us as a matter of fact—as a matter of its credibility—what proportion of current inflation it thinks is due to, for example, the commodity price shock that resulted from the invasion of Ukraine. Labour Members absolutely refuse to accept that anything is responsible for inflation other than UK domestic pressures and domestic policy. If they believe that that gives their party credibility in the markets, they have got another think coming. We will want to make sure that the electorate understand that analysis very well.
15:36:29
Catherine West
Hornsey and Wood Green
Will the right hon. Gentleman give way?
15:36:28
Dr Fox
If the hon. Lady will answer that specific question on behalf of her Front Benchers, which they will not answer, I will happily give way.
15:36:55
Catherine West
The right hon. Gentleman talks about which questions will be asked during a general election campaign. Since last year, my constituent has had to move with her husband and children back into her parents’ home: she cannot afford a mortgage, because when she went to renew hers, the right hon. Member for South West Norfolk (Elizabeth Truss) had crashed the economy. My constituent and a lot of other people who live in Crouch End and Muswell Hill cannot afford their mortgages because this Government crashed the economy. Can the right hon. Gentleman tell the House what the Government will say to my constituents at a general election?
15:37:19
Dr Fox
Unsurprisingly, the hon. Lady was both incapable of answering the question and unable to do so. The question was, “What was the cause of inflation?” It was inflation that drove up interest rates. I reiterate the point that my hon. Friend the Member for Torbay (Kevin Foster) made: the Fed rate is 5.5%, while the Bank of England rate is 5.25%. I presume the hon. Lady thinks that—in her words—my right hon. Friend the Member for South West Norfolk (Elizabeth Truss) crashed the American economy too. It is complete nonsense; it is a bogus economic analysis.
We all know the impact that inflation has. We know that it hits the poorest people in our society hardest, which is why the Government, along with the Bank of England, were willing to see the pain of higher interest rates applied. Inflation does not help anyone. What I wanted to know, which I did not get from the hon. Lady or from her Front Benchers—surprise, surprise—was what they thought was the external responsibility for that inflation. We do not have an answer from Labour, and therefore we have an Opposition who have no credibility on one of the most basic questions: what causes inflation? If they do not know the answer, they cannot possibly be trusted to be in charge of this country’s finances.
One of the other things that I welcomed today is that we are moving slowly—still a little too slowly, I would argue—towards a lower-tax economy. The Chancellor set out the reasons why a lower-tax economy is a good thing. It is not just an abstract economic argument; it fits with Conservative ideas of individual responsibility, reducing the size of government, giving individuals greater choice, and providing incentives for those who will generate the wealth on which our future public services will depend. By emphasising the importance of creating prosperity, rather than the sterile debate about whether we should spend less or tax more, we are getting back into the right territory for a Conservative Government.
I was especially pleased to hear the measures for small businesses. My hon. Friend the Member for Sevenoaks (Laura Trott) recently had to endure my previous speech on this subject recently, in which I pointed out that, unlike what you would believe if you listened to the Labour party, public sector and private sector jobs in our economy are not in balance. The public sector produces only about 17% of the jobs in our economy; it is the small businesses and the private sector that produce the jobs and prosperity on which our country depends. We have had too high a tax burden on small businesses as they have come out of the pandemic, so I welcome the measures today.
I still have trouble with this term “growth” that goes around. I do not believe that growth as measured by the standard definitions is appropriate for a UK economy so highly geared towards services compared with goods. I know that it is the accepted norm, but I think we need to find better ways of describing it.
I welcome some of the moves towards improving capital availability, because if our businesses face one real problem, it is the lack of capital available for growth in our economy compared, for example, with the United States. That is because our economy is still too heavily geared towards the banks, and not enough towards private equity. We need to look at the breadth and depth of the private equity or venture capital industry in the United States and find out how we can replicate that in the United Kingdom if we are to give even more help to our small businesses.
I very much welcome the incentives to work that the Chancellor announced. Again, getting people back into work is not just an economic exercise; it is what I would regard as a moral imperative. If the only value people know they have is what the state gives them to do nothing, how can they possibly know what value they could be to themselves, their families and their communities if they were allowed to realise their full potential? Getting 200,000 more people back into work is a socially progressive thing to do, and if we are able to get more disabled people back into the workplace, so much the better for them, not just for the economy. I welcome what the Government have announced, because the best way to tackle poverty is to get people into work, and it is not just financial poverty but poverty of aspiration and poverty of hope that we are addressing by making this important social change.
There were one or two other elements on which I would have liked to have had some more detail from the Chancellor. I hope my hon. Friend the Minister might be able to provide that in responding to the debate. One of the problems right across the economy, particularly for small businesses, as the Chancellor stated, is late payment. However, one of the most important culprits in late payment is local government. Local authorities are spending the taxes that we in this House have to raise, in addition to the taxes they raise themselves, and surely it is not acceptable to us that the taxes we raise are spent in a way that actually adds an extra burden to small businesses. It should be a requirement on local authorities that they pay all their bills to small businesses on time. I hope the Government will look at that, because I believe there would be widespread support across this House for measures that compelled local government to do so.
I very much welcome the additional £20 billion investment over the next decade. That will help to address the one problem that has bedevilled our economy more, I think, than any other factor: productivity falling behind that of our competitors. Improving the horizon for freeports by up to 10 years will give additional stability, and again I hope we can look at how we can have a deregulatory exercise in those areas. That could test exactly how much we would get were we to expand the concept of freeports. I hope we can look more at the experience of countries such as the United States, where freeports have greater freedoms than they have in the United Kingdom. The Government are moving in exactly the right direction, but let us move further and faster on that.
The Chancellor talked about other supply-side reforms to the economy, one of them being the speeding up of improvements to the grid so that we can take advantage of the investments that have been made, for example, in renewables. I do not expect a response to that in the wind-up today, but I introduced a private Member’s Bill exactly to ensure that individuals impacted by the speeding up of improvements to the grid would have access to an independent arbitration programme, and not have National Grid deciding whether they should get compensation and how much they should get. That was an unacceptable position. We have not yet seen the regulations that will produce that independent arbitration, and we need to see them quickly. If we are to see the roll-out of an improved grid, it will impact more people, and we have to see a fair, equitable and affordable system where individuals can seek redress if they feel they have been dealt with unfairly.
I will briefly mention the continuing whinging victimhood of the nationalists. When they were talking about the ridiculous position that they are put in by being part of the Union, they just forgot to mention—I am sure it was an omission—that the block grant has now risen to the highest level since devolution began, at £41 billion this year. For every £100 that the UK Government spend in England, the Scottish Government receive £126 per person in Scotland.
We all know the impact that inflation has. We know that it hits the poorest people in our society hardest, which is why the Government, along with the Bank of England, were willing to see the pain of higher interest rates applied. Inflation does not help anyone. What I wanted to know, which I did not get from the hon. Lady or from her Front Benchers—surprise, surprise—was what they thought was the external responsibility for that inflation. We do not have an answer from Labour, and therefore we have an Opposition who have no credibility on one of the most basic questions: what causes inflation? If they do not know the answer, they cannot possibly be trusted to be in charge of this country’s finances.
One of the other things that I welcomed today is that we are moving slowly—still a little too slowly, I would argue—towards a lower-tax economy. The Chancellor set out the reasons why a lower-tax economy is a good thing. It is not just an abstract economic argument; it fits with Conservative ideas of individual responsibility, reducing the size of government, giving individuals greater choice, and providing incentives for those who will generate the wealth on which our future public services will depend. By emphasising the importance of creating prosperity, rather than the sterile debate about whether we should spend less or tax more, we are getting back into the right territory for a Conservative Government.
I was especially pleased to hear the measures for small businesses. My hon. Friend the Member for Sevenoaks (Laura Trott) recently had to endure my previous speech on this subject recently, in which I pointed out that, unlike what you would believe if you listened to the Labour party, public sector and private sector jobs in our economy are not in balance. The public sector produces only about 17% of the jobs in our economy; it is the small businesses and the private sector that produce the jobs and prosperity on which our country depends. We have had too high a tax burden on small businesses as they have come out of the pandemic, so I welcome the measures today.
I still have trouble with this term “growth” that goes around. I do not believe that growth as measured by the standard definitions is appropriate for a UK economy so highly geared towards services compared with goods. I know that it is the accepted norm, but I think we need to find better ways of describing it.
I welcome some of the moves towards improving capital availability, because if our businesses face one real problem, it is the lack of capital available for growth in our economy compared, for example, with the United States. That is because our economy is still too heavily geared towards the banks, and not enough towards private equity. We need to look at the breadth and depth of the private equity or venture capital industry in the United States and find out how we can replicate that in the United Kingdom if we are to give even more help to our small businesses.
I very much welcome the incentives to work that the Chancellor announced. Again, getting people back into work is not just an economic exercise; it is what I would regard as a moral imperative. If the only value people know they have is what the state gives them to do nothing, how can they possibly know what value they could be to themselves, their families and their communities if they were allowed to realise their full potential? Getting 200,000 more people back into work is a socially progressive thing to do, and if we are able to get more disabled people back into the workplace, so much the better for them, not just for the economy. I welcome what the Government have announced, because the best way to tackle poverty is to get people into work, and it is not just financial poverty but poverty of aspiration and poverty of hope that we are addressing by making this important social change.
There were one or two other elements on which I would have liked to have had some more detail from the Chancellor. I hope my hon. Friend the Minister might be able to provide that in responding to the debate. One of the problems right across the economy, particularly for small businesses, as the Chancellor stated, is late payment. However, one of the most important culprits in late payment is local government. Local authorities are spending the taxes that we in this House have to raise, in addition to the taxes they raise themselves, and surely it is not acceptable to us that the taxes we raise are spent in a way that actually adds an extra burden to small businesses. It should be a requirement on local authorities that they pay all their bills to small businesses on time. I hope the Government will look at that, because I believe there would be widespread support across this House for measures that compelled local government to do so.
I very much welcome the additional £20 billion investment over the next decade. That will help to address the one problem that has bedevilled our economy more, I think, than any other factor: productivity falling behind that of our competitors. Improving the horizon for freeports by up to 10 years will give additional stability, and again I hope we can look at how we can have a deregulatory exercise in those areas. That could test exactly how much we would get were we to expand the concept of freeports. I hope we can look more at the experience of countries such as the United States, where freeports have greater freedoms than they have in the United Kingdom. The Government are moving in exactly the right direction, but let us move further and faster on that.
The Chancellor talked about other supply-side reforms to the economy, one of them being the speeding up of improvements to the grid so that we can take advantage of the investments that have been made, for example, in renewables. I do not expect a response to that in the wind-up today, but I introduced a private Member’s Bill exactly to ensure that individuals impacted by the speeding up of improvements to the grid would have access to an independent arbitration programme, and not have National Grid deciding whether they should get compensation and how much they should get. That was an unacceptable position. We have not yet seen the regulations that will produce that independent arbitration, and we need to see them quickly. If we are to see the roll-out of an improved grid, it will impact more people, and we have to see a fair, equitable and affordable system where individuals can seek redress if they feel they have been dealt with unfairly.
I will briefly mention the continuing whinging victimhood of the nationalists. When they were talking about the ridiculous position that they are put in by being part of the Union, they just forgot to mention—I am sure it was an omission—that the block grant has now risen to the highest level since devolution began, at £41 billion this year. For every £100 that the UK Government spend in England, the Scottish Government receive £126 per person in Scotland.
15:45:41
Drew Hendry
rose—
15:46:37
Dr Fox
The hon. Member gave his side of the case. I am just pointing to the fact that individuals in Scotland do extremely well out of their membership of the Union. If SNP Members want to see a crash, they know exactly which way to go about it, although I fear that the electors of Scotland at the general election will ensure that they do not get the opportunity to test their mad theories to destruction.
I was glad that we had a Conservative financial statement today that sets course for the spring Budget and the chance to set out genuine differences of ideology when we get to a general election. We believe that we should have a smaller state; we believe in lower taxes, public sector reform, and getting better value for money for the taxpayer. The Labour party will want to increase spending, increase borrowing and pass it on to the next generation. As with all things, the primal difference between socialists and Conservatives is that we believe in equality of opportunity; they believe in equality of outcome and equal mediocrity for all. What we want to see is the betterment of the United Kingdom for the sake of all its people.
I was glad that we had a Conservative financial statement today that sets course for the spring Budget and the chance to set out genuine differences of ideology when we get to a general election. We believe that we should have a smaller state; we believe in lower taxes, public sector reform, and getting better value for money for the taxpayer. The Labour party will want to increase spending, increase borrowing and pass it on to the next generation. As with all things, the primal difference between socialists and Conservatives is that we believe in equality of opportunity; they believe in equality of outcome and equal mediocrity for all. What we want to see is the betterment of the United Kingdom for the sake of all its people.
15:46:45
Sir Stephen Timms
East Ham
I congratulate the hon. Member for Sevenoaks (Laura Trott) on her appointment as Chief Secretary to the Treasury. I am pleased to see a former Pensions Minister in that role, and I want to make some points about the pensions measures announced in the autumn statement.
First, on benefit uprating, I wrote on behalf of the Work and Pensions Committee to the Chancellor a month ago asking for two things: first, for working-age benefits to be uprated in line with the normal formula, which is September’s rate of inflation; and secondly, for local housing allowance to be rebased to the 30th percentile. I am relieved that both those points were in the Chancellor’s statement. The Joseph Rowntree Foundation reported last month that 3.8 million people were experiencing destitution in the UK last year. A fortnight ago, the Trussell Trust reported that food bank demand is 16% higher this year than it was last year, with 1.5 million emergency food bank parcels given out in the six months from April to September.
How is it that our economy is failing to meet the basic needs of so many in our society? We need the economy to start functioning properly again in a way that it clearly is not and has not been for a number of years. Spurious justifications were proposed for uprating working-age benefits by a lower amount in the autumn statement. Had those been adopted, they would simply have made things even worse, so I welcome the fact that the Treasury resisted those calls. I congratulate the Secretary of State for Work and Pensions on achieving the outcome that we have heard this afternoon.
I also welcome the rebasing of local housing allowance. By next April, it will have been frozen for four years, when rents have risen sharply. The freeze was causing widespread homelessness among working families who were doing perfectly decent jobs, but could no longer afford the rent. That was then imposing enormous costs on local councils for temporary accommodation, so I am pleased the allowance has been rebased, but I want to call for annual rebasing of the local housing allowance. It should be at the 30th percentile each year. I hope we will be told that it will. I am also glad that the temptation to water down the pension triple lock has been resisted.
Last week, the Work and Pensions Committee published a report on the Government’s cost of living support payments in which we identified a number of gaps in payments made. I was relieved that the Chancellor said in answer to my question that the household support fund is being maintained. There is a strong case for making it a permanent feature of our system so that local authorities know that they will have funds each year for providing local welfare support. That has been important in the crisis over the last few years. I hope that we can make it longer term and that its rules do not keep changing as they have over the last few years, making it difficult for local authorities to make a good job of administering it. I am glad that it will be there next year and I hope that the rules for it will not change next year as well.
The consultation on proposed changes to the work capability assessment, which were mentioned by the Chancellor, has been rushed and is inadequate—only eight weeks to consider major changes. Those changes that he said will go ahead will make things difficult for a significant number of people. We are told in a document that I think has been published since the Chancellor sat down that the vast majority of those who have already been assessed as having limited capability for work-related activity will not have to go through another work capability assessment, because that assessment is to be abolished. That, of course, will be of some relief for many, but it remains unclear what will replace it in the long term and when the promised legislation will come forward.
I am glad that the Chancellor is progressing the aims he set out at the Mansion House to increase pension fund investment in the economy to increase returns to pensioners, as he said, as well as to improve outcomes for investors and unlock capital for our growth businesses. There is a good deal of benefit in that approach, but where is the pensions Bill? I am genuinely mystified by that. In July, when the Chief Secretary was the Pensions Minister, her Department promised a “permanent regulated regime” for pension superfunds
“as soon as the parliamentary time allows”.
Evidence to our Committee has been clear that in the absence of a permanent statutory framework, superfunds will continue to struggle, undermining the Chancellor’s aims. I think the Chancellor reiterated his commitment to a regulated regime for pension superfunds, but there is no sign of legislation. I wonder if anyone can tell us what is proposed.
The Select Committee called on the Pensions Regulator to make changes to the new scheme funding regime—the Chief Secretary will be familiar with this from her previous role—to enable open defined-benefit schemes, like the railways pension scheme, to continue to invest in the economy, as the Chancellor rightly wants to happen. The Department has told us that concerns about the wellbeing of open defined-benefit schemes will be addressed, but they have not been yet, and the new code, which is causing a lot of anxiety, is, as the Chief Secretary knows, due to be introduced in April. Any clarification of the intention there will be gratefully received. I look forward to hearing more about the role in consolidation among smaller defined-benefit pension schemes that the Chancellor mentioned in his statement, and the role he envisages for the outstandingly successful Pension Protection Fund in taking on that task.
The Chancellor has talked about a consultation on a “pot for life” approach to pension saving. There are certainly benefits to that approach, and he referred to them, but there are problems as well. He said that there will be a consultation, and I think that is appropriate. In particular, there is the challenge for employers of having to manage lots of different pension funds among their different employees. There will be a significant increase in employer costs of handling that, and I hope that will be properly explored in the consultation.
I welcome the changes announced in Monday’s written statement to improve the support for people out of work on health grounds and with disabilities, including better employment support, plans for a severe disability group and, as the Select Committee recommended, trying out matching ill health benefit claimants with an assessor with experience of their primary health condition. There were ideas for assessing fluctuating health conditions, which I hope will be helpful. I wholeheartedly welcome the expansion that the Chancellor mentioned of integrated placement and support, which was recommended in the Committee’s report on the Government’s plan for jobs. The evidence is clear that it is helpful for people with mild to moderate mental health conditions to get back into work. The increased access to talking therapies is welcome too.
The Chancellor has announced an expansion of the restart scheme. We do not know how good that is because, until now, the Department has refused to published the outcome data for restart. I am glad that, in response to the Select Committee, it has said that it will start publishing that data, so we will see whether the scheme is doing a good job. The Committee took evidence this morning on the UK shared prosperity fund, which targets inactivity. One of the problems with the scheme is that the allocations were made in the middle of the year in which the money was supposed to be spent, so it is not surprising that people have not been able to set up the programmes that the funding supports. I hope that the Government will get their act together and ensure that the allocations are announced in good time for local authorities to award providers contracts to deliver the help that is needed.
The promised improvements for employment support have been matched by announcements of harsher sanctions. It is clear that sanctions are already high for people claiming universal credit and the other working-age benefits. There is no evidence at all that what is proposed will make people more likely to move into work. Particularly, where people are out of work because of a mental health problem, there is growing evidence that increasing sanctions makes matters worse. There has been a large response to the Government’s announcement, particularly for people out of work on mental health grounds, that the proposed increase in sanctions will make people less likely to get into work.
Yesterday, I received a letter with 70 signatures from single parent groups, children’s charities, domestic abuse charities and others, asking that the Select Committee look at the newly increased work obligations imposed on carers of young children. At the moment, carers of young children expect to work 16 hours a week—that is to be nearly doubled to 30 hours a week. The letter challenges those proposals for reasonableness and feasibility. If someone is looking after young children, is it appropriate to demand such large working weeks—far greater than the requirement until now?
After the misery of the past few years, we must all hope that the plan set out by my right hon. Friend the Member for Leeds West (Rachel Reeves) in answer to the Chancellor’s statement is put in place next year, finally, to reignite much needed growth in the UK economy.
First, on benefit uprating, I wrote on behalf of the Work and Pensions Committee to the Chancellor a month ago asking for two things: first, for working-age benefits to be uprated in line with the normal formula, which is September’s rate of inflation; and secondly, for local housing allowance to be rebased to the 30th percentile. I am relieved that both those points were in the Chancellor’s statement. The Joseph Rowntree Foundation reported last month that 3.8 million people were experiencing destitution in the UK last year. A fortnight ago, the Trussell Trust reported that food bank demand is 16% higher this year than it was last year, with 1.5 million emergency food bank parcels given out in the six months from April to September.
How is it that our economy is failing to meet the basic needs of so many in our society? We need the economy to start functioning properly again in a way that it clearly is not and has not been for a number of years. Spurious justifications were proposed for uprating working-age benefits by a lower amount in the autumn statement. Had those been adopted, they would simply have made things even worse, so I welcome the fact that the Treasury resisted those calls. I congratulate the Secretary of State for Work and Pensions on achieving the outcome that we have heard this afternoon.
I also welcome the rebasing of local housing allowance. By next April, it will have been frozen for four years, when rents have risen sharply. The freeze was causing widespread homelessness among working families who were doing perfectly decent jobs, but could no longer afford the rent. That was then imposing enormous costs on local councils for temporary accommodation, so I am pleased the allowance has been rebased, but I want to call for annual rebasing of the local housing allowance. It should be at the 30th percentile each year. I hope we will be told that it will. I am also glad that the temptation to water down the pension triple lock has been resisted.
Last week, the Work and Pensions Committee published a report on the Government’s cost of living support payments in which we identified a number of gaps in payments made. I was relieved that the Chancellor said in answer to my question that the household support fund is being maintained. There is a strong case for making it a permanent feature of our system so that local authorities know that they will have funds each year for providing local welfare support. That has been important in the crisis over the last few years. I hope that we can make it longer term and that its rules do not keep changing as they have over the last few years, making it difficult for local authorities to make a good job of administering it. I am glad that it will be there next year and I hope that the rules for it will not change next year as well.
The consultation on proposed changes to the work capability assessment, which were mentioned by the Chancellor, has been rushed and is inadequate—only eight weeks to consider major changes. Those changes that he said will go ahead will make things difficult for a significant number of people. We are told in a document that I think has been published since the Chancellor sat down that the vast majority of those who have already been assessed as having limited capability for work-related activity will not have to go through another work capability assessment, because that assessment is to be abolished. That, of course, will be of some relief for many, but it remains unclear what will replace it in the long term and when the promised legislation will come forward.
I am glad that the Chancellor is progressing the aims he set out at the Mansion House to increase pension fund investment in the economy to increase returns to pensioners, as he said, as well as to improve outcomes for investors and unlock capital for our growth businesses. There is a good deal of benefit in that approach, but where is the pensions Bill? I am genuinely mystified by that. In July, when the Chief Secretary was the Pensions Minister, her Department promised a “permanent regulated regime” for pension superfunds
“as soon as the parliamentary time allows”.
Evidence to our Committee has been clear that in the absence of a permanent statutory framework, superfunds will continue to struggle, undermining the Chancellor’s aims. I think the Chancellor reiterated his commitment to a regulated regime for pension superfunds, but there is no sign of legislation. I wonder if anyone can tell us what is proposed.
The Select Committee called on the Pensions Regulator to make changes to the new scheme funding regime—the Chief Secretary will be familiar with this from her previous role—to enable open defined-benefit schemes, like the railways pension scheme, to continue to invest in the economy, as the Chancellor rightly wants to happen. The Department has told us that concerns about the wellbeing of open defined-benefit schemes will be addressed, but they have not been yet, and the new code, which is causing a lot of anxiety, is, as the Chief Secretary knows, due to be introduced in April. Any clarification of the intention there will be gratefully received. I look forward to hearing more about the role in consolidation among smaller defined-benefit pension schemes that the Chancellor mentioned in his statement, and the role he envisages for the outstandingly successful Pension Protection Fund in taking on that task.
The Chancellor has talked about a consultation on a “pot for life” approach to pension saving. There are certainly benefits to that approach, and he referred to them, but there are problems as well. He said that there will be a consultation, and I think that is appropriate. In particular, there is the challenge for employers of having to manage lots of different pension funds among their different employees. There will be a significant increase in employer costs of handling that, and I hope that will be properly explored in the consultation.
I welcome the changes announced in Monday’s written statement to improve the support for people out of work on health grounds and with disabilities, including better employment support, plans for a severe disability group and, as the Select Committee recommended, trying out matching ill health benefit claimants with an assessor with experience of their primary health condition. There were ideas for assessing fluctuating health conditions, which I hope will be helpful. I wholeheartedly welcome the expansion that the Chancellor mentioned of integrated placement and support, which was recommended in the Committee’s report on the Government’s plan for jobs. The evidence is clear that it is helpful for people with mild to moderate mental health conditions to get back into work. The increased access to talking therapies is welcome too.
The Chancellor has announced an expansion of the restart scheme. We do not know how good that is because, until now, the Department has refused to published the outcome data for restart. I am glad that, in response to the Select Committee, it has said that it will start publishing that data, so we will see whether the scheme is doing a good job. The Committee took evidence this morning on the UK shared prosperity fund, which targets inactivity. One of the problems with the scheme is that the allocations were made in the middle of the year in which the money was supposed to be spent, so it is not surprising that people have not been able to set up the programmes that the funding supports. I hope that the Government will get their act together and ensure that the allocations are announced in good time for local authorities to award providers contracts to deliver the help that is needed.
The promised improvements for employment support have been matched by announcements of harsher sanctions. It is clear that sanctions are already high for people claiming universal credit and the other working-age benefits. There is no evidence at all that what is proposed will make people more likely to move into work. Particularly, where people are out of work because of a mental health problem, there is growing evidence that increasing sanctions makes matters worse. There has been a large response to the Government’s announcement, particularly for people out of work on mental health grounds, that the proposed increase in sanctions will make people less likely to get into work.
Yesterday, I received a letter with 70 signatures from single parent groups, children’s charities, domestic abuse charities and others, asking that the Select Committee look at the newly increased work obligations imposed on carers of young children. At the moment, carers of young children expect to work 16 hours a week—that is to be nearly doubled to 30 hours a week. The letter challenges those proposals for reasonableness and feasibility. If someone is looking after young children, is it appropriate to demand such large working weeks—far greater than the requirement until now?
After the misery of the past few years, we must all hope that the plan set out by my right hon. Friend the Member for Leeds West (Rachel Reeves) in answer to the Chancellor’s statement is put in place next year, finally, to reignite much needed growth in the UK economy.
15:59:20
Dr Ben Spencer
Runnymede and Weybridge
It is always a pleasure to follow the right hon. Member for East Ham (Sir Stephen Timms). I had the pleasure of serving on the Select Committee he chairs and I listened very carefully to the points he made. Like him, I intend to focus on the elements supporting people to work and back into work. Before I do so, let me say how much I welcome today’s statement. The measures will have a huge impact on people across the nation and, of course, in my constituency. To draw out one thing which for me is a huge headline, making full expensing permanent is a real game changer for businesses, giving them certainty in investment.
What I see as the social contract is our striving for equality of opportunity, knocking down the barriers to people’s getting on in life and in employment, while also providing support so that if things do not work out for people—they become ill—there is a safety net to catch them and help them through. That is really important. One common reason people drop out of employment is illness and disability.
Following becoming unwell, one of the most important outcomes in someone’s treatment pathway is getting them back into work. Why is that? Because work gives agency. Work provides opportunity. Work is hope. All of us need stable employment—a statement that colleagues will perhaps be mindful of, a year from a general election. Work gives people a reason to get up in the morning. It provides a structure to the day. It provides opportunity and the aspiration to invest in one’s self and to invest in society, and to continue as a citizen in our communities. Work is a core good. It is absolutely right that we do everything we can to support people back into work, to support people into work for the first time, and to help people who are struggling in work to ensure that they stay in employment. Several measures we have heard today are absolutely critical in that offering to people from the state.
The first measure, mentioned a moment ago by the right hon. Member for East Ham, is individual placement support. This is an incredibly good package. There is now a huge evidence base behind it supporting people into work, but, critically, retaining employment, which often is the real challenge. It is about not just getting a job but being able to sustain employment and ensuring it works out. I have been calling for it for years. Years ago, before I was an MP, I learned about the benefits of IPS and what an important package it is to support people in employment. In my constituency, we have a branch of Richmond Fellowship. The team, based in Chertsey, do fantastic work. They have spoken to me about the importance of IPS and what it will deliver to help people back into work and to continue in work.
The second measure is the expansion of broad support packages. I am particularly interested in the reform of the fit note system to try to get better pathways between health and social care, integrated care systems and the Department for Work and Pensions. We still have very siloed institutions and anything that will help them all work together, because it is a full package that works holistically, will lead to improvement.
The social contract I referred to is also about fairness. It remains the case that there are people—a small minority—who can work but decide not to. All things being equal, they can get into work and sustain a job but choose not to. It is not fair to ask our taxpayers to pay taxes, which they cannot refuse to pay, to subsidise someone’s decision to exit the employment market. What is fair is for us to say, “Hey—we will do everything we can to support you into work. We will provide packages to help you when illness happens, either because you cannot work because the illness is so severe, or”—and this is the primary focus—“to make sure that you can get back into work and you can get better, and that is part of your recovery plan for the future. But if you do not want to be part of that and you can be, it is not fair to ask other people to subsidise your lifestyle choice.”
I support, 100%, reforms that are fair not only to people who are receiving benefits and who are living with complex illness, but to our society as a whole.
What I see as the social contract is our striving for equality of opportunity, knocking down the barriers to people’s getting on in life and in employment, while also providing support so that if things do not work out for people—they become ill—there is a safety net to catch them and help them through. That is really important. One common reason people drop out of employment is illness and disability.
Following becoming unwell, one of the most important outcomes in someone’s treatment pathway is getting them back into work. Why is that? Because work gives agency. Work provides opportunity. Work is hope. All of us need stable employment—a statement that colleagues will perhaps be mindful of, a year from a general election. Work gives people a reason to get up in the morning. It provides a structure to the day. It provides opportunity and the aspiration to invest in one’s self and to invest in society, and to continue as a citizen in our communities. Work is a core good. It is absolutely right that we do everything we can to support people back into work, to support people into work for the first time, and to help people who are struggling in work to ensure that they stay in employment. Several measures we have heard today are absolutely critical in that offering to people from the state.
The first measure, mentioned a moment ago by the right hon. Member for East Ham, is individual placement support. This is an incredibly good package. There is now a huge evidence base behind it supporting people into work, but, critically, retaining employment, which often is the real challenge. It is about not just getting a job but being able to sustain employment and ensuring it works out. I have been calling for it for years. Years ago, before I was an MP, I learned about the benefits of IPS and what an important package it is to support people in employment. In my constituency, we have a branch of Richmond Fellowship. The team, based in Chertsey, do fantastic work. They have spoken to me about the importance of IPS and what it will deliver to help people back into work and to continue in work.
The second measure is the expansion of broad support packages. I am particularly interested in the reform of the fit note system to try to get better pathways between health and social care, integrated care systems and the Department for Work and Pensions. We still have very siloed institutions and anything that will help them all work together, because it is a full package that works holistically, will lead to improvement.
The social contract I referred to is also about fairness. It remains the case that there are people—a small minority—who can work but decide not to. All things being equal, they can get into work and sustain a job but choose not to. It is not fair to ask our taxpayers to pay taxes, which they cannot refuse to pay, to subsidise someone’s decision to exit the employment market. What is fair is for us to say, “Hey—we will do everything we can to support you into work. We will provide packages to help you when illness happens, either because you cannot work because the illness is so severe, or”—and this is the primary focus—“to make sure that you can get back into work and you can get better, and that is part of your recovery plan for the future. But if you do not want to be part of that and you can be, it is not fair to ask other people to subsidise your lifestyle choice.”
I support, 100%, reforms that are fair not only to people who are receiving benefits and who are living with complex illness, but to our society as a whole.
16:05:24
Dame Meg Hillier
Hackney South and Shoreditch
Before launching into my speech, I will pick up some comments made by the right hon. Member for North Somerset (Dr Fox). He said that his Government were in favour of the measures laid out today but that the official Opposition, represented by my right hon. Friend the Member for Leeds West (Rachel Reeves), were in favour of public spending. I think it worth pointing out, as I have the privilege of chairing the Public Accounts Committee, that this Government have been putting off issues repeatedly until they reach crisis point. It is all very well for them to say that they do not want to spend money on the public sector, but they are actually costing it more. For instance, our Committee recently produced a report on the school building programme which revealed that 700,000 pupils were in inadequate premises; and although a former Prime Minister announced a programme for the building of 40 hospitals, there are still only 32, and the building of those hospitals is expected to “bunch” by the late 2020s or thereabouts.
Matt Rodda
Reading East
My hon. Friend is making an excellent speech, and has just made an important point. My local hospital, the Royal Berkshire Hospital in Reading, is one of those that were promised something but have not yet received anything. This is a problem for many communities around the country
16:06:57
Dame Meg Hillier
It is a real concern. Those 32 hospitals are just the tip of the iceberg of what is needed, and nothing is in train yet, so if it bunches into the late 2020s and then into the 2030s, that could leave some—the seven affected by reinforced autoclaved aerated concrete—beyond their useful life, and it will mean a squeeze on construction.
For schools and hospitals alone this is a huge challenge, but it is also worth mentioning an animal health centre in Weybridge, in the constituency of the hon. Member for Runnymede and Weybridge (Dr Spencer), which has suffered from under-investment for a long time. If we had two zoonotic diseases in this country, we could not currently cope with that, because the centre is greatly in need of public sector investment.
These are things that the Government cannot dodge, because it is not possible to bring in other resources. It is easy to make jibes, but in reality there is a big challenge. We have, of course, seen councils squeezed until the pips squeak, although they are vital to the delivery of services that will not be delivered by anyone else. There is no private sector alternative, even for those whose ideology leads them in that direction.
Overall, there was a great deal of smoke and mirrors in the statement. I have had a look at the Green Book, although I cannot claim to have gone through every pledge in enormous detail because there has not been time since the Chancellor sat down, but we have already seen pledges in earlier Budgets and autumn statements unravel. One pet idea of a former Chancellor, the lifetime ISA, was not mentioned today; I certainly could not see anything in the Green Book about it. Those who have a lifetime ISA can invest in a property that is worth up to £450,000. In my constituency, it is impossible to find any new-build property for £450,000. The level has not kept up with prices, and as far as I can see there is to be no uprating. This means that many young people who hoped that this would help them to get a foot on the housing ladder have no hope. If any of the Treasury Ministers can say anything about that, my constituents will be glad to hear it.
I have just given an example of a dud financial product, delivered and then forgotten about. The Chancellor also mentioned childcare. Notwithstanding the pledge to provide free childcare for parents of children aged one and two, not enough places are available, because the money has not gone into delivering those places. Childcare facilities will not be able to provide childcare at less than the cost of the hourly rate of the people providing it. This is simply a pledge without any back-up, which is of real concern.
I am pleased to see that the local housing allowance has received its long-overdue increase, but I am not sure whether it will make any difference in many parts of the country where there is still a shortage of housing, apart from very expensive private rented housing. I will be touching on housing costs in Hackney.
Local government is struggling and failing, and the much-vaunted levelling up has been opaque. We cannot see exactly where the money has been spent and we have not really seen results. There is a lot of flim-flam and promise but the money is spread very badly, as reports this week have highlighted. Local government is one area that is being squeezed considerably, and now there is this idea that if a big planning application is not dealt with in a given timeframe, the council will have to refund the planning fees. Where are all the planners who are supposed to do this work, given the enormous shortage of that skill in local government?
Also, the fees do not currently even cover the costs of a planning application, as many developers tie planning departments up in knots as they argue for more storeys or fewer affordable housing units, and they can go on doing that for a year. It is not always the fault of the planners when there are delays in planning applications, but that is an easy statement to make. My party wants to ensure that the planning system works so that we can get those new homes built and get all the necessary capital infrastructure moving. There will be a proper plan behind the pledges of my party when we get to our manifesto.
On skills, we all want to see a skilled-up economy, but again we are looking at a failure over 13 years, after all the promises. The Green Book tells me that there will £50 million for a two-year pilot to stimulate training in growth sectors and address barriers to entry. I think we have heard this one before. It is great to see a pilot, and great to see investment in it, but it is always too late. I was arguing over a decade ago that we needed skills in the green growth industries. An industrial strategy that included that would have boosted the economy and got us ahead of the game internationally on green issues. We need construction industry skills, including in the skilled trades. That was predictable when we went through the Brexit vote in 2016, yet here we are in 2023 and we still have those challenges.
There are huge skills issues in civil and nuclear defence, as my Committee, the Public Accounts Committee, has repeatedly highlighted. We cannot create highly experienced people in a decade, but we could have gone a long way if work had been done earlier. We also lack skills in fire safety. I should declare an interest in that I live in a block that had cladding. We need fire safety engineers to get through the process, and there is a shortage of them. It only takes three years to train for that role, and if we had started doing that after Grenfell, we would be much better placed now.
I will be generous and say that I welcome some things in the autumn statement. The piloting of additional jobcentre support for universal credit claimants at seven weeks in 90 jobcentres is a good thing. As we repeatedly say on the Committee, it is good to pilot initiatives—and 90 is quite a big pilot—so that we can learn and make sure that they work properly and become embedded. Seven weeks—nearly two months—is a long time to be without work, and if people can get that extra bit of intense support early on to keep them off long-term unemployment, that will be a good thing.
But I am massively concerned about ending benefits after 18 months for people who say that they will not go to work. People have many issues that are health-related but that do not qualify them for the personal independence payment. I pay tribute to the jobcentre coaches in the jobcentre in Hackney, and particularly those who work with the most vulnerable and disabled people. They provide amazing support to people, but we need a lot of those really good people to deliver this, and they will all need to be trained and developed. All previous work programmes show that health is one of the big final barriers to getting people into work, and that there is a residual group of people who, for various health reasons, cannot easily access work. The DWP is often called the Department of wonderful people, but however great its staff might be, they cannot always cross that barrier to deal with someone’s health problem, because that is a whole different issue for that individual in relation to their medical support, if they have it. The Public Accounts Committee has repeated endlessly that sanctions do not work and that they just cause real problems for people. In Hackney, we have just over 16,000 people claiming universal credit and over a third of them are in employment, so these are not all people who are not working.
But there are many other barriers, including childcare and travel costs, as well as significant logistical barriers matched to particular jobs. I vividly remember a gentleman coming to my surgery who was a kitchen porter. He wanted to improve his English, as it was not his first language, and he was struggling to get a job. He went to the jobcentre and they were sending him to zone 6. For people outside London, my constituency is in zones 1 and 2, and zone 6 is quite a distance away and a lot more expensive to travel to. The time and cost of travel for someone on a kitchen porter’s wage, even with an uplift in the minimum wage, will still be challenging in London, combined with the fact that he had two small children and a wife who also had a low-paid job. It was logistically impossible for him to do what the jobcentre was asking of him. If we are going to have all these changes, there needs to be an awful lot of investment in jobcentres to get anywhere near making them work. What will happen at the end of 18 months if someone is not in work? Will they be left destitute? There are lots of questions there.
I am interested in the national insurance contributions for self-employed people. The Public Accounts Committee has looked at serious challenges with pensions and pension records in the DWP. I will not go into too much detail now—for those who are interested, our work is all on our website—but there have been issues with inaccurate record keeping and the databases and systems in the DWP not talking to each other. The problem first affected a group of women—widows over 80 and others—who did not get their full state pension, but an issue was uncovered more recently that affects mostly women who had caring responsibilities and should have had credits but, because of the links between HMRC and DWP not working properly, those were not properly recorded and reflected.
Whatever the policy, we need to make sure that it works technically. It says in the Green Book that credits will be applied, but we need to make sure that the technical system is in place, because it would be a tragedy if people who are self-employed found later down the line that they could not claim the state pension because that circle had not been squared.
The 1%-a-year increase in funding to Whitehall is, of course, a repeat of what was said earlier in the year, but it is a real-terms cut, so every Department will have to trim what it is delivering.
There are so many other failing areas. We have talked about hospitals and schools, where we know that demand is really big. The Department for Education wanted to build 200 new schools a year. In the 2020 spending review, it was allocated £1.3 billion for just 50 new schools a year. Now, there are 100 schools with reinforced autoclaved aerated concrete that need to be in that programme—the Secretary of State identified that problem at the end of August, just days before term started—and they are knocking other schools down the list. Eventually, there will be 500; goodness knows how long that will take on the current timeframe. Public spending is not always a bad thing; in fact, delaying it can cost a lot more to the taxpayer and those trying to receive services in the meantime.
I welcome the money for debt management in HMRC. That is good, but we on the Public Accounts Committee will of course be watching closely how it works. If money is invested well in the DWP and HMRC, we can see real dividends for the taxpayer, and no one wants to see fraud and bad debt.
Despite the increase in local housing allowance, which is a help, the LHA rate still causes problems. In the private rented sector in Hackney, the average rent for a two-bed is just shy of £2,000 a month, and there are 30% fewer private rented properties available now than there were before the pandemic. Before today—I have not been able to establish whether today’s announcement will have a real impact in Hackney—not a single property was available to those on low incomes at LHA rates. If we are only going up to the 30th percentile, there will still be a real challenge in a borough where we have seen more homes for rent built at the luxury end of the market than at the lower end. Anyone lucky enough to be in a low-cost, relatively stable private sector home does not really have the option to move, so the supply is not being replenished.
That brings me to a really difficult issue for my constituents. One in two children lives in poverty, we are the 22nd poorest borough in the country and we have such a serious housing problem. I mention that every time I speak in the Chamber, and I make no apology for that. Not only do we have generation rent living in insecure properties, with rents spiralling out of control, but we have a huge shortage of social housing. In the year to 2022, only 671 social housing units became available, down from 1,200-odd in 2016-17.
That diminution is explained partly by the fact that, once someone has got social housing, they do not move out, because there is nowhere to go. That is leaving many of my constituents living in massively overcrowded conditions. Someone came to see me at my last surgery who has three children in a one-bedroom housing association flat, but the housing association has nowhere to put him, so he is bidding on the council list. If his case is typical, he will be waiting 12 years for a two-bedroom property. We have 3,759 children in temporary accommodation, which is enough to fill eight primary schools and is 1% of the population of my borough. We are having to close schools because children are leaving, as lots of families cannot afford to live in Hackney any longer. Those children are often housed outside the borough, because of the cost of housing in Hackney. So this is a really big concern.
In the year to 2023—in the last financial year—more than 4,000 residents approached the council seeking housing help, which is an increase of 18% on the figure for 2018-19. These figures are increasing exponentially every year, despite the best efforts of our excellently run Labour council. Under the new mayor, Caroline Woodley, and her predecessor, there has been a real desire and effort to build properly affordable social housing, including council housing. However, this is a drop in the ocean for the need. This autumn statement does nothing to help the people I am talking about. People are living in poverty and in overcrowded conditions. As my hon. Friend the Member for Ealing North (James Murray) says from the Front Bench, they are not better off than they were 13 years ago. They are considerably worse off and there is no hope—except, I hope, a general election, when my party will come in to try to sort out this mess.
For schools and hospitals alone this is a huge challenge, but it is also worth mentioning an animal health centre in Weybridge, in the constituency of the hon. Member for Runnymede and Weybridge (Dr Spencer), which has suffered from under-investment for a long time. If we had two zoonotic diseases in this country, we could not currently cope with that, because the centre is greatly in need of public sector investment.
These are things that the Government cannot dodge, because it is not possible to bring in other resources. It is easy to make jibes, but in reality there is a big challenge. We have, of course, seen councils squeezed until the pips squeak, although they are vital to the delivery of services that will not be delivered by anyone else. There is no private sector alternative, even for those whose ideology leads them in that direction.
Overall, there was a great deal of smoke and mirrors in the statement. I have had a look at the Green Book, although I cannot claim to have gone through every pledge in enormous detail because there has not been time since the Chancellor sat down, but we have already seen pledges in earlier Budgets and autumn statements unravel. One pet idea of a former Chancellor, the lifetime ISA, was not mentioned today; I certainly could not see anything in the Green Book about it. Those who have a lifetime ISA can invest in a property that is worth up to £450,000. In my constituency, it is impossible to find any new-build property for £450,000. The level has not kept up with prices, and as far as I can see there is to be no uprating. This means that many young people who hoped that this would help them to get a foot on the housing ladder have no hope. If any of the Treasury Ministers can say anything about that, my constituents will be glad to hear it.
I have just given an example of a dud financial product, delivered and then forgotten about. The Chancellor also mentioned childcare. Notwithstanding the pledge to provide free childcare for parents of children aged one and two, not enough places are available, because the money has not gone into delivering those places. Childcare facilities will not be able to provide childcare at less than the cost of the hourly rate of the people providing it. This is simply a pledge without any back-up, which is of real concern.
I am pleased to see that the local housing allowance has received its long-overdue increase, but I am not sure whether it will make any difference in many parts of the country where there is still a shortage of housing, apart from very expensive private rented housing. I will be touching on housing costs in Hackney.
Local government is struggling and failing, and the much-vaunted levelling up has been opaque. We cannot see exactly where the money has been spent and we have not really seen results. There is a lot of flim-flam and promise but the money is spread very badly, as reports this week have highlighted. Local government is one area that is being squeezed considerably, and now there is this idea that if a big planning application is not dealt with in a given timeframe, the council will have to refund the planning fees. Where are all the planners who are supposed to do this work, given the enormous shortage of that skill in local government?
Also, the fees do not currently even cover the costs of a planning application, as many developers tie planning departments up in knots as they argue for more storeys or fewer affordable housing units, and they can go on doing that for a year. It is not always the fault of the planners when there are delays in planning applications, but that is an easy statement to make. My party wants to ensure that the planning system works so that we can get those new homes built and get all the necessary capital infrastructure moving. There will be a proper plan behind the pledges of my party when we get to our manifesto.
On skills, we all want to see a skilled-up economy, but again we are looking at a failure over 13 years, after all the promises. The Green Book tells me that there will £50 million for a two-year pilot to stimulate training in growth sectors and address barriers to entry. I think we have heard this one before. It is great to see a pilot, and great to see investment in it, but it is always too late. I was arguing over a decade ago that we needed skills in the green growth industries. An industrial strategy that included that would have boosted the economy and got us ahead of the game internationally on green issues. We need construction industry skills, including in the skilled trades. That was predictable when we went through the Brexit vote in 2016, yet here we are in 2023 and we still have those challenges.
There are huge skills issues in civil and nuclear defence, as my Committee, the Public Accounts Committee, has repeatedly highlighted. We cannot create highly experienced people in a decade, but we could have gone a long way if work had been done earlier. We also lack skills in fire safety. I should declare an interest in that I live in a block that had cladding. We need fire safety engineers to get through the process, and there is a shortage of them. It only takes three years to train for that role, and if we had started doing that after Grenfell, we would be much better placed now.
I will be generous and say that I welcome some things in the autumn statement. The piloting of additional jobcentre support for universal credit claimants at seven weeks in 90 jobcentres is a good thing. As we repeatedly say on the Committee, it is good to pilot initiatives—and 90 is quite a big pilot—so that we can learn and make sure that they work properly and become embedded. Seven weeks—nearly two months—is a long time to be without work, and if people can get that extra bit of intense support early on to keep them off long-term unemployment, that will be a good thing.
But I am massively concerned about ending benefits after 18 months for people who say that they will not go to work. People have many issues that are health-related but that do not qualify them for the personal independence payment. I pay tribute to the jobcentre coaches in the jobcentre in Hackney, and particularly those who work with the most vulnerable and disabled people. They provide amazing support to people, but we need a lot of those really good people to deliver this, and they will all need to be trained and developed. All previous work programmes show that health is one of the big final barriers to getting people into work, and that there is a residual group of people who, for various health reasons, cannot easily access work. The DWP is often called the Department of wonderful people, but however great its staff might be, they cannot always cross that barrier to deal with someone’s health problem, because that is a whole different issue for that individual in relation to their medical support, if they have it. The Public Accounts Committee has repeated endlessly that sanctions do not work and that they just cause real problems for people. In Hackney, we have just over 16,000 people claiming universal credit and over a third of them are in employment, so these are not all people who are not working.
But there are many other barriers, including childcare and travel costs, as well as significant logistical barriers matched to particular jobs. I vividly remember a gentleman coming to my surgery who was a kitchen porter. He wanted to improve his English, as it was not his first language, and he was struggling to get a job. He went to the jobcentre and they were sending him to zone 6. For people outside London, my constituency is in zones 1 and 2, and zone 6 is quite a distance away and a lot more expensive to travel to. The time and cost of travel for someone on a kitchen porter’s wage, even with an uplift in the minimum wage, will still be challenging in London, combined with the fact that he had two small children and a wife who also had a low-paid job. It was logistically impossible for him to do what the jobcentre was asking of him. If we are going to have all these changes, there needs to be an awful lot of investment in jobcentres to get anywhere near making them work. What will happen at the end of 18 months if someone is not in work? Will they be left destitute? There are lots of questions there.
I am interested in the national insurance contributions for self-employed people. The Public Accounts Committee has looked at serious challenges with pensions and pension records in the DWP. I will not go into too much detail now—for those who are interested, our work is all on our website—but there have been issues with inaccurate record keeping and the databases and systems in the DWP not talking to each other. The problem first affected a group of women—widows over 80 and others—who did not get their full state pension, but an issue was uncovered more recently that affects mostly women who had caring responsibilities and should have had credits but, because of the links between HMRC and DWP not working properly, those were not properly recorded and reflected.
Whatever the policy, we need to make sure that it works technically. It says in the Green Book that credits will be applied, but we need to make sure that the technical system is in place, because it would be a tragedy if people who are self-employed found later down the line that they could not claim the state pension because that circle had not been squared.
The 1%-a-year increase in funding to Whitehall is, of course, a repeat of what was said earlier in the year, but it is a real-terms cut, so every Department will have to trim what it is delivering.
There are so many other failing areas. We have talked about hospitals and schools, where we know that demand is really big. The Department for Education wanted to build 200 new schools a year. In the 2020 spending review, it was allocated £1.3 billion for just 50 new schools a year. Now, there are 100 schools with reinforced autoclaved aerated concrete that need to be in that programme—the Secretary of State identified that problem at the end of August, just days before term started—and they are knocking other schools down the list. Eventually, there will be 500; goodness knows how long that will take on the current timeframe. Public spending is not always a bad thing; in fact, delaying it can cost a lot more to the taxpayer and those trying to receive services in the meantime.
I welcome the money for debt management in HMRC. That is good, but we on the Public Accounts Committee will of course be watching closely how it works. If money is invested well in the DWP and HMRC, we can see real dividends for the taxpayer, and no one wants to see fraud and bad debt.
Despite the increase in local housing allowance, which is a help, the LHA rate still causes problems. In the private rented sector in Hackney, the average rent for a two-bed is just shy of £2,000 a month, and there are 30% fewer private rented properties available now than there were before the pandemic. Before today—I have not been able to establish whether today’s announcement will have a real impact in Hackney—not a single property was available to those on low incomes at LHA rates. If we are only going up to the 30th percentile, there will still be a real challenge in a borough where we have seen more homes for rent built at the luxury end of the market than at the lower end. Anyone lucky enough to be in a low-cost, relatively stable private sector home does not really have the option to move, so the supply is not being replenished.
That brings me to a really difficult issue for my constituents. One in two children lives in poverty, we are the 22nd poorest borough in the country and we have such a serious housing problem. I mention that every time I speak in the Chamber, and I make no apology for that. Not only do we have generation rent living in insecure properties, with rents spiralling out of control, but we have a huge shortage of social housing. In the year to 2022, only 671 social housing units became available, down from 1,200-odd in 2016-17.
That diminution is explained partly by the fact that, once someone has got social housing, they do not move out, because there is nowhere to go. That is leaving many of my constituents living in massively overcrowded conditions. Someone came to see me at my last surgery who has three children in a one-bedroom housing association flat, but the housing association has nowhere to put him, so he is bidding on the council list. If his case is typical, he will be waiting 12 years for a two-bedroom property. We have 3,759 children in temporary accommodation, which is enough to fill eight primary schools and is 1% of the population of my borough. We are having to close schools because children are leaving, as lots of families cannot afford to live in Hackney any longer. Those children are often housed outside the borough, because of the cost of housing in Hackney. So this is a really big concern.
In the year to 2023—in the last financial year—more than 4,000 residents approached the council seeking housing help, which is an increase of 18% on the figure for 2018-19. These figures are increasing exponentially every year, despite the best efforts of our excellently run Labour council. Under the new mayor, Caroline Woodley, and her predecessor, there has been a real desire and effort to build properly affordable social housing, including council housing. However, this is a drop in the ocean for the need. This autumn statement does nothing to help the people I am talking about. People are living in poverty and in overcrowded conditions. As my hon. Friend the Member for Ealing North (James Murray) says from the Front Bench, they are not better off than they were 13 years ago. They are considerably worse off and there is no hope—except, I hope, a general election, when my party will come in to try to sort out this mess.
16:20:43
Priti Patel
Witham
I am pleased to follow the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). She has made some important points, some of which I will come on to shortly. I am grateful to my right hon. Friend the Chancellor of the Exchequer for his statement. As we go through the details of the announcements and the delights of the OBR forecast, there will be much discussion in the forthcoming debates. I always take the view that Budgets and fiscal events, some of which I have been part of in the past, need to address three crucial challenges: whether they support the economic freedom of our constituents; whether they empower businesses and enterprise to create economic growth, as it is the private sector, not the state, that grows the economy—I will come on to state spending shortly; and whether they manage the public finances in a sound and sustainable way.
I suspect that you, Mr Deputy Speaker, like me are old enough to remember the great Conservative Budgets from the 1980s delivered by Geoffrey Howe and Nigel Lawson—you do not need to agree with me on that right now. They set the benchmarks that any Chancellor, especially a Conservative one, should look to and follow to get the right balance of creating economic growth and sustaining the public finances in a suitable, sustainable and measured way. It should always be the mission of a Conservative Government to ensure that people can keep more of what they earn; it is right that the Chancellor used that statement a number of times and spoke about the fiscal measures he is introducing to ensure that that happens.
Of course, businesses and people spend their money far more effectively, efficiently and productively than the state, which is why low-tax economies are also naturally the fastest growing ones. A lower tax burden would mean more money in the pockets of our constituents to provide for themselves and their families. Having listened to speeches made by those on the Opposition Benches, it is fair to say that we would all agree that we want all our constituents to be well-off, financially and economically, for their families and their futures. A lower tax burden would also mean more money available to businesses to invest and expand. The Chancellor touched on some measures, and I shall do so shortly, on jobs and higher salaries. Naturally, this leads to more resources for economic growth. That is also why I fundamentally believe the Government should look to bring the levels of personal taxation down. The Chancellor mentioned that today, but I might suggest a few cheeky measures to say what more we can do on that, as more can be done.
Today’s autumn statement marks—these might actually be the words of the Chancellor—a major moment when the Government and the country change gear and focus on how to drive growth in the decade ahead with the a package of tax measures, while seeking to ensure that inflation continues to fall. That is absolutely right. There are different ways in which it can be achieved, and the Chancellor has outlined the ways in which he wants to make sure that it happens.
On the measures announced today, naturally I support cutting the main rate of national insurance contributions—the infamous NICs—from 12% to 10%. It was refreshing to not only address but go as far as abolish class 2 contributions for the self-employed. That will have implications and the devil is in the detail, as touched on by the hon. Member for Hackney South and Shoreditch, including issues of interoperability, such as how that will relate to and engage with the pensions system, technical measures and delivery. That is a fact of life. I do not want to be pointed, but HMRC and DWP use two different systems that are not always interoperable; I am a former DWP Minister and a former Treasury Minister, so I have seen that in action. I urge the Government to pay attention to the delivery of that measure, and I have no doubt that the Public Accounts Committee will be watching very closely as well.
On reducing the tax burden, my colleagues on the Treasury Bench will expect me to say that I maintain, fundamentally, that we can do more to freeze income tax levels. I know Treasury Ministers have heard me and indulged me on that subject before. Back in 2010, the measures around the tax-free threshold and increasing the higher rate threshold were a significant way to help families directly, in a sustainable way. I point to that example because it did not lead to a fall in inflation. Of course, the inflationary measures we see now—external measures, such as the war in Ukraine and energy prices—are different, but I will continue to lobby the Government relentlessly because I want to see a shift in tax-free and higher rate allowances.
That is important in the context set out by the OBR today, which states:
“Tax changes in this Autumn Statement reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast, rising from 10.2 per cent of GDP this year, to 11.3 per cent in 2028-29”.
Those increases are driven by, dare I say it, the threshold freezes in income tax rates and the nominal earnings growth that will come from that. The implications are self-evident: more of our constituents will pay more income tax, there is the infamous fiscal drag and more people will move into higher rate bands, so ultimately 400,000 more people will pay the additional rate.
I suspect that you, Mr Deputy Speaker, like me are old enough to remember the great Conservative Budgets from the 1980s delivered by Geoffrey Howe and Nigel Lawson—you do not need to agree with me on that right now. They set the benchmarks that any Chancellor, especially a Conservative one, should look to and follow to get the right balance of creating economic growth and sustaining the public finances in a suitable, sustainable and measured way. It should always be the mission of a Conservative Government to ensure that people can keep more of what they earn; it is right that the Chancellor used that statement a number of times and spoke about the fiscal measures he is introducing to ensure that that happens.
Of course, businesses and people spend their money far more effectively, efficiently and productively than the state, which is why low-tax economies are also naturally the fastest growing ones. A lower tax burden would mean more money in the pockets of our constituents to provide for themselves and their families. Having listened to speeches made by those on the Opposition Benches, it is fair to say that we would all agree that we want all our constituents to be well-off, financially and economically, for their families and their futures. A lower tax burden would also mean more money available to businesses to invest and expand. The Chancellor touched on some measures, and I shall do so shortly, on jobs and higher salaries. Naturally, this leads to more resources for economic growth. That is also why I fundamentally believe the Government should look to bring the levels of personal taxation down. The Chancellor mentioned that today, but I might suggest a few cheeky measures to say what more we can do on that, as more can be done.
Today’s autumn statement marks—these might actually be the words of the Chancellor—a major moment when the Government and the country change gear and focus on how to drive growth in the decade ahead with the a package of tax measures, while seeking to ensure that inflation continues to fall. That is absolutely right. There are different ways in which it can be achieved, and the Chancellor has outlined the ways in which he wants to make sure that it happens.
On the measures announced today, naturally I support cutting the main rate of national insurance contributions—the infamous NICs—from 12% to 10%. It was refreshing to not only address but go as far as abolish class 2 contributions for the self-employed. That will have implications and the devil is in the detail, as touched on by the hon. Member for Hackney South and Shoreditch, including issues of interoperability, such as how that will relate to and engage with the pensions system, technical measures and delivery. That is a fact of life. I do not want to be pointed, but HMRC and DWP use two different systems that are not always interoperable; I am a former DWP Minister and a former Treasury Minister, so I have seen that in action. I urge the Government to pay attention to the delivery of that measure, and I have no doubt that the Public Accounts Committee will be watching very closely as well.
On reducing the tax burden, my colleagues on the Treasury Bench will expect me to say that I maintain, fundamentally, that we can do more to freeze income tax levels. I know Treasury Ministers have heard me and indulged me on that subject before. Back in 2010, the measures around the tax-free threshold and increasing the higher rate threshold were a significant way to help families directly, in a sustainable way. I point to that example because it did not lead to a fall in inflation. Of course, the inflationary measures we see now—external measures, such as the war in Ukraine and energy prices—are different, but I will continue to lobby the Government relentlessly because I want to see a shift in tax-free and higher rate allowances.
That is important in the context set out by the OBR today, which states:
“Tax changes in this Autumn Statement reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast, rising from 10.2 per cent of GDP this year, to 11.3 per cent in 2028-29”.
Those increases are driven by, dare I say it, the threshold freezes in income tax rates and the nominal earnings growth that will come from that. The implications are self-evident: more of our constituents will pay more income tax, there is the infamous fiscal drag and more people will move into higher rate bands, so ultimately 400,000 more people will pay the additional rate.
Dame Meg Hillier
Does the right hon. Lady agree that will create a burden for those people who will then have to complete a tax return? In addition, there will be an impact on child benefit, so there is a double whammy once people hit the higher threshold, if they have children.
Priti Patel
The right hon. Lady is correct and makes an important point. I do not want to be boxing the ears of my hon. Friends on the Treasury Bench today, which is their day, but I sound like a broken record on this subject. I would go for complete streamlining and simplification of the tax system, even on NI, where I would like to see measures such as the merger of income tax and NI. I would love to see a simple system where we do not have the burdens of bureaucracy. Even when we spoke about full expensing in the Budget, the business and regulatory implications are pretty vast. The childcare measures are very good and encouraging, but from, a personal perspective, even more complexities are being introduced to the system and we, as Conservatives, could do much more to streamline that.
Ian Blackford
I encourage the right hon. Lady on what she said about the integration of tax and national insurance. Although such measures are not without their complications, they can be overcome, so perhaps there should be some work across the House to examine that issue. Let us make things simpler and more straightforward for all our taxpayers.
16:31:48
Priti Patel
We could have a separate debate on a single income tax and all sorts of other measures. I would like to see tax transparency as well. I am so old-fashioned that I think we should be able to follow every pound of Government expenditure, and that there should be far greater transparency for the public in that regard. I am sure that the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) would support that, too, from her perspective as Chair of the Public Accounts Committee. I do not say these things lightly. In this modern day, when we have much greater digitalisation and access to information, our constituents naturally also want to see more transparency in that area, especially while the Government are investing in artificial intelligence and all sorts of other things, including bots. His Majesty’s Revenue and Customs could be run by bots before we know it, although on that basis alone we might get more efficient telephone conversations and call handling. None the less, more needs to be done, and we should welcome that.
I will move on to a couple of other measures, but just while we are on the subject of taxation and revenues, I wish to make a point about the savings that can be made from Government efficiencies. This matter has not been addressed today, but the Chancellor did touch on it. There is much more work that needs to be done in this area, although I appreciate that this is an autumn statement and not a full-fat Budget. For the spring in particular, this is one area where we can do much more in boosting state productivity. The Chancellor always mentions the P word—productivity—but in 2021-22, just as an illustration, the Government delivered £4.4 billion-worth of efficiency savings. In monetary terms, that was significant, but it represented just 0.4% of public expenditure —a drop in the ocean. For the benefit of our constituents, let me say that that is £1 for every £250 spent. Again, much more needs to be done in that area.
Let me continue on the theme of hard-pressed taxpayers. This was not mentioned today, but at previous fiscal events I have voiced support for the fuel price escalator. I believe that we should do much more to back our motorists and make sure that the 5p cut in fuel duty, which was introduced in 2022, is maintained. There is some important signalling that we can do as a Government to ensure that the UK’s 37 million drivers are not seen as a cash cow. We must back them and continue to remain on their side.
That brings me to business taxes. Our economy relies on private enterprise. I am an Essex MP, and Essex is the county of entrepreneurs. Some 80% of my constituents work for small and medium-sized enterprises, which is 20% higher than the national average. We are proud of those SMEs, but we really need them to keep their head above water. That is why we must always support businesses —small businesses as well as big businesses. It is the small businesses that are the engines of economic growth.
I am proud to represent a county where we have businesses that are hungry to innovate and invest, and I want the Government to free them from the shackles that hold them back. A lot of that is regulation and red tape; and there is far too much of that. I have previously called for a freeze of the small business rate multiplier, and I am pleased that the Chancellor has agreed. That in its own right will have some benefits. I know that it has been reinstated for another year, along with other retail and hospitality measures. Retail and hospitality are burgeoning and important sectors that can help to boost our struggling high streets.
I welcome the continuation of business support with full expensing, which I have touched on, but there should be greater clarity over how that will operate, what it will mean for businesses, and the burdens that it will place on the sector. Will firms have to employ an army of accountants who will eat into their business expenses? Reducing overall taxes on businesses is, of course, welcome. It will help firms to invest, to create jobs and to boost supply, which is incredibly important.
When I call on businesses to invest, that also means that we must do much more to get them to invest in skills. Skills and productivity are the biggest challenges that we face. I would, at some stage, like to press those on the Treasury Front Bench on why we are still not committing ourselves to a labour market strategy around some of the key sectors where we know we have shortages in skills growth. When it comes to specialist sectors, we want to be the hub for technology, innovation and science, so we need to consider what more we can do. We also need to consider the work that is required around the green economy. As a former Home Secretary, I can say that we rely far too heavily on migration to fulfil our labour market needs. For the past five years, even when in Government, I have consistently and continuously called for that to be addressed. It sits with the Treasury, not just the DWP, and I urge the Chancellor to make good on those calls. I have discussed it with him several times.
I want to speak about the importance of the energy sector. The Chancellor touched on connectivity to the national grid in today’s autumn statement. I am an Essex MP. Off the coast of the east of England, we have enormous potential when it comes to increasing our energy security, because we have been successful in producing renewable energy offshore. We are effectively a hub in the east of England, where we have had investment. Efforts to develop the sector and increase renewable energy are welcome, and we are proud of the work that has taken place, but we are now suffering from the lack of strategic planning.
Windfarms have received consent and been developed without serious thought being given to interoperability and connection to the network and to the grid. That has resulted in one of the most deeply unpopular policies from central Government, which is now affecting the whole of the east of England: the National Grid’s plan to cover the east of England countryside with over 100 miles of pylons and overhead power lines. Our constituents do not support that. I am fully aware of what the Winser review says, and of the prospect of support—financial bribes, as my constituents call it—for local residences, but we need to ensure that there is proper engagement.
We are putting forward alternatives to pylons, and offshore options that we want to work with the Government to develop. That would support our renewables sector, bringing further skills to our region and our country. Ultimately, we have to address the issue of local constituents feeling frustrated. They resent that this is being done to them, rather than it being their suggestions and some of the local investment being taken into consideration. There is a sense that decisions are being made in an opaque way and that their views are being ignored. I would welcome better dialogue and consultation from the Government on this.
The Chancellor touched on the fact that devolution deals are under way. This is a work in progress for us in Essex. I would very much like to engage with the Treasury and the Government on what a greater devolution deal would mean for our fantastic county, particularly when it comes to investment in skills and infrastructure. Devolution deals can promise the earth, but central Government have to deliver the goods, and it has to translate into a return on the investment locally. In Essex, we are net contributors to the Treasury, so we can apply the multiplier effect and work out where we are getting the benefits, and where we are not getting our return on the investment. We should have further discussions on that.
I welcome the direction of travel in the autumn statement. The Chancellor has opened the door to sound economic principles of lower taxes. I welcome the support for business, which is fundamental. I urge everyone on the Government Front Bench to continue to look at ways to lower taxes, including personal taxes. Times have been tough for the British public. We want to ensure that all our constituents are able to keep more of the money that they earn, and ultimately have a secure economic future.
I will move on to a couple of other measures, but just while we are on the subject of taxation and revenues, I wish to make a point about the savings that can be made from Government efficiencies. This matter has not been addressed today, but the Chancellor did touch on it. There is much more work that needs to be done in this area, although I appreciate that this is an autumn statement and not a full-fat Budget. For the spring in particular, this is one area where we can do much more in boosting state productivity. The Chancellor always mentions the P word—productivity—but in 2021-22, just as an illustration, the Government delivered £4.4 billion-worth of efficiency savings. In monetary terms, that was significant, but it represented just 0.4% of public expenditure —a drop in the ocean. For the benefit of our constituents, let me say that that is £1 for every £250 spent. Again, much more needs to be done in that area.
Let me continue on the theme of hard-pressed taxpayers. This was not mentioned today, but at previous fiscal events I have voiced support for the fuel price escalator. I believe that we should do much more to back our motorists and make sure that the 5p cut in fuel duty, which was introduced in 2022, is maintained. There is some important signalling that we can do as a Government to ensure that the UK’s 37 million drivers are not seen as a cash cow. We must back them and continue to remain on their side.
That brings me to business taxes. Our economy relies on private enterprise. I am an Essex MP, and Essex is the county of entrepreneurs. Some 80% of my constituents work for small and medium-sized enterprises, which is 20% higher than the national average. We are proud of those SMEs, but we really need them to keep their head above water. That is why we must always support businesses —small businesses as well as big businesses. It is the small businesses that are the engines of economic growth.
I am proud to represent a county where we have businesses that are hungry to innovate and invest, and I want the Government to free them from the shackles that hold them back. A lot of that is regulation and red tape; and there is far too much of that. I have previously called for a freeze of the small business rate multiplier, and I am pleased that the Chancellor has agreed. That in its own right will have some benefits. I know that it has been reinstated for another year, along with other retail and hospitality measures. Retail and hospitality are burgeoning and important sectors that can help to boost our struggling high streets.
I welcome the continuation of business support with full expensing, which I have touched on, but there should be greater clarity over how that will operate, what it will mean for businesses, and the burdens that it will place on the sector. Will firms have to employ an army of accountants who will eat into their business expenses? Reducing overall taxes on businesses is, of course, welcome. It will help firms to invest, to create jobs and to boost supply, which is incredibly important.
When I call on businesses to invest, that also means that we must do much more to get them to invest in skills. Skills and productivity are the biggest challenges that we face. I would, at some stage, like to press those on the Treasury Front Bench on why we are still not committing ourselves to a labour market strategy around some of the key sectors where we know we have shortages in skills growth. When it comes to specialist sectors, we want to be the hub for technology, innovation and science, so we need to consider what more we can do. We also need to consider the work that is required around the green economy. As a former Home Secretary, I can say that we rely far too heavily on migration to fulfil our labour market needs. For the past five years, even when in Government, I have consistently and continuously called for that to be addressed. It sits with the Treasury, not just the DWP, and I urge the Chancellor to make good on those calls. I have discussed it with him several times.
I want to speak about the importance of the energy sector. The Chancellor touched on connectivity to the national grid in today’s autumn statement. I am an Essex MP. Off the coast of the east of England, we have enormous potential when it comes to increasing our energy security, because we have been successful in producing renewable energy offshore. We are effectively a hub in the east of England, where we have had investment. Efforts to develop the sector and increase renewable energy are welcome, and we are proud of the work that has taken place, but we are now suffering from the lack of strategic planning.
Windfarms have received consent and been developed without serious thought being given to interoperability and connection to the network and to the grid. That has resulted in one of the most deeply unpopular policies from central Government, which is now affecting the whole of the east of England: the National Grid’s plan to cover the east of England countryside with over 100 miles of pylons and overhead power lines. Our constituents do not support that. I am fully aware of what the Winser review says, and of the prospect of support—financial bribes, as my constituents call it—for local residences, but we need to ensure that there is proper engagement.
We are putting forward alternatives to pylons, and offshore options that we want to work with the Government to develop. That would support our renewables sector, bringing further skills to our region and our country. Ultimately, we have to address the issue of local constituents feeling frustrated. They resent that this is being done to them, rather than it being their suggestions and some of the local investment being taken into consideration. There is a sense that decisions are being made in an opaque way and that their views are being ignored. I would welcome better dialogue and consultation from the Government on this.
The Chancellor touched on the fact that devolution deals are under way. This is a work in progress for us in Essex. I would very much like to engage with the Treasury and the Government on what a greater devolution deal would mean for our fantastic county, particularly when it comes to investment in skills and infrastructure. Devolution deals can promise the earth, but central Government have to deliver the goods, and it has to translate into a return on the investment locally. In Essex, we are net contributors to the Treasury, so we can apply the multiplier effect and work out where we are getting the benefits, and where we are not getting our return on the investment. We should have further discussions on that.
I welcome the direction of travel in the autumn statement. The Chancellor has opened the door to sound economic principles of lower taxes. I welcome the support for business, which is fundamental. I urge everyone on the Government Front Bench to continue to look at ways to lower taxes, including personal taxes. Times have been tough for the British public. We want to ensure that all our constituents are able to keep more of the money that they earn, and ultimately have a secure economic future.
15:43:16
Dame Angela Eagle
Wallasey
It is a pleasure to follow the right hon. Member for Witham (Priti Patel), who made an interesting and thoughtful speech.
The backdrop of the autumn statement is an ongoing cost of living crisis and a flailing Government who cannot defend their appalling record in office and know that the general election is fast approaching. The fifth Tory Prime Minister in 13 years has had four relaunches in the past six weeks. He cannot decide whether he is the change candidate or continuity Cameron, he cancelled the northern leg of HS2 in Manchester, his King’s Speech was a visionless damp squib, and he has had to ditch an incompetent Home Secretary he should never have appointed in the first place.
The reality is that the Tories have delivered 13 years of chaos, incompetence and instability. They have made our country weaker, and working people are worse off. Taken together, these Tory Governments have delivered 25 tax rises since 2019. The last Prime Minister sacked the Treasury permanent secretary responsible for fiscal stability, crashed the economy and nearly melted down pension funds, and millions of people are paying higher mortgages and rents as a result.
Since the last election we have seen the highest increases in tax in any Parliament since records began and today’s announcements have not changed that reality. This Tory Government have cost each and every household in the UK a massive £4,000 in tax rises since 2010. Even after today’s tax cuts, the tax burden still reaches its highest level for 70 years. The Tories have delivered the worst economic growth since the 1920s and the worst performance for real wage growth since Napoleon crowned himself emperor.
Yet despite a tax burden running at a 70-year high and a debt which is the highest in peacetime, our public services are crumbling, our schools are riddled with reinforced autoclaved aerated concrete—RAAC—our rivers are full of sewage, and there are 7.8 million people on an NHS waiting list. The Tories in all their various iterations of Government have somehow managed to deliver the worst of both worlds: record high taxes and crumbling public services, and an ongoing cost of living crisis causing misery to millions.
To be fair, there have been some achievements. We have seen record levels of waste and fraud: a staggering £l00 billion of it in the last four years. My constituents are furious about this, and it is right and proper that my right hon. Friend the shadow Chancellor has pledged to set up a covid corruption commissioner to get some of these lost billions back.
It is good news that since March this year growth has been revised up slightly, inflation has halved—although is still high by G7 standards—and borrowing has been revised down. In other words, inflation is twice the target and growth is so modest it could be a rounding up error. The bad news is that the economy is barely growing, with ongoing risks of a recession, and despite what the Chancellor said in his autumn statement, the OBR has downgraded growth forecasts substantially for the next three years. Living standards are now due to be 3.5% lower in 2024-25 than pre-pandemic, the largest reduction in living standards since the 1950s. Taxes are at record levels and the national debt is projected scarcely to fall at all, meaning soaring levels of debt interest spending to service it.
Higher tax receipts in nominal terms and borrowing coming in slightly below the expectations set in the March Budget have increased the so-called headroom the Chancellor has if he is to meet his fiscal rules. He has decided to spend all of it. The OBR points out that half of this so-called headroom comes from a fuel duty escalator that keeps being cancelled and which the right hon. Member for Witham has just perfectly reasonably argued ought to be cancelled next time. That means the headroom the Chancellor has just splashed around is cut in half by that one decision on fuel duty.
This apparent largesse of his also signals—he did not talk about this much—that public spending plans which were already very tight indeed are going to end up even tighter. As the OBR has pointed out in its assessment published this afternoon, this headroom is
“mainly a reflection of a £19.1 billion erosion in the real value of departmental spending.”
The Chancellor did not give us any indication that he was going to increase public spending in real terms to compensate for that, which means that already very difficult public service and departmental budgets will be squeezed further. The Institute for Fiscal Studies has calculated that the extra spending pressures imply real-terms cuts of 16% for unprotected Departments such as Justice and flat budgets in real terms for many of the rest, but the Chancellor has conveniently pushed that scarcely credible fiscal consolidation into the next Parliament, where it is safe to assume he will not be in the job or have to deliver it. It is a scorched earth policy that Julius Caesar would recognise.
The outlook for both growth and productivity is currently gloomy. The OBR forecasts a modest improvement this year, coupled with significant downgrades for the next three years. That is slightly more optimistic than the Bank of England forecast last month, which put the chances of a recession next year at 50-50, with the possibility of three quarters of zero growth. As members of the Monetary Policy Committee pointed out in evidence to the Treasury Committee yesterday, productivity growth since 2016 has been a dismal 6%, while the USA has achieved a 25% increase in the same period.
Falling so far below our competitors will simply lock in the stagflation we are already experiencing. There can be no prospect of sustainable growth in living standards and real wages without a significant improvement in our economy’s performance. Labour has long argued for a move to make full expensing of business investment permanent. The Chancellor condemned that as “irrespon-sibility from Labour” in the King’s Speech debate just eight days ago, so we welcome his damascene conversion today, which ends the uncertainty of the three-year cut-off period and the problems it was creating. We need to increase economic growth, and, despite the blind faith of the Conservative party, tax cuts do not do that; investment in equipment and people does. Labour’s green prosperity plan will put shovels in the ground and cranes in the sky, propelling us to net zero and transforming our infrastructure in every region, truly preparing us for the future.
Having spent most of the last year saying that tax cuts were irresponsible, the Chancellor has now decided to cut national insurance by 2p at a cost of around £10 billion, spending that headroom created by higher nominal tax receipts because inflation is higher than expected. While inflation has halved, it is still very high in comparison with other G7 countries, and the Governor of the Bank of England told us yesterday in the Treasury Committee that he feared that the risks were on the upside, so there are considerable dangers in the Chancellor pursuing the strategy that he has decided on. The current Prime Minister’s decision to freeze tax thresholds for six years has been revealed as a stealth tax that is due to rake in £52 billion—one of the biggest tax grabs ever, as I think the right hon. Member for Witham said in her contribution.
The cut to national insurance does not unravel that tax grab. For most people, even after that modest cut to their national insurance contributions, their taxes will still go up next April. The OBR points out on page 11 of its executive summary that the tax changes
“reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast”,
and goes on to demonstrate that
“frozen thresholds result in nearly 4 million additional workers paying income tax, 3 million more moved to the higher rate, and 400,000 more paying the additional rate.”
Apparently, that is a tax-cutting Budget, in our Chancellor’s view—well, not in mine. Close to the end of the Parliament in which the Conservative party has raised the tax take by more than any of its predecessors, giving a tiny bit back at the end will make virtually no difference.
I am pleased that the Chancellor has decided to uprate benefits as normal despite the speculation that he would not do so, but benefits have already been cut a lot and have not kept pace with inflation. With that and other cuts since 2010, the poorest fifth of the income distribution have lost £2,700, as the Resolution Foundation has shown. The social security system is not generous: 73% of universal credit recipients are in food poverty—and by the way, food inflation is still at a punishing 10.1%. In my Wallasey constituency, there has been a 54% increase in the number of people needing to use food banks in the past year. The autumn statement has done nothing to address those concerns.
We need a change of Government away from the chaos, the in-fighting, the clown show. We need a serious Labour Government with a plan to grow our economy and prepare properly for the future. We need planning reforms to be delivered, not talked about; we need Labour’s green prosperity plan to get us to net zero and create good jobs; and we need a new deal for working people to ensure that work pays. And by the way, we also need a general election—the sooner, the better.
The backdrop of the autumn statement is an ongoing cost of living crisis and a flailing Government who cannot defend their appalling record in office and know that the general election is fast approaching. The fifth Tory Prime Minister in 13 years has had four relaunches in the past six weeks. He cannot decide whether he is the change candidate or continuity Cameron, he cancelled the northern leg of HS2 in Manchester, his King’s Speech was a visionless damp squib, and he has had to ditch an incompetent Home Secretary he should never have appointed in the first place.
The reality is that the Tories have delivered 13 years of chaos, incompetence and instability. They have made our country weaker, and working people are worse off. Taken together, these Tory Governments have delivered 25 tax rises since 2019. The last Prime Minister sacked the Treasury permanent secretary responsible for fiscal stability, crashed the economy and nearly melted down pension funds, and millions of people are paying higher mortgages and rents as a result.
Since the last election we have seen the highest increases in tax in any Parliament since records began and today’s announcements have not changed that reality. This Tory Government have cost each and every household in the UK a massive £4,000 in tax rises since 2010. Even after today’s tax cuts, the tax burden still reaches its highest level for 70 years. The Tories have delivered the worst economic growth since the 1920s and the worst performance for real wage growth since Napoleon crowned himself emperor.
Yet despite a tax burden running at a 70-year high and a debt which is the highest in peacetime, our public services are crumbling, our schools are riddled with reinforced autoclaved aerated concrete—RAAC—our rivers are full of sewage, and there are 7.8 million people on an NHS waiting list. The Tories in all their various iterations of Government have somehow managed to deliver the worst of both worlds: record high taxes and crumbling public services, and an ongoing cost of living crisis causing misery to millions.
To be fair, there have been some achievements. We have seen record levels of waste and fraud: a staggering £l00 billion of it in the last four years. My constituents are furious about this, and it is right and proper that my right hon. Friend the shadow Chancellor has pledged to set up a covid corruption commissioner to get some of these lost billions back.
It is good news that since March this year growth has been revised up slightly, inflation has halved—although is still high by G7 standards—and borrowing has been revised down. In other words, inflation is twice the target and growth is so modest it could be a rounding up error. The bad news is that the economy is barely growing, with ongoing risks of a recession, and despite what the Chancellor said in his autumn statement, the OBR has downgraded growth forecasts substantially for the next three years. Living standards are now due to be 3.5% lower in 2024-25 than pre-pandemic, the largest reduction in living standards since the 1950s. Taxes are at record levels and the national debt is projected scarcely to fall at all, meaning soaring levels of debt interest spending to service it.
Higher tax receipts in nominal terms and borrowing coming in slightly below the expectations set in the March Budget have increased the so-called headroom the Chancellor has if he is to meet his fiscal rules. He has decided to spend all of it. The OBR points out that half of this so-called headroom comes from a fuel duty escalator that keeps being cancelled and which the right hon. Member for Witham has just perfectly reasonably argued ought to be cancelled next time. That means the headroom the Chancellor has just splashed around is cut in half by that one decision on fuel duty.
This apparent largesse of his also signals—he did not talk about this much—that public spending plans which were already very tight indeed are going to end up even tighter. As the OBR has pointed out in its assessment published this afternoon, this headroom is
“mainly a reflection of a £19.1 billion erosion in the real value of departmental spending.”
The Chancellor did not give us any indication that he was going to increase public spending in real terms to compensate for that, which means that already very difficult public service and departmental budgets will be squeezed further. The Institute for Fiscal Studies has calculated that the extra spending pressures imply real-terms cuts of 16% for unprotected Departments such as Justice and flat budgets in real terms for many of the rest, but the Chancellor has conveniently pushed that scarcely credible fiscal consolidation into the next Parliament, where it is safe to assume he will not be in the job or have to deliver it. It is a scorched earth policy that Julius Caesar would recognise.
The outlook for both growth and productivity is currently gloomy. The OBR forecasts a modest improvement this year, coupled with significant downgrades for the next three years. That is slightly more optimistic than the Bank of England forecast last month, which put the chances of a recession next year at 50-50, with the possibility of three quarters of zero growth. As members of the Monetary Policy Committee pointed out in evidence to the Treasury Committee yesterday, productivity growth since 2016 has been a dismal 6%, while the USA has achieved a 25% increase in the same period.
Falling so far below our competitors will simply lock in the stagflation we are already experiencing. There can be no prospect of sustainable growth in living standards and real wages without a significant improvement in our economy’s performance. Labour has long argued for a move to make full expensing of business investment permanent. The Chancellor condemned that as “irrespon-sibility from Labour” in the King’s Speech debate just eight days ago, so we welcome his damascene conversion today, which ends the uncertainty of the three-year cut-off period and the problems it was creating. We need to increase economic growth, and, despite the blind faith of the Conservative party, tax cuts do not do that; investment in equipment and people does. Labour’s green prosperity plan will put shovels in the ground and cranes in the sky, propelling us to net zero and transforming our infrastructure in every region, truly preparing us for the future.
Having spent most of the last year saying that tax cuts were irresponsible, the Chancellor has now decided to cut national insurance by 2p at a cost of around £10 billion, spending that headroom created by higher nominal tax receipts because inflation is higher than expected. While inflation has halved, it is still very high in comparison with other G7 countries, and the Governor of the Bank of England told us yesterday in the Treasury Committee that he feared that the risks were on the upside, so there are considerable dangers in the Chancellor pursuing the strategy that he has decided on. The current Prime Minister’s decision to freeze tax thresholds for six years has been revealed as a stealth tax that is due to rake in £52 billion—one of the biggest tax grabs ever, as I think the right hon. Member for Witham said in her contribution.
The cut to national insurance does not unravel that tax grab. For most people, even after that modest cut to their national insurance contributions, their taxes will still go up next April. The OBR points out on page 11 of its executive summary that the tax changes
“reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast”,
and goes on to demonstrate that
“frozen thresholds result in nearly 4 million additional workers paying income tax, 3 million more moved to the higher rate, and 400,000 more paying the additional rate.”
Apparently, that is a tax-cutting Budget, in our Chancellor’s view—well, not in mine. Close to the end of the Parliament in which the Conservative party has raised the tax take by more than any of its predecessors, giving a tiny bit back at the end will make virtually no difference.
I am pleased that the Chancellor has decided to uprate benefits as normal despite the speculation that he would not do so, but benefits have already been cut a lot and have not kept pace with inflation. With that and other cuts since 2010, the poorest fifth of the income distribution have lost £2,700, as the Resolution Foundation has shown. The social security system is not generous: 73% of universal credit recipients are in food poverty—and by the way, food inflation is still at a punishing 10.1%. In my Wallasey constituency, there has been a 54% increase in the number of people needing to use food banks in the past year. The autumn statement has done nothing to address those concerns.
We need a change of Government away from the chaos, the in-fighting, the clown show. We need a serious Labour Government with a plan to grow our economy and prepare properly for the future. We need planning reforms to be delivered, not talked about; we need Labour’s green prosperity plan to get us to net zero and create good jobs; and we need a new deal for working people to ensure that work pays. And by the way, we also need a general election—the sooner, the better.
16:49:22
Anna Firth
Southend West
It is a pleasure to follow the hon. Member for Wallasey (Dame Angela Eagle). As I listened to her speech, I came to the conclusion that we have something in common: we both seem to welcome tax cuts. She does not seem to think that they have gone far enough. I wholeheartedly welcome this Budget. It a serious Budget for growth, a Budget that sets the course for the long-term success of our country, a Budget for businesses, a Budget that rewards hard work, and a Budget that rewards our pensioners and senior citizens.
Tackling inflation has rightly been the Government’s top priority over the past year. We have all seen the horrendous effects of double-digit inflation on the cost of living, on energy prices, on households and on our constituents. I believe that the Chancellor and his team deserve all our praise for the dogged way in which they have kept to the programme and delivered. They have more than delivered, because inflation has more than halved over the past year. That will make every single one of my Southend and Leigh-on-Sea constituents better off, which I wholeheartedly welcome.
Being Conservatives means that we believe in growing the economy by giving people and businesses the freedom to succeed. We believe that lasting wealth creation depends on cutting taxes and reducing regulation. Our way is to set businesses free. I do not want to get too party political at this stage in my speech, but that is not the way of the Opposition, who have traditionally been about ramping up borrowing, increasing debt, and, obviously, increasing mortgage rates.
My priority—always—is to make Southend and Leigh-on-Sea safer, healthier and wealthier. I judge all legislation against those three simple tests, and this autumn statement will undoubtedly make my constituents wealthier. The vast majority of Southend and Leigh-on-Sea residents work hard, work full-time, and own their own homes. They deserve to keep as much of their own money as possible, so I welcome the fact that, thanks to the long-term responsible decisions taken by the Chancellor and his team last year, we can now begin to get back to cutting taxes. We are not going as far as I would like, but we are making a good start.
Cutting taxes for 27 million working people from January, by cutting the main rate of national insurance contributions from 12% to 10%, is a great start. It means that the average person in Southend West and Leigh-on-Sea, earning an average of only £36,500 a year, will see an almost immediate tax cut of £480 per person. If it is a family with two earners, as most of them are, they will see a tax cut of £960 per year—nearly £1,000 a year, starting from January. A senior nurse at Southend hospital will be better off by £600 a year, and the average police officer will be better off by £630 a year. I welcome putting that money back into the pockets of my hard-working constituents, because we on the Conservative Benches know that employment is the long-term route out of poverty. I am delighted that the welfare reforms in the autumn statement will cut the number of people in this country who are signed off work on benefits, to ensure that their potential is not wasted in the long term. Making a concerted effort to help people back into work is not nasty: it is responsible, compassionate, and ultimately caring.
I also welcome the support for small businesses in the statement. Over 98% of businesses in Southend are micro or small businesses; Southend is a city of entrepreneurs, and I am very proud of them. As such, I welcome the extension of the 75% business rates relief for retail, hospitality and leisure until 2025 and the decision to freeze the small business multiplier, which will be a huge benefit to businesses in Southend and Leigh-on-Sea. Having been self-employed for many years, I also welcome the support we are giving to the self-employed by cutting class 2 national insurance contributions from April 2024 completely. Again, we are putting more money into the pockets of the hard-working.
Permanent full expensing will mean the biggest business tax cut in modern British history. Again, it is clear what side Conservative Members are on: we are on the side of businesses, the job creators, and those who are working hard. I also welcome the fact that fuel duty will remain frozen, maintaining the 5p reduction introduced last year. Some 80% of Southend households have at least one car or van—significantly higher than the national average—and 40% of my employed constituents drive to work, so being a motorist is not a dirty word in Essex. We enjoy our cars and are proud of them, and of white van man. Let me say this loud and clear: there will be no ultra low emission zone in Essex. Kremlin Khan can keep his communist measures in London; we will not have them in Southend.
We must also look after our pensioners and the poorest in society. There are nearly 18,000 pensioners in Southend West, and we must do the right thing by them. As such, I welcome the fact that the Chancellor has reaffirmed his commitment to the pensions triple lock and pension credit. I thank him and his team for listening to the many representations from Conservative Members to keep that triple lock, which will rise in April 2024 by 8.5%. That is going to mean an extra £70 a month for my pensioners—nearly £900 a year.
More importantly, I welcome the fact that this Government are positioning the UK to be a global leader in the industries of the future. We had a revolution in banking when I started my career in the City, and it has created a long-term tax take on which we all depend in part today. Creating the industries of the future is an investment in high-paid jobs and in the tax take that we will all be relying on as we get older. Last year, we became the third trillion-dollar tech economy in the world; our tech sector is now double the size of Germany’s and three times that of France. Our life sciences sector is the biggest in Europe. Offshore wind has been mentioned; we do more offshore wind than any other country in Europe. We are now Europe’s biggest film and TV production centre. Those successes are all investments in our future, and they are not quick fixes—they are not things that just happen. They are due to long-term strategic decisions, laying the foundation for future success. It is because of these long-term strategic decisions that we have grown faster since 2010 than France, Germany, Italy, Spain, Austria, Finland, the Netherlands and Japan. In fact, I think the Chancellor even mentioned a few more countries in his statement.
I would say that what is happening nationally is reflected in Southend. I am sorry that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), who has joined the Treasury team, is no longer in his place because he will know, from attending our trade summit in September, that Southend is not just a historic, successful, scenic seaside city but that it has a growing life sciences sector, with world leading businesses such as Olympus KeyMed and ESSLAB, to name but two. In fact, the Thames estuary, backed by the Government, has been named the UK’s No. 1 growth area, with the potential to create 1.3 million jobs and add £190 billion to the nation’s economy by 2050. I would welcome—and I continue to encourage the Chancellor to look at this—the creation of new investment zones, in particular focusing on new cities. The Chancellor recently said,
“don’t bet against Britain—it’s been tried before and it never works.”
I would say, “don’t bet against Southend either”, and certainly not against the mighty Southend United, as the hon. Member for Chesterfield (Mr Perkins), who is not in his place, knows only too well.
The other area I want to touch on is apprenticeships. On skills, business-led local skills improvement plans have been a big success, particularly in Essex, where we have an excellent one run by the Essex chambers of commerce. However, we do need the Government to commit to long-term funding beyond the current 2025 cut-off point to truly embed them into the skills landscape, and I would like to continue that conversation with the Treasury team. Of course, apprenticeships offer a chance for people to earn while they learn and gain industry experience, and I welcome the fact that we are committing a further £50 million to a two-year apprenticeship pilot to explore new ways to stimulate training in growth sectors. However, at the same time, the apprenticeship levy does need to be reformed. Apprenticeships are not always the best solution to all training needs. I have a brilliant college in Southend, the South Essex College, and I have heard many times that greater flexibility is needed in the types of training for which the levy can be used. Many firms need shorter, more modular training to enable individuals to upskill quickly. I hope that the Government will look at allowing a percentage of the apprenticeship levy to be used on other forms of accredited training offered by approved providers.
To conclude, I welcome the autumn statement. The measures contained in it are good for my constituents in Southend and Leigh-on-Sea. I believe they are good for the country, and I look forward to supporting them at the beginning of next week.
Tackling inflation has rightly been the Government’s top priority over the past year. We have all seen the horrendous effects of double-digit inflation on the cost of living, on energy prices, on households and on our constituents. I believe that the Chancellor and his team deserve all our praise for the dogged way in which they have kept to the programme and delivered. They have more than delivered, because inflation has more than halved over the past year. That will make every single one of my Southend and Leigh-on-Sea constituents better off, which I wholeheartedly welcome.
Being Conservatives means that we believe in growing the economy by giving people and businesses the freedom to succeed. We believe that lasting wealth creation depends on cutting taxes and reducing regulation. Our way is to set businesses free. I do not want to get too party political at this stage in my speech, but that is not the way of the Opposition, who have traditionally been about ramping up borrowing, increasing debt, and, obviously, increasing mortgage rates.
My priority—always—is to make Southend and Leigh-on-Sea safer, healthier and wealthier. I judge all legislation against those three simple tests, and this autumn statement will undoubtedly make my constituents wealthier. The vast majority of Southend and Leigh-on-Sea residents work hard, work full-time, and own their own homes. They deserve to keep as much of their own money as possible, so I welcome the fact that, thanks to the long-term responsible decisions taken by the Chancellor and his team last year, we can now begin to get back to cutting taxes. We are not going as far as I would like, but we are making a good start.
Cutting taxes for 27 million working people from January, by cutting the main rate of national insurance contributions from 12% to 10%, is a great start. It means that the average person in Southend West and Leigh-on-Sea, earning an average of only £36,500 a year, will see an almost immediate tax cut of £480 per person. If it is a family with two earners, as most of them are, they will see a tax cut of £960 per year—nearly £1,000 a year, starting from January. A senior nurse at Southend hospital will be better off by £600 a year, and the average police officer will be better off by £630 a year. I welcome putting that money back into the pockets of my hard-working constituents, because we on the Conservative Benches know that employment is the long-term route out of poverty. I am delighted that the welfare reforms in the autumn statement will cut the number of people in this country who are signed off work on benefits, to ensure that their potential is not wasted in the long term. Making a concerted effort to help people back into work is not nasty: it is responsible, compassionate, and ultimately caring.
I also welcome the support for small businesses in the statement. Over 98% of businesses in Southend are micro or small businesses; Southend is a city of entrepreneurs, and I am very proud of them. As such, I welcome the extension of the 75% business rates relief for retail, hospitality and leisure until 2025 and the decision to freeze the small business multiplier, which will be a huge benefit to businesses in Southend and Leigh-on-Sea. Having been self-employed for many years, I also welcome the support we are giving to the self-employed by cutting class 2 national insurance contributions from April 2024 completely. Again, we are putting more money into the pockets of the hard-working.
Permanent full expensing will mean the biggest business tax cut in modern British history. Again, it is clear what side Conservative Members are on: we are on the side of businesses, the job creators, and those who are working hard. I also welcome the fact that fuel duty will remain frozen, maintaining the 5p reduction introduced last year. Some 80% of Southend households have at least one car or van—significantly higher than the national average—and 40% of my employed constituents drive to work, so being a motorist is not a dirty word in Essex. We enjoy our cars and are proud of them, and of white van man. Let me say this loud and clear: there will be no ultra low emission zone in Essex. Kremlin Khan can keep his communist measures in London; we will not have them in Southend.
We must also look after our pensioners and the poorest in society. There are nearly 18,000 pensioners in Southend West, and we must do the right thing by them. As such, I welcome the fact that the Chancellor has reaffirmed his commitment to the pensions triple lock and pension credit. I thank him and his team for listening to the many representations from Conservative Members to keep that triple lock, which will rise in April 2024 by 8.5%. That is going to mean an extra £70 a month for my pensioners—nearly £900 a year.
More importantly, I welcome the fact that this Government are positioning the UK to be a global leader in the industries of the future. We had a revolution in banking when I started my career in the City, and it has created a long-term tax take on which we all depend in part today. Creating the industries of the future is an investment in high-paid jobs and in the tax take that we will all be relying on as we get older. Last year, we became the third trillion-dollar tech economy in the world; our tech sector is now double the size of Germany’s and three times that of France. Our life sciences sector is the biggest in Europe. Offshore wind has been mentioned; we do more offshore wind than any other country in Europe. We are now Europe’s biggest film and TV production centre. Those successes are all investments in our future, and they are not quick fixes—they are not things that just happen. They are due to long-term strategic decisions, laying the foundation for future success. It is because of these long-term strategic decisions that we have grown faster since 2010 than France, Germany, Italy, Spain, Austria, Finland, the Netherlands and Japan. In fact, I think the Chancellor even mentioned a few more countries in his statement.
I would say that what is happening nationally is reflected in Southend. I am sorry that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), who has joined the Treasury team, is no longer in his place because he will know, from attending our trade summit in September, that Southend is not just a historic, successful, scenic seaside city but that it has a growing life sciences sector, with world leading businesses such as Olympus KeyMed and ESSLAB, to name but two. In fact, the Thames estuary, backed by the Government, has been named the UK’s No. 1 growth area, with the potential to create 1.3 million jobs and add £190 billion to the nation’s economy by 2050. I would welcome—and I continue to encourage the Chancellor to look at this—the creation of new investment zones, in particular focusing on new cities. The Chancellor recently said,
“don’t bet against Britain—it’s been tried before and it never works.”
I would say, “don’t bet against Southend either”, and certainly not against the mighty Southend United, as the hon. Member for Chesterfield (Mr Perkins), who is not in his place, knows only too well.
The other area I want to touch on is apprenticeships. On skills, business-led local skills improvement plans have been a big success, particularly in Essex, where we have an excellent one run by the Essex chambers of commerce. However, we do need the Government to commit to long-term funding beyond the current 2025 cut-off point to truly embed them into the skills landscape, and I would like to continue that conversation with the Treasury team. Of course, apprenticeships offer a chance for people to earn while they learn and gain industry experience, and I welcome the fact that we are committing a further £50 million to a two-year apprenticeship pilot to explore new ways to stimulate training in growth sectors. However, at the same time, the apprenticeship levy does need to be reformed. Apprenticeships are not always the best solution to all training needs. I have a brilliant college in Southend, the South Essex College, and I have heard many times that greater flexibility is needed in the types of training for which the levy can be used. Many firms need shorter, more modular training to enable individuals to upskill quickly. I hope that the Government will look at allowing a percentage of the apprenticeship levy to be used on other forms of accredited training offered by approved providers.
To conclude, I welcome the autumn statement. The measures contained in it are good for my constituents in Southend and Leigh-on-Sea. I believe they are good for the country, and I look forward to supporting them at the beginning of next week.
17:00:00
Mr Nigel Evans
Mr Deputy Speaker
Order. I am trying not to put a time limit on speeches, but as Members can see, we have 10 speakers and 100 minutes left, which roughly equates to 10 minutes each. If Members do not go wildly over that, we can get everybody in and with equal time.
15:11:51
Jon Trickett
Hemsworth
Thank you for your guidance, Mr Deputy Speaker, and I will try to be brief.
The first point I want to make is that the Chancellor and the Chief Secretary, who spoke at the beginning of this debate, seem to have omitted certain important facts. I do not want to suggest that they deliberately misled the House—that would be totally inappropriate—but perhaps they had memory problems, so I will try to assist those on the Government Front Bench with some things that seem to have been forgotten, but are quite important. First, right hon. and hon. Members on the other side have suggested that Labour has a problem with borrowing, but look at the figures. Since 2010, the Government have borrowed £1.5 trillion, and they seem to be heading towards borrowing of £3 trillion, an increase of 28% of GDP since Labour left office: they are the borrowers.
Look around: where has the money gone? Our services have collapsed in many cases, including schools, hospitals and the police force. Our people are living in increasingly difficult times. There is an increase in poverty and the necessity to use food banks. Our growth is more or less static. Okay, there is a small percentage increase, but over the medium term we are not looking at any growth at all. Where has all this money and all this borrowing gone? It has been spent by a profligate Government who do not have any sense of the country’s priorities, and that worries me. One section of the population has done well—the big corporations and the wealthy—and I might return to that if I have time.
The Government forgot to mention that the OBR has said that the plans published today require £19 billion worth of expenditure to maintain our public services, but the Government have provided only £4 billion. A spokesperson for one of the larger well-known think-tanks has said that the cuts that the Government are proposing are “completely implausible”. I looked at the figures. Schools are looking at a cut in real terms. There is no attempt to match inflation. The Government are going to reduce the amount of money going into schools. How will those cuts be made? Services, after 13 years, are almost beyond repair without a new Government.
The Government seem also to have forgotten that the OBR has said that working people are facing the worst cut in living standards since records began. That is shocking, when we reflect on the levels of difficulty that we see in our constituencies. The other thing that the Government seem to have forgotten, while they have been claiming that inflation is going in the right direction, is that inflation as a whole is one figure, but the cost of food is increasing by 10%. I looked at the figures to see where we are with food poverty. The bottom four deciles—that is, two fifths of the population—spend more than 40% of their total household income on food and housing. Food prices going up are driving people further and further into destitution and poverty. All those facts seem to have been forgotten by those on the Government Front Bench.
I will not speak for too long, but I will make a couple of other points. Ministers have said that this is a Budget for working people. I represent large numbers of working people—we all do, I guess—and the average salary or income in my constituency is £29,200, which is way below the national average. With wage increases needing to match food inflation, I calculated the result of today’s announcements for people on £29,200. The amount of income tax they pay will increase by £456, because the Government have not increased the thresholds. That is £9 a week. Okay, the Chancellor announced a reduction in national insurance of 2p, but that will still leave people in my constituency on the average salary more than £2 a week worse off. What the Government pretend they are giving with one hand with a cut to national insurance is then taken with the other hand, as they have not increased the thresholds. Effectively, people are falling further into poverty.
The people I represent and the people of Britain as a whole are not fools. We might see tomorrow’s right-wing newspapers bellowing out a great triumph for the Conservative Government, but people will look at their pay packets, and they will see that the Treasury is still taking £100 more than it would have had thresholds changed. That is an unfortunate situation to be in. It is what the economists call fiscal drag, and it is estimated that next year alone, the Treasury will take back £8 billion from working people, which is £270 a person a week. The faulty memory of Government Ministers—let us put it no stronger—has resulted in a rather rosy picture of what will happen to our country, but the people will see what has happened to their families, their households and their neighbours, and they will understand that this Government are simply for the rich rather than for the rest of society.
I return to inflation. The right hon. Member for North Somerset (Dr Fox), who is not in his seat, talked about how we should explain inflation and said it was produced purely by external forces. Of course, external forces have made a difference. But I have covered 40 separate financial statements since I was first elected 28 years ago, and I remember sitting here and seeing the faces of Conservative Members when the Budget was introduced—they started off rosy and finished up pale, even white and ashen—but what did they do? They voted for it—all of them, I think. We know what the consequences have been since.
Was there another option for the Government to try to protect working people? I think there was. Spain, for example, with the same spending pressures from oil costs, harvests, the wars and so on, has managed to keep inflation down to 2% while ours was roaring away at up to 11%. What did Spain do? It removed VAT from basic foodstuffs, capped prices, made payments to households, and reduced VAT on electricity and gas. The thing is, we left the European Union in part because we supposedly wanted to be free to adjust our VAT rates, but we have done none of those things, really. We let inflation rip.
My final point—again, this was not mentioned in the statement—is about the asymmetric way we deal with income. As we have heard, we tax earnings from work to a significant amount—part of that is just to pay for the debt that we have incurred while this lot have been in government—so someone who earns £50,000 will receive £38,400 after tax and national insurance. Someone who earns £50,000 from dividends will take home another £8,000 and receive £46,250. If we were a Parliament for working people—one that valued work and labour as a way of contributing to our society—we would not tax work more heavily than income from wealth. I will leave the House with that point. There is money in our society that could be used for public services and to help working people, which the Government pretend they are trying to do but have failed to do.
The first point I want to make is that the Chancellor and the Chief Secretary, who spoke at the beginning of this debate, seem to have omitted certain important facts. I do not want to suggest that they deliberately misled the House—that would be totally inappropriate—but perhaps they had memory problems, so I will try to assist those on the Government Front Bench with some things that seem to have been forgotten, but are quite important. First, right hon. and hon. Members on the other side have suggested that Labour has a problem with borrowing, but look at the figures. Since 2010, the Government have borrowed £1.5 trillion, and they seem to be heading towards borrowing of £3 trillion, an increase of 28% of GDP since Labour left office: they are the borrowers.
Look around: where has the money gone? Our services have collapsed in many cases, including schools, hospitals and the police force. Our people are living in increasingly difficult times. There is an increase in poverty and the necessity to use food banks. Our growth is more or less static. Okay, there is a small percentage increase, but over the medium term we are not looking at any growth at all. Where has all this money and all this borrowing gone? It has been spent by a profligate Government who do not have any sense of the country’s priorities, and that worries me. One section of the population has done well—the big corporations and the wealthy—and I might return to that if I have time.
The Government forgot to mention that the OBR has said that the plans published today require £19 billion worth of expenditure to maintain our public services, but the Government have provided only £4 billion. A spokesperson for one of the larger well-known think-tanks has said that the cuts that the Government are proposing are “completely implausible”. I looked at the figures. Schools are looking at a cut in real terms. There is no attempt to match inflation. The Government are going to reduce the amount of money going into schools. How will those cuts be made? Services, after 13 years, are almost beyond repair without a new Government.
The Government seem also to have forgotten that the OBR has said that working people are facing the worst cut in living standards since records began. That is shocking, when we reflect on the levels of difficulty that we see in our constituencies. The other thing that the Government seem to have forgotten, while they have been claiming that inflation is going in the right direction, is that inflation as a whole is one figure, but the cost of food is increasing by 10%. I looked at the figures to see where we are with food poverty. The bottom four deciles—that is, two fifths of the population—spend more than 40% of their total household income on food and housing. Food prices going up are driving people further and further into destitution and poverty. All those facts seem to have been forgotten by those on the Government Front Bench.
I will not speak for too long, but I will make a couple of other points. Ministers have said that this is a Budget for working people. I represent large numbers of working people—we all do, I guess—and the average salary or income in my constituency is £29,200, which is way below the national average. With wage increases needing to match food inflation, I calculated the result of today’s announcements for people on £29,200. The amount of income tax they pay will increase by £456, because the Government have not increased the thresholds. That is £9 a week. Okay, the Chancellor announced a reduction in national insurance of 2p, but that will still leave people in my constituency on the average salary more than £2 a week worse off. What the Government pretend they are giving with one hand with a cut to national insurance is then taken with the other hand, as they have not increased the thresholds. Effectively, people are falling further into poverty.
The people I represent and the people of Britain as a whole are not fools. We might see tomorrow’s right-wing newspapers bellowing out a great triumph for the Conservative Government, but people will look at their pay packets, and they will see that the Treasury is still taking £100 more than it would have had thresholds changed. That is an unfortunate situation to be in. It is what the economists call fiscal drag, and it is estimated that next year alone, the Treasury will take back £8 billion from working people, which is £270 a person a week. The faulty memory of Government Ministers—let us put it no stronger—has resulted in a rather rosy picture of what will happen to our country, but the people will see what has happened to their families, their households and their neighbours, and they will understand that this Government are simply for the rich rather than for the rest of society.
I return to inflation. The right hon. Member for North Somerset (Dr Fox), who is not in his seat, talked about how we should explain inflation and said it was produced purely by external forces. Of course, external forces have made a difference. But I have covered 40 separate financial statements since I was first elected 28 years ago, and I remember sitting here and seeing the faces of Conservative Members when the Budget was introduced—they started off rosy and finished up pale, even white and ashen—but what did they do? They voted for it—all of them, I think. We know what the consequences have been since.
Was there another option for the Government to try to protect working people? I think there was. Spain, for example, with the same spending pressures from oil costs, harvests, the wars and so on, has managed to keep inflation down to 2% while ours was roaring away at up to 11%. What did Spain do? It removed VAT from basic foodstuffs, capped prices, made payments to households, and reduced VAT on electricity and gas. The thing is, we left the European Union in part because we supposedly wanted to be free to adjust our VAT rates, but we have done none of those things, really. We let inflation rip.
My final point—again, this was not mentioned in the statement—is about the asymmetric way we deal with income. As we have heard, we tax earnings from work to a significant amount—part of that is just to pay for the debt that we have incurred while this lot have been in government—so someone who earns £50,000 will receive £38,400 after tax and national insurance. Someone who earns £50,000 from dividends will take home another £8,000 and receive £46,250. If we were a Parliament for working people—one that valued work and labour as a way of contributing to our society—we would not tax work more heavily than income from wealth. I will leave the House with that point. There is money in our society that could be used for public services and to help working people, which the Government pretend they are trying to do but have failed to do.
17:12:50
Sir Geoffrey Clifton-Brown
The Cotswolds
Thank you, Mr Deputy Speaker, for letting me catch your eye in the debate. I am delighted to follow the hon. Member for Hemsworth (Jon Trickett). A long time ago, we were paired—most hon. Members in the Chamber will have forgotten that we had an official pairing system—which I am afraid dates him and me.
Many interesting points have been made, but one of the most interesting things I have heard is the number of Opposition Members who have been complaining about the level of the tax burden. I will assume that when they produce their general election manifestos, each will say that they will reduce the burden of tax on the people of this country. I will bet you a bottle of something nice, Mr Deputy Speaker, that when the Labour party manifesto comes out, we will see a higher fiscal burden on the people of this country than there would be under a Conservative Government.
The hon. Member for Wallasey (Dame Angela Eagle) was dead right, and reinforced the point made by my right hon. Friend the Member for Witham (Priti Patel), that fiscal drag is one of the main reasons why the tax burden has gone up so much. The top rate of tax comes in at just £50,270 and, as the hon. Lady made clear in her speech, progressively over the years, an increasing number of people will fall into that. Quite large numbers of constituents who are working hard on fairly modest wages—medium-paid police, medium-paid teachers and medium-paid people in the health service—will suddenly be thrust into the top rate of tax. As my right hon. Friend said, people know how to spend their own money far better than the state does. We want a progressive look at that to see what can be done, perhaps in the Budget.
This autumn statement will be remembered for two key events. One was full expensing made permanent, at a cost £11 billion—a big relief announced today. The second one, for individuals, is the cut in class 2 and class 4 national insurance, amounting to £10 billion. Those are two big measures. I warmly welcome the measures to boost growth, employment, productivity and, above all, investment. Boosting investment will help the long-standing productivity problem in this country. There are measures to boost growth, reduce debt and, above all, see inflation come down in the way that it has.
Inflation is a tax on every single person in this country, every business and the public sector. In short, it is very damaging to the economy as a whole, and it is good to see it come down from over 11% to just under 5% in a year. We look forward to the Chancellor’s predictions of it coming down to 2.8% next year. Even better, by the end of next year or the beginning of 2025, it may come down to the Bank of England’s target level of 2%. That is a good thing to happen to the economy.
What have we done in this autumn statement? We have cut taxes for 27 million working people from January, by reducing the rate of national insurance contributions. We have cut and simplified tax for 2 million self-employed—I warmly welcome that, as I have a lot of self-employed people in my constituency. We have cut business rates, by freezing the small business multiplier yet again, saving the average shop £1,650. That will benefit a lot of shops in my small towns in the Cotswolds. As I said, we have increased the national living wage to £11.44 an hour, up from about £5.50 when we took power in 2010. That is a terrific achievement and will benefit 2.7 million workers. One measure that will help in the Cotswolds is increasing the local housing allowance, because rents are high, and the difference between housing benefit and what people have to pay in the market is large. Having an elderly population, I am delighted that the Government intend to keep their promise on the triple lock.
I am delighted to follow my Chair on the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). She recounted in her wise speech a lot of measures that we have heard in Committee hearings, which she and I attend diligently twice a week—a terrific workload. I absolutely agree with her on skills, as others have mentioned. Time after time in our hearings we have heard about skills shortages in certain sectors—IT programmers, digital collection, project managers and complex procurers—hampering the public sector in carrying out particularly big projects. I am delighted, therefore, by what the Chancellor said today about how our youngsters’ levels of education have increased so much within the G7.
I had a good visit the other day to see the acting deputy head of Cirencester College. His is one of the leading colleges in the country for the Government’s new T-levels. He now teaches 13, up from 10. His student numbers are full to the gunwales at 3,300, and he cannot take any more unless he has new buildings. It may interest the House that he warmly welcomes the Government’s new proposals on advanced British standards, because the combination of vocational and technical training produces more rounded pupils who go on to do better at university. The Government have some imaginative ideas in education, and I know that my teachers in the Cotswolds will warmly welcome the record resources going into our schools through the statement.
There was one thing missing in the autumn statement and I am sorry but I am going to detain the House for a little while on it, because it is so important. I will go through it in a little detail. I asked the Chancellor why tourist tax measures were not included in the autumn statement. On leaving the EU, Britain had the chance to become the only European country where 450 million EU residents could shop tax free. I warmly welcome the newly appointed Minister on the Front Bench, the Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). I think he would agree with me on this. If he does, let us get on and do something about it, because businesses believe that this new market could be worth an estimated £10 billion in two years.
At the time of leaving the EU, the Treasury considered the option of extended tax-free shopping to EU visitors but decided it would cost too much. Britain ended the existing tax-free shopping not only for EU visitors, but for shoppers from around the world. That had consequences. By ending tax-free shopping for non-EU visitors, Britain is losing out on a multibillion-pound market where it was by far the leading destination in Europe for tax-free shopping. In 2019, Britain accounted for 45% of all tax-free shopping done in France, Italy, Spain and Britain combined, but it has missed out on this potentially huge new shopping-led tourist market which only Britain could have benefited from because we were the country that had left the EU.
Let us look at the data on the opportunity for Britain if the Government had chosen to extend tax-free shopping to EU visitors and visitors from around the world. We are now seeing something of the impact of allowing British visitors to the EU to shop tax free: our people going to the EU and shopping tax free, which they do in abundance. In the first full year of travel, in 2022, British shoppers spent around £500 million on tax-free shopping in the EU. This year, the figure is estimated to double, so that our people are going out and benefiting EU countries potentially to the tune of £1 billion. The Association of International Retail has made a very rough estimate, from the behaviour of British tax-free shoppers, of what could happen were Britain to offer tax-free shopping to EU visitors. The EU has six times more people than Britain, so if that level was replicated by the EU shoppers we allowed to shop tax free in this country, the £1 billion of tax-free shopping that our people do in Europe could be turned into up to £6 billion.
The most recent forecasting reports are truly staggering and I ask my hon. Friend on the Front Bench to listen to them. The Centre for Economics and Business Research builds on a previous report by the respected Oxford Economics. The two reports forecast that introducing tax-free shopping would boost visitor numbers by between 1.6 million and 1.7 million, increase spending by between £1.7 billion and £2.8 billion, and increase GDP by between £4.1 billion and £9.1 billion annually. I cannot understand why the Treasury will not consider this measure. The difference between the two forecasts is mainly due to timing, with the Oxford Economics study released in October 2022 and the CEBR study published a little later, in July 2023.
When the Government are looking for growth measures, why has the Treasury dismissed this opportunity so quickly, without any comprehensive cost-benefit analysis? Ministers have told us time after time that the Treasury wrongly assumes—those are my words—that tax-free shopping produces little or no behavioural change by international travellers, either in choosing to come to the UK or their spending levels. That is just so counterintuitive it is unbelievable. The Treasure forecasts a £2 billion cost in refunding VAT, with little or no benefit in terms of additional numbers or spending—again, completely counterintuitive.
The Treasury constantly repeats the claim that evidence shows that tax-free shopping is not a significant reason for people to come to this country, but the actual figures show that that is complete nonsense. Out there in the market, retail levels in London, for instance, are roughly back where they were in 2019, before the pandemic, while in other European centres, such as Paris and Madrid, they are up by 300% and 200% respectively. What is also happening is that the high spenders, people from America, the middle east and China, are not coming here to do their high-level shopping, to the disbenefit of the high-level retailers. Burberry, for example, is shifting its investment away from the UK and on to the continent. Those are some of the things that are happening out there, and they are not of benefit to us.
Why, then, was the OBR not asked to look at extending tax-free shopping to the EU? Why was it not asked to assess the policy until after the decision had been made? This meant that it had no remit to assess the forecasts of EU spending on the basis of which the decision was made. It strikes me as entirely sensible to call for an independent review of that decision, because the evidence is now undermining the Treasury’s forecast in a big way, and because those particular forecasts were never assessed by the OBR.
I am watching you very carefully, Madam Deputy Speaker, and I will wind up my speech now. Let me just repeat what I said in my question to the Chancellor. Our citizens benefit European and other countries by shopping duty free abroad, but we do not extend the same facility to shoppers who want to spend a lot of money in this country. I implore Treasury Ministers to commission an independent report as soon as possible to establish whether what a number of large businesses are saying—do not just take it from me—is true, because we in this country could be losing out in a big way.
Many interesting points have been made, but one of the most interesting things I have heard is the number of Opposition Members who have been complaining about the level of the tax burden. I will assume that when they produce their general election manifestos, each will say that they will reduce the burden of tax on the people of this country. I will bet you a bottle of something nice, Mr Deputy Speaker, that when the Labour party manifesto comes out, we will see a higher fiscal burden on the people of this country than there would be under a Conservative Government.
The hon. Member for Wallasey (Dame Angela Eagle) was dead right, and reinforced the point made by my right hon. Friend the Member for Witham (Priti Patel), that fiscal drag is one of the main reasons why the tax burden has gone up so much. The top rate of tax comes in at just £50,270 and, as the hon. Lady made clear in her speech, progressively over the years, an increasing number of people will fall into that. Quite large numbers of constituents who are working hard on fairly modest wages—medium-paid police, medium-paid teachers and medium-paid people in the health service—will suddenly be thrust into the top rate of tax. As my right hon. Friend said, people know how to spend their own money far better than the state does. We want a progressive look at that to see what can be done, perhaps in the Budget.
This autumn statement will be remembered for two key events. One was full expensing made permanent, at a cost £11 billion—a big relief announced today. The second one, for individuals, is the cut in class 2 and class 4 national insurance, amounting to £10 billion. Those are two big measures. I warmly welcome the measures to boost growth, employment, productivity and, above all, investment. Boosting investment will help the long-standing productivity problem in this country. There are measures to boost growth, reduce debt and, above all, see inflation come down in the way that it has.
Inflation is a tax on every single person in this country, every business and the public sector. In short, it is very damaging to the economy as a whole, and it is good to see it come down from over 11% to just under 5% in a year. We look forward to the Chancellor’s predictions of it coming down to 2.8% next year. Even better, by the end of next year or the beginning of 2025, it may come down to the Bank of England’s target level of 2%. That is a good thing to happen to the economy.
What have we done in this autumn statement? We have cut taxes for 27 million working people from January, by reducing the rate of national insurance contributions. We have cut and simplified tax for 2 million self-employed—I warmly welcome that, as I have a lot of self-employed people in my constituency. We have cut business rates, by freezing the small business multiplier yet again, saving the average shop £1,650. That will benefit a lot of shops in my small towns in the Cotswolds. As I said, we have increased the national living wage to £11.44 an hour, up from about £5.50 when we took power in 2010. That is a terrific achievement and will benefit 2.7 million workers. One measure that will help in the Cotswolds is increasing the local housing allowance, because rents are high, and the difference between housing benefit and what people have to pay in the market is large. Having an elderly population, I am delighted that the Government intend to keep their promise on the triple lock.
I am delighted to follow my Chair on the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). She recounted in her wise speech a lot of measures that we have heard in Committee hearings, which she and I attend diligently twice a week—a terrific workload. I absolutely agree with her on skills, as others have mentioned. Time after time in our hearings we have heard about skills shortages in certain sectors—IT programmers, digital collection, project managers and complex procurers—hampering the public sector in carrying out particularly big projects. I am delighted, therefore, by what the Chancellor said today about how our youngsters’ levels of education have increased so much within the G7.
I had a good visit the other day to see the acting deputy head of Cirencester College. His is one of the leading colleges in the country for the Government’s new T-levels. He now teaches 13, up from 10. His student numbers are full to the gunwales at 3,300, and he cannot take any more unless he has new buildings. It may interest the House that he warmly welcomes the Government’s new proposals on advanced British standards, because the combination of vocational and technical training produces more rounded pupils who go on to do better at university. The Government have some imaginative ideas in education, and I know that my teachers in the Cotswolds will warmly welcome the record resources going into our schools through the statement.
There was one thing missing in the autumn statement and I am sorry but I am going to detain the House for a little while on it, because it is so important. I will go through it in a little detail. I asked the Chancellor why tourist tax measures were not included in the autumn statement. On leaving the EU, Britain had the chance to become the only European country where 450 million EU residents could shop tax free. I warmly welcome the newly appointed Minister on the Front Bench, the Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). I think he would agree with me on this. If he does, let us get on and do something about it, because businesses believe that this new market could be worth an estimated £10 billion in two years.
At the time of leaving the EU, the Treasury considered the option of extended tax-free shopping to EU visitors but decided it would cost too much. Britain ended the existing tax-free shopping not only for EU visitors, but for shoppers from around the world. That had consequences. By ending tax-free shopping for non-EU visitors, Britain is losing out on a multibillion-pound market where it was by far the leading destination in Europe for tax-free shopping. In 2019, Britain accounted for 45% of all tax-free shopping done in France, Italy, Spain and Britain combined, but it has missed out on this potentially huge new shopping-led tourist market which only Britain could have benefited from because we were the country that had left the EU.
Let us look at the data on the opportunity for Britain if the Government had chosen to extend tax-free shopping to EU visitors and visitors from around the world. We are now seeing something of the impact of allowing British visitors to the EU to shop tax free: our people going to the EU and shopping tax free, which they do in abundance. In the first full year of travel, in 2022, British shoppers spent around £500 million on tax-free shopping in the EU. This year, the figure is estimated to double, so that our people are going out and benefiting EU countries potentially to the tune of £1 billion. The Association of International Retail has made a very rough estimate, from the behaviour of British tax-free shoppers, of what could happen were Britain to offer tax-free shopping to EU visitors. The EU has six times more people than Britain, so if that level was replicated by the EU shoppers we allowed to shop tax free in this country, the £1 billion of tax-free shopping that our people do in Europe could be turned into up to £6 billion.
The most recent forecasting reports are truly staggering and I ask my hon. Friend on the Front Bench to listen to them. The Centre for Economics and Business Research builds on a previous report by the respected Oxford Economics. The two reports forecast that introducing tax-free shopping would boost visitor numbers by between 1.6 million and 1.7 million, increase spending by between £1.7 billion and £2.8 billion, and increase GDP by between £4.1 billion and £9.1 billion annually. I cannot understand why the Treasury will not consider this measure. The difference between the two forecasts is mainly due to timing, with the Oxford Economics study released in October 2022 and the CEBR study published a little later, in July 2023.
When the Government are looking for growth measures, why has the Treasury dismissed this opportunity so quickly, without any comprehensive cost-benefit analysis? Ministers have told us time after time that the Treasury wrongly assumes—those are my words—that tax-free shopping produces little or no behavioural change by international travellers, either in choosing to come to the UK or their spending levels. That is just so counterintuitive it is unbelievable. The Treasure forecasts a £2 billion cost in refunding VAT, with little or no benefit in terms of additional numbers or spending—again, completely counterintuitive.
The Treasury constantly repeats the claim that evidence shows that tax-free shopping is not a significant reason for people to come to this country, but the actual figures show that that is complete nonsense. Out there in the market, retail levels in London, for instance, are roughly back where they were in 2019, before the pandemic, while in other European centres, such as Paris and Madrid, they are up by 300% and 200% respectively. What is also happening is that the high spenders, people from America, the middle east and China, are not coming here to do their high-level shopping, to the disbenefit of the high-level retailers. Burberry, for example, is shifting its investment away from the UK and on to the continent. Those are some of the things that are happening out there, and they are not of benefit to us.
Why, then, was the OBR not asked to look at extending tax-free shopping to the EU? Why was it not asked to assess the policy until after the decision had been made? This meant that it had no remit to assess the forecasts of EU spending on the basis of which the decision was made. It strikes me as entirely sensible to call for an independent review of that decision, because the evidence is now undermining the Treasury’s forecast in a big way, and because those particular forecasts were never assessed by the OBR.
I am watching you very carefully, Madam Deputy Speaker, and I will wind up my speech now. Let me just repeat what I said in my question to the Chancellor. Our citizens benefit European and other countries by shopping duty free abroad, but we do not extend the same facility to shoppers who want to spend a lot of money in this country. I implore Treasury Ministers to commission an independent report as soon as possible to establish whether what a number of large businesses are saying—do not just take it from me—is true, because we in this country could be losing out in a big way.
Dame Rosie Winterton
Madam Deputy Speaker
Order. We have eight more speakers, so there is more pressure than I thought. I am afraid that Members have not been sticking to the advisory guidance of speaking for only 10 minutes, so I will now impose a nine-minute limit to aid colleagues in the length of their speeches.
17:29:07
Sammy Wilson
East Antrim
Let me say first of all that I welcome the Chancellor’s statement. It is good to see that, at long last, the light has come on and he has realised that, “You cannot tax your way to growth,” and that some of the wrong policies that were followed by him, and by the Prime Minister when he was in that post, are now being reversed.
All the economic evidence shows that the more you tax people the less growth you will have, and the more you tax businesses the less money you will have to invest, and therefore you will have low levels of growth. I know that a lot of people have spent a lot of time criticising the Chancellor today, but I am pleased that a sinner has come to repentance. There should be great rejoicing about the fact that this Damascus road experience in the Treasury is now going to bear some fruit in our country. The models contained in many studies conducted by, for instance, the Cardiff macroeconomics research group, the Centre for Brexit Policy, and the Growth Foundation have already shown that a low-tax economy can benefit in terms of growth, which then helps to increase tax revenues, reduce debt and finance public services. It is a virtuous circle.
There are some measures that I particularly welcome, including some of the tax changes. It is good to see a reduction in national insurance contributions, especially at a time when the OBR is forecasting that GDP growth per head will rise by only 0.7% and inflation will rise by 5.1%. While those figures show that the cost of living problems will continue for ordinary individuals, it is good for them to have some of their own money to keep or spend, enabling them to pay those higher prices. I also welcome the corporation tax allowance. Again, this is targeted not just to give companies profits to distribute to shareholders but, more importantly, to incentivise them to invest. That targeted way of reducing corporation tax is important.
I also welcome the business rates commitment, although I hope that the Secretary of State for Northern Ireland has paid close attention to what has been said about the importance of keeping business rates low, because one of the suggestions being made around Northern Ireland at present is that, as he has some responsibility for bringing budgets forward due to the Executive not being in operation, business rates might be one of the areas where he could save some money. I hope we do not have a policy of the Government in London saying that reducing business rates is important while the Minister in Northern Ireland says, “Oh well, it’s a different situation here.”
I would point out, however, that despite all these tax cuts, there are tax increases coming down the way for businesses. On green taxes, the Government have made much of wanting to try to reduce the cost of their net zero policies. The OBR forecasts suggest that environmental taxes are going to soar to £20 billion, that emissions trading taxes will go up by 50% in the next year and that environmental levies will be up 100% by 2026. That is a burden on businesses, and of course the planning policies that are being introduced are simply to allow for the expensive roll-out of the grid due to net zero policies.
I also want to mention the fact that there are Barnett consequentials in this statement for Scotland, Northern Ireland and Wales. The Barnett consequentials for Northern Ireland are meant to be about £185 million, but none of that is likely to be spent in Northern Ireland even though these measures were designed to promote growth and help to expand the economy. They will be taken back. We know for certain that some will be taken back by the Treasury to repay the overspend that occurred as a result of the incompetence of the Sinn Féin Finance Minister who oversaw a budget overspend in Northern Ireland. This is happening in a week when Northern Ireland has been denied money from the levelling-up fund as well.
I hope that the Chancellor will listen to the arguments from Northern Ireland and from the Fiscal Council that, despite the claims being made, Northern Ireland is actually underfunded in relation to Scotland and Wales, because need is not taken into account. On top of that, when money is allocated in statements such as these, it is not even made available in Northern Ireland. The Government cannot ignore this issue if they want to bring up the level of growth in Northern Ireland.
I welcome the fact that the Government are going to encourage people to get into work. That should not be regarded as some kind of bullying tactic. It should be seen as important for those people who are unemployed. Whatever their reason for being unemployed, they will be encouraged to get back into work and make a contribution, and of course raise their own self-esteem as well.
We also welcome the triple lock on pensions. When we had some influence in this House, we made it a condition of working with the Government that the triple lock be maintained, and I am glad that that has continued to be the case, especially at a time when the cost of living is increasing so much. Pensioners on fixed incomes require the support that the triple lock is providing.
I welcome the fact that the Government are now turning around, and I look forward to more tax reductions. As other Members have pointed out, people have been dragged into a higher tax rate as their wages have gone up, and some find that it is no longer worth their while working. Let us take a single parent on a £50,000 income who needs to pay for childcare if they want to go out to work. Some find that, by the time they have paid their childcare costs, their marginal rate of taxation is nearly 68%. If we are looking for a supply-side measure, there is one. We could release a lot of skilled people into the workforce by ensuring that their childcare costs do not prohibit them from working.
Only time will tell, but I hope that the measures taken today will have the impact that the Government hope they will have, because that will be good for the economy, for individuals and for public services.
All the economic evidence shows that the more you tax people the less growth you will have, and the more you tax businesses the less money you will have to invest, and therefore you will have low levels of growth. I know that a lot of people have spent a lot of time criticising the Chancellor today, but I am pleased that a sinner has come to repentance. There should be great rejoicing about the fact that this Damascus road experience in the Treasury is now going to bear some fruit in our country. The models contained in many studies conducted by, for instance, the Cardiff macroeconomics research group, the Centre for Brexit Policy, and the Growth Foundation have already shown that a low-tax economy can benefit in terms of growth, which then helps to increase tax revenues, reduce debt and finance public services. It is a virtuous circle.
There are some measures that I particularly welcome, including some of the tax changes. It is good to see a reduction in national insurance contributions, especially at a time when the OBR is forecasting that GDP growth per head will rise by only 0.7% and inflation will rise by 5.1%. While those figures show that the cost of living problems will continue for ordinary individuals, it is good for them to have some of their own money to keep or spend, enabling them to pay those higher prices. I also welcome the corporation tax allowance. Again, this is targeted not just to give companies profits to distribute to shareholders but, more importantly, to incentivise them to invest. That targeted way of reducing corporation tax is important.
I also welcome the business rates commitment, although I hope that the Secretary of State for Northern Ireland has paid close attention to what has been said about the importance of keeping business rates low, because one of the suggestions being made around Northern Ireland at present is that, as he has some responsibility for bringing budgets forward due to the Executive not being in operation, business rates might be one of the areas where he could save some money. I hope we do not have a policy of the Government in London saying that reducing business rates is important while the Minister in Northern Ireland says, “Oh well, it’s a different situation here.”
I would point out, however, that despite all these tax cuts, there are tax increases coming down the way for businesses. On green taxes, the Government have made much of wanting to try to reduce the cost of their net zero policies. The OBR forecasts suggest that environmental taxes are going to soar to £20 billion, that emissions trading taxes will go up by 50% in the next year and that environmental levies will be up 100% by 2026. That is a burden on businesses, and of course the planning policies that are being introduced are simply to allow for the expensive roll-out of the grid due to net zero policies.
I also want to mention the fact that there are Barnett consequentials in this statement for Scotland, Northern Ireland and Wales. The Barnett consequentials for Northern Ireland are meant to be about £185 million, but none of that is likely to be spent in Northern Ireland even though these measures were designed to promote growth and help to expand the economy. They will be taken back. We know for certain that some will be taken back by the Treasury to repay the overspend that occurred as a result of the incompetence of the Sinn Féin Finance Minister who oversaw a budget overspend in Northern Ireland. This is happening in a week when Northern Ireland has been denied money from the levelling-up fund as well.
I hope that the Chancellor will listen to the arguments from Northern Ireland and from the Fiscal Council that, despite the claims being made, Northern Ireland is actually underfunded in relation to Scotland and Wales, because need is not taken into account. On top of that, when money is allocated in statements such as these, it is not even made available in Northern Ireland. The Government cannot ignore this issue if they want to bring up the level of growth in Northern Ireland.
I welcome the fact that the Government are going to encourage people to get into work. That should not be regarded as some kind of bullying tactic. It should be seen as important for those people who are unemployed. Whatever their reason for being unemployed, they will be encouraged to get back into work and make a contribution, and of course raise their own self-esteem as well.
We also welcome the triple lock on pensions. When we had some influence in this House, we made it a condition of working with the Government that the triple lock be maintained, and I am glad that that has continued to be the case, especially at a time when the cost of living is increasing so much. Pensioners on fixed incomes require the support that the triple lock is providing.
I welcome the fact that the Government are now turning around, and I look forward to more tax reductions. As other Members have pointed out, people have been dragged into a higher tax rate as their wages have gone up, and some find that it is no longer worth their while working. Let us take a single parent on a £50,000 income who needs to pay for childcare if they want to go out to work. Some find that, by the time they have paid their childcare costs, their marginal rate of taxation is nearly 68%. If we are looking for a supply-side measure, there is one. We could release a lot of skilled people into the workforce by ensuring that their childcare costs do not prohibit them from working.
Only time will tell, but I hope that the measures taken today will have the impact that the Government hope they will have, because that will be good for the economy, for individuals and for public services.
Dame Rosie Winterton
Madam Deputy Speaker
Order. I am going to be very generous and see what happens if I put the time limit back up to 10 minutes, although I may have to reduce it again.
17:38:01
Richard Fuller
North East Bedfordshire
You tempt me in the wrong direction, Madam Deputy Speaker. I am sure that, in a few minutes, those on the Government Front Bench will wish that I had had fewer minutes.
It is a great pleasure to follow the right hon. Member for East Antrim (Sammy Wilson). He always speaks a lot of sense in the House, and I listened with interest to what he said. It is also a pleasure to welcome the Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), to his place. I am sure he will do a fantastic job in the Treasury, as will the rest of the team.
I congratulate the Chancellor, because at the start of this debate the Opposition were struggling to have anything to say about what was in his statement. They talked about things that the Chancellor was not doing, and then they tried desperately not to sound too enthusiastic about the things that he was doing. That is part of the success of the Chancellor’s statement. I therefore congratulate him on making a reasonable and good start, but we have a very long way to go to get back to Conservative principles in public financing.
I want to draw attention to three charts that the Institute for Fiscal Studies prepared. The first shows public spending increases in real terms, going back all the way to 1985-86. As one gets older, one likes looking at longer-term trends in things. The chart shows that in this Parliament there was a significant increase in public expenditure in two fiscal years. As Ministers have said, those were caused by exceptional items: the covid response and the consequences of Russia’s invasion of Ukraine.
Those one-off increases should have been followed by significant real reductions in public expenditure, to get it back to where it was. If we have real increases, we are then at a higher level, and we get back to where we were before the one-offs only if we have real reductions. There was nothing in the announcements today that indicated that the Government have got to grips with that essential point about public spending.
The second chart from the IFS looks at tax rises across Parliaments. I do not want to get into the nitty-gritty, although it is true that, at the moment, this is the largest tax-raising Parliament of any, and that will be extremely difficult for me to explain to my constituents, but if we look over the longer term, four of the six Parliaments from 1970 to 1997 were tax-cutting Parliaments, and only two were tax-increasing. Of the seven Parliaments since 1997, five have increased taxes and only two have reduced them. We have a political-class problem: whichever party is in power, we are biased towards increasing the burden on taxpayers to increase the state. That is not a Conservative approach to the economy.
Thirdly, the IFS looked at the proportion of taxpayers now captured in the higher and additional rate. Lots of sensible words have been said by Members in all parts of the House about thresholds and the drag. When this rate was brought in, 4% of adults paid that higher rate. With measures not reversed today—it is important that we say to the Treasury, “You did not reverse this today”—that number will rise to 16% by 2027-28. That is not 16% of taxpayers, but 16% of all adults and so it includes people who are not working and it includes pensioners. The actual number will be nearly one in four taxpayers paying the higher rate of tax. That is not a Conservative way to run the economy.
There are some specific hopes in what the Government have put in. I particularly welcome some of the measures, including those set out in paragraphs 5.95, 5.96 and 5.97 in the Green Book, which form part of the Chancellor’s 110 measures. They seek to strengthen economic regulation and impose, or introduce, a growth duty on Ofwat, Ofcom and Ofgem. Those important measures will stimulate growth, but my point would be: is that it? Regulators cover 25% of the productive part of our economy. Members in all parts of the House have pointed out numerous times the failures of our regulators to manage their sectors effectively, be it water or energy. What on earth are the Government doing to make regulators make more effort to stimulate growth? I ask the regulators, please, not only to stick with current efforts but to do more of what they can. I know that my hon. Friend the Economic Secretary feels similarly.
The Financial Secretary is not here, but he has responsibility for His Majesty’s Revenue and Customs. The Green Book contains an interesting item at paragraph 5.57, which is heroically called:
“Investment in HMRC debt management capability”.
I have a background in venture capital and this measure, for £163 million, promises an annual return of more than £1 billion. We put £163 million of extra resources into HMRC to chase on this issue and we get £1 billion back, according to the Government’s numbers. How does that happen? It is because this measure
“will allow HMRC to better distinguish between those who can afford to settle their tax debts, but choose not to, from those who are temporarily unable to pay and need support.”
That is a massive extension of the roles and responsibility of HMRC into the personal finances or the corporate finances of small businesses. Clearly, that may be a good measure, whereby we can close the tax gap. I worry, however, that HMRC is extending itself a little too far and not focusing on the bread and butter issues, such as picking up the phone and answering the inquiries of taxpayers day to day.
The Chancellor was right to introduce productivity targets for the public, as it is clear that since the pandemic the private sector has roared ahead with productivity improvements and the public sector has done absolutely nothing to improve productivity. But why go for 0.5%? What institution cannot achieve more than a 0.5% improvement in productivity year on year? The Chancellor should look at strengthening that target. While he is at it, why does he not go through all the capital projects that do not have a positive benefit-to-cost ratio, on proper discounted cash-flow terms, and cancel the lot of them? If they are going to waste public money, let us not spend the public money in the first place.
Unlike some Opposition Members, I welcome the triple lock and the living wage increase. Those long-term Conservative policies have been put in place and year on year they have done so much to take working people and many pensioners out of poverty. Those measures are expensive for the state—of course, we need to understand that—but they are crucial parts of making our society more equal. I have one point to raise: I do not think anyone in this House is confident about introducing a regional living wage, as there are lots of problems with that. However, we must note that the living wage is rising to £11.44 and that is nearly 80% of median wages in Wales. There becomes an issue in certain regions as to whether this very strong push on the national living wage will have a distributional effect on unemployment.
Although I may not sound it, I am pleased that the Chancellor has announced these measures. It is clear we live in a world where forecasters now have the whip hand—how on earth we got here, I do not know. One year there is no headroom, but then they spin the forecast around and a year later there is. Who knows where this will end? Whatever that headroom has been, the Chancellor has pointed the ship of state in the right direction and I wish him full speed ahead.
It is a great pleasure to follow the right hon. Member for East Antrim (Sammy Wilson). He always speaks a lot of sense in the House, and I listened with interest to what he said. It is also a pleasure to welcome the Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), to his place. I am sure he will do a fantastic job in the Treasury, as will the rest of the team.
I congratulate the Chancellor, because at the start of this debate the Opposition were struggling to have anything to say about what was in his statement. They talked about things that the Chancellor was not doing, and then they tried desperately not to sound too enthusiastic about the things that he was doing. That is part of the success of the Chancellor’s statement. I therefore congratulate him on making a reasonable and good start, but we have a very long way to go to get back to Conservative principles in public financing.
I want to draw attention to three charts that the Institute for Fiscal Studies prepared. The first shows public spending increases in real terms, going back all the way to 1985-86. As one gets older, one likes looking at longer-term trends in things. The chart shows that in this Parliament there was a significant increase in public expenditure in two fiscal years. As Ministers have said, those were caused by exceptional items: the covid response and the consequences of Russia’s invasion of Ukraine.
Those one-off increases should have been followed by significant real reductions in public expenditure, to get it back to where it was. If we have real increases, we are then at a higher level, and we get back to where we were before the one-offs only if we have real reductions. There was nothing in the announcements today that indicated that the Government have got to grips with that essential point about public spending.
The second chart from the IFS looks at tax rises across Parliaments. I do not want to get into the nitty-gritty, although it is true that, at the moment, this is the largest tax-raising Parliament of any, and that will be extremely difficult for me to explain to my constituents, but if we look over the longer term, four of the six Parliaments from 1970 to 1997 were tax-cutting Parliaments, and only two were tax-increasing. Of the seven Parliaments since 1997, five have increased taxes and only two have reduced them. We have a political-class problem: whichever party is in power, we are biased towards increasing the burden on taxpayers to increase the state. That is not a Conservative approach to the economy.
Thirdly, the IFS looked at the proportion of taxpayers now captured in the higher and additional rate. Lots of sensible words have been said by Members in all parts of the House about thresholds and the drag. When this rate was brought in, 4% of adults paid that higher rate. With measures not reversed today—it is important that we say to the Treasury, “You did not reverse this today”—that number will rise to 16% by 2027-28. That is not 16% of taxpayers, but 16% of all adults and so it includes people who are not working and it includes pensioners. The actual number will be nearly one in four taxpayers paying the higher rate of tax. That is not a Conservative way to run the economy.
There are some specific hopes in what the Government have put in. I particularly welcome some of the measures, including those set out in paragraphs 5.95, 5.96 and 5.97 in the Green Book, which form part of the Chancellor’s 110 measures. They seek to strengthen economic regulation and impose, or introduce, a growth duty on Ofwat, Ofcom and Ofgem. Those important measures will stimulate growth, but my point would be: is that it? Regulators cover 25% of the productive part of our economy. Members in all parts of the House have pointed out numerous times the failures of our regulators to manage their sectors effectively, be it water or energy. What on earth are the Government doing to make regulators make more effort to stimulate growth? I ask the regulators, please, not only to stick with current efforts but to do more of what they can. I know that my hon. Friend the Economic Secretary feels similarly.
The Financial Secretary is not here, but he has responsibility for His Majesty’s Revenue and Customs. The Green Book contains an interesting item at paragraph 5.57, which is heroically called:
“Investment in HMRC debt management capability”.
I have a background in venture capital and this measure, for £163 million, promises an annual return of more than £1 billion. We put £163 million of extra resources into HMRC to chase on this issue and we get £1 billion back, according to the Government’s numbers. How does that happen? It is because this measure
“will allow HMRC to better distinguish between those who can afford to settle their tax debts, but choose not to, from those who are temporarily unable to pay and need support.”
That is a massive extension of the roles and responsibility of HMRC into the personal finances or the corporate finances of small businesses. Clearly, that may be a good measure, whereby we can close the tax gap. I worry, however, that HMRC is extending itself a little too far and not focusing on the bread and butter issues, such as picking up the phone and answering the inquiries of taxpayers day to day.
The Chancellor was right to introduce productivity targets for the public, as it is clear that since the pandemic the private sector has roared ahead with productivity improvements and the public sector has done absolutely nothing to improve productivity. But why go for 0.5%? What institution cannot achieve more than a 0.5% improvement in productivity year on year? The Chancellor should look at strengthening that target. While he is at it, why does he not go through all the capital projects that do not have a positive benefit-to-cost ratio, on proper discounted cash-flow terms, and cancel the lot of them? If they are going to waste public money, let us not spend the public money in the first place.
Unlike some Opposition Members, I welcome the triple lock and the living wage increase. Those long-term Conservative policies have been put in place and year on year they have done so much to take working people and many pensioners out of poverty. Those measures are expensive for the state—of course, we need to understand that—but they are crucial parts of making our society more equal. I have one point to raise: I do not think anyone in this House is confident about introducing a regional living wage, as there are lots of problems with that. However, we must note that the living wage is rising to £11.44 and that is nearly 80% of median wages in Wales. There becomes an issue in certain regions as to whether this very strong push on the national living wage will have a distributional effect on unemployment.
Although I may not sound it, I am pleased that the Chancellor has announced these measures. It is clear we live in a world where forecasters now have the whip hand—how on earth we got here, I do not know. One year there is no headroom, but then they spin the forecast around and a year later there is. Who knows where this will end? Whatever that headroom has been, the Chancellor has pointed the ship of state in the right direction and I wish him full speed ahead.
17:45:08
Ian Blackford
Ross, Skye and Lochaber
It is a pleasure to follow the hon. Member for North East Bedfordshire (Richard Fuller). I understand the points he made about taxation. There have to be limits on how we tax people, families, businesses and so on, but the position we are in today underscores the need to deliver sustainable economic growth, because that will deliver the tax receipts that allow us to invest in our public services.
The autumn statement is clearly framed with the next UK election in mind. While some of the measures are welcome—I particularly welcome the announcement of the reallocation of the Inverness and Highland city region deal, allowing £20 million in funding for the Corran ferry in my constituency, which will be well received by the community in the Ardnamurchan peninsula and others—overall the autumn statement is a missed opportunity to deal with the structural weaknesses in the UK economy, while recognising the pressures felt from the cost of living crisis.
Let us reflect on the headroom referred to by the hon. Member for North East Bedfordshire. In large measure, that has been caused by the inflationary aspects on taxation receipts. Much of the gloss of the headline tax cuts will wash away when people realise the harsh reality: inflation will erode the fantasy that the Chancellor is making folk better off, and, as have heard, fiscal drag is real issue. While much of the focus is on the short term, where is the vision to sustainably grow the economy for the long term? Interestingly, when we look at the OBR book, we find that business investment is forecast to fall from 10.9% of GDP this year to 9.7% by 2029. The illusion that we will see an explosion of investment growth is not borne out by the analysis of the Office for Budget Responsibility.
We can debate the source of the pressure on public finances, but absence of growth fundamentally caps the growth in tax receipts that would allow us to invest in infrastructure and our public services, and ultimately pay down our accumulated debt through the delivery of growth. The harsh reality is that the United Kingdom is falling down the league tables for investment and growth, which affects all of us here and is all too apparent to all our constituents and communities.
Let us look at the OBR forecasts: GDP growth of 0.6% for this year, 0.7% for next year and 1.4% for the year after. That is an average of 1.4% over the six-year period forecast. I do not know how the Chancellor classifies a high-growth economy—but, my goodness, this is not it. It is a fantasy if those on the Tory Benches believe that this autumn statement delivers high and sustainable growth; quite simply, it does not.
By comparison, let us look at the International Monetary Fund forecast for the US: growth of 1.6% this year, 1.1% next year and 1.8% the year after, and an economy that has outpaced the UK on average by 1% a year over the last decade. That is the reality of how the UK has fallen behind over the period of Tory Governments since 2010. The UK has failed on growth since the financial crisis and, on today’s forecasts, the UK will continue to fail on growth. To quote the phrase to the Chancellor: “It’s the economy, stupid”.
Let us look at the reality of policy failure in broken Britain. The Resolution Foundation suggests that the current parliamentary term is on track to be the worst for living standards since at least the 1950s. The OBR suggests that real wages will only get back to the 1998 level in 2028: two decades of no growth in real wages—yet you wouldn’t believe any of that when you hear the bùrach coming from the Tory Benches. Why do they not just admit that over the course of their Administration—and thank goodness it is coming to an end—people have got poorer?
We can talk about the tax burden and we can talk about the investments they have trumpeted, but the harsh reality is that what we have seen is a massive, massive mismanagement of the economy. I ask colleagues across the House to dwell on that, and the Chancellor and his Treasury team to accept the failure of financial management that has resulted in such poor outcomes. My goodness, what a disgrace. With our debt and taxation burdens, people have got poorer. Those on the Government Benches should look at themselves in the mirror and at what they have presided over.
It is not just a failure of leadership and management in this parliamentary term; the problems run much deeper. In particular, we have been stuck with a low-growth economy since the financial crisis of 2008. Low growth, low investment and low productivity growth led to that lost decade and that squeeze on living standards.
When we think back to the period post the financial crisis, the only game in town was quantitative easing; much of it was required, but there were two failures. The complete misalignment between monetary and fiscal policy for much of the period meant that the circumstances to create sustainable economic growth could not be delivered. The failure of that lies at the door of this Tory Government. Then the continued printing of money through the QE scheme was one, but not the only, cause of the increase in inflation that we have seen. The Government say that they are not responsible for the increase in inflation to 11.1%—of course recognising the independence of the Bank of England, but let us not kid ourselves about the alignment that takes place—but much of that increase in inflation was a failure of policy, in particular a failure of policy at the time of covid. Let us accept some responsibility where it is necessary to do so.
The Government had some cheek congratulating themselves on the decline in inflation when the increase in the first place was driven by policy failure. Although the growth in inflation is falling, let us please not forget that it is hurting ordinary folk. We know about the continued increase in food prices, the cost of energy, and the painful choices that people are having to make. The lack of direct support to counteract all that is hitting home for millions of folk who are struggling to make ends meet.
Tomorrow the energy cap will be announced, and it is expected to increase from £1,800 to £1,900. That is the reality of what is happening to people—that increase in cost and the impact on consumers. Of course, there is also the fact that the Bank of England is warning that interest rates will remain high, and millions will face the impact of rising mortgage costs yet to come. And let us remember that the international markets attach a risk premium to the UK; our interest rates will remain higher for longer than our international counterparts, and that has been the case for a while now.
What we see with the tax cuts that are being trumpeted today is that our UK economy is very much based on a trade and current account deficit. What happens in the end is that the currency takes the hit and investors say they want a premium to hold UK assets. Again, that is the failure of long-term planning for the UK economy—not just the disastrous Budget last year, but the penalty of being in the UK, and for us in Scotland of being in broken Britain.
Let me return to the future and to the questions about vision and the sort of economy that the UK is. Fundamentally, the UK is a trading economy, not a manufacturing economy. When we are discussing this autumn statement and the prospects for growth, we cannot ignore the self-harm of Brexit or the lost growth opportunity that impacts the UK to the tune of 4% of our GDP—when we are struggling for growth, we actually inflict that self-harm on ourselves. Just look at the OBR forecast for growth. Where is the plan to change this? Where is the green industrial strategy?
I am delighted that the Scottish Government have been presented with an industrial strategy—it is sitting with the Government now—because we recognise the enormous opportunity that there is to increase our green energy output fivefold and to create, between now and 2050, 325,000 jobs. What a contrast it is to have a Government who will make sure that we have that just transition, who will prioritise investment in net zero, and who will make sure that we tackle fuel insecurity. The Scottish Government estimate that there are 830,000 fuel-poor households in Scotland—a third of all our households. It is a scandal that energy-rich Scotland is paying the price for the failure of UK energy policy. It clearly demonstrates that, while we have the power in Scotland, Westminster has control—and in Scotland, we pay the price.
Let me wrap up. The UK Government should have reinstated the £400 energy bill support scheme. Protecting people from the cost of living crisis should have been a priority in the autumn statement. My colleagues in the Scottish Government, through initiatives such as the Scottish child payment, are helping to drive young people and families out of poverty. We understand the importance of using our capital funding to strengthen the conditions for economic growth, but we are having to do that while our capital budget is being constrained and cut by the UK. That is the real-terms cost to Scotland of being held back by broken Britain—
The autumn statement is clearly framed with the next UK election in mind. While some of the measures are welcome—I particularly welcome the announcement of the reallocation of the Inverness and Highland city region deal, allowing £20 million in funding for the Corran ferry in my constituency, which will be well received by the community in the Ardnamurchan peninsula and others—overall the autumn statement is a missed opportunity to deal with the structural weaknesses in the UK economy, while recognising the pressures felt from the cost of living crisis.
Let us reflect on the headroom referred to by the hon. Member for North East Bedfordshire. In large measure, that has been caused by the inflationary aspects on taxation receipts. Much of the gloss of the headline tax cuts will wash away when people realise the harsh reality: inflation will erode the fantasy that the Chancellor is making folk better off, and, as have heard, fiscal drag is real issue. While much of the focus is on the short term, where is the vision to sustainably grow the economy for the long term? Interestingly, when we look at the OBR book, we find that business investment is forecast to fall from 10.9% of GDP this year to 9.7% by 2029. The illusion that we will see an explosion of investment growth is not borne out by the analysis of the Office for Budget Responsibility.
We can debate the source of the pressure on public finances, but absence of growth fundamentally caps the growth in tax receipts that would allow us to invest in infrastructure and our public services, and ultimately pay down our accumulated debt through the delivery of growth. The harsh reality is that the United Kingdom is falling down the league tables for investment and growth, which affects all of us here and is all too apparent to all our constituents and communities.
Let us look at the OBR forecasts: GDP growth of 0.6% for this year, 0.7% for next year and 1.4% for the year after. That is an average of 1.4% over the six-year period forecast. I do not know how the Chancellor classifies a high-growth economy—but, my goodness, this is not it. It is a fantasy if those on the Tory Benches believe that this autumn statement delivers high and sustainable growth; quite simply, it does not.
By comparison, let us look at the International Monetary Fund forecast for the US: growth of 1.6% this year, 1.1% next year and 1.8% the year after, and an economy that has outpaced the UK on average by 1% a year over the last decade. That is the reality of how the UK has fallen behind over the period of Tory Governments since 2010. The UK has failed on growth since the financial crisis and, on today’s forecasts, the UK will continue to fail on growth. To quote the phrase to the Chancellor: “It’s the economy, stupid”.
Let us look at the reality of policy failure in broken Britain. The Resolution Foundation suggests that the current parliamentary term is on track to be the worst for living standards since at least the 1950s. The OBR suggests that real wages will only get back to the 1998 level in 2028: two decades of no growth in real wages—yet you wouldn’t believe any of that when you hear the bùrach coming from the Tory Benches. Why do they not just admit that over the course of their Administration—and thank goodness it is coming to an end—people have got poorer?
We can talk about the tax burden and we can talk about the investments they have trumpeted, but the harsh reality is that what we have seen is a massive, massive mismanagement of the economy. I ask colleagues across the House to dwell on that, and the Chancellor and his Treasury team to accept the failure of financial management that has resulted in such poor outcomes. My goodness, what a disgrace. With our debt and taxation burdens, people have got poorer. Those on the Government Benches should look at themselves in the mirror and at what they have presided over.
It is not just a failure of leadership and management in this parliamentary term; the problems run much deeper. In particular, we have been stuck with a low-growth economy since the financial crisis of 2008. Low growth, low investment and low productivity growth led to that lost decade and that squeeze on living standards.
When we think back to the period post the financial crisis, the only game in town was quantitative easing; much of it was required, but there were two failures. The complete misalignment between monetary and fiscal policy for much of the period meant that the circumstances to create sustainable economic growth could not be delivered. The failure of that lies at the door of this Tory Government. Then the continued printing of money through the QE scheme was one, but not the only, cause of the increase in inflation that we have seen. The Government say that they are not responsible for the increase in inflation to 11.1%—of course recognising the independence of the Bank of England, but let us not kid ourselves about the alignment that takes place—but much of that increase in inflation was a failure of policy, in particular a failure of policy at the time of covid. Let us accept some responsibility where it is necessary to do so.
The Government had some cheek congratulating themselves on the decline in inflation when the increase in the first place was driven by policy failure. Although the growth in inflation is falling, let us please not forget that it is hurting ordinary folk. We know about the continued increase in food prices, the cost of energy, and the painful choices that people are having to make. The lack of direct support to counteract all that is hitting home for millions of folk who are struggling to make ends meet.
Tomorrow the energy cap will be announced, and it is expected to increase from £1,800 to £1,900. That is the reality of what is happening to people—that increase in cost and the impact on consumers. Of course, there is also the fact that the Bank of England is warning that interest rates will remain high, and millions will face the impact of rising mortgage costs yet to come. And let us remember that the international markets attach a risk premium to the UK; our interest rates will remain higher for longer than our international counterparts, and that has been the case for a while now.
What we see with the tax cuts that are being trumpeted today is that our UK economy is very much based on a trade and current account deficit. What happens in the end is that the currency takes the hit and investors say they want a premium to hold UK assets. Again, that is the failure of long-term planning for the UK economy—not just the disastrous Budget last year, but the penalty of being in the UK, and for us in Scotland of being in broken Britain.
Let me return to the future and to the questions about vision and the sort of economy that the UK is. Fundamentally, the UK is a trading economy, not a manufacturing economy. When we are discussing this autumn statement and the prospects for growth, we cannot ignore the self-harm of Brexit or the lost growth opportunity that impacts the UK to the tune of 4% of our GDP—when we are struggling for growth, we actually inflict that self-harm on ourselves. Just look at the OBR forecast for growth. Where is the plan to change this? Where is the green industrial strategy?
I am delighted that the Scottish Government have been presented with an industrial strategy—it is sitting with the Government now—because we recognise the enormous opportunity that there is to increase our green energy output fivefold and to create, between now and 2050, 325,000 jobs. What a contrast it is to have a Government who will make sure that we have that just transition, who will prioritise investment in net zero, and who will make sure that we tackle fuel insecurity. The Scottish Government estimate that there are 830,000 fuel-poor households in Scotland—a third of all our households. It is a scandal that energy-rich Scotland is paying the price for the failure of UK energy policy. It clearly demonstrates that, while we have the power in Scotland, Westminster has control—and in Scotland, we pay the price.
Let me wrap up. The UK Government should have reinstated the £400 energy bill support scheme. Protecting people from the cost of living crisis should have been a priority in the autumn statement. My colleagues in the Scottish Government, through initiatives such as the Scottish child payment, are helping to drive young people and families out of poverty. We understand the importance of using our capital funding to strengthen the conditions for economic growth, but we are having to do that while our capital budget is being constrained and cut by the UK. That is the real-terms cost to Scotland of being held back by broken Britain—
Dame Rosie Winterton
Madam Deputy Speaker
Order. I do have to pull people up if they go over. I call Maggie Throup.
18:01:34
Maggie Throup
Erewash
Thank you, Madam Deputy Speaker. I am sure that I will be able to remain within the time you have allocated, as my voice today is a limiting factor.
I am delighted to contribute to today’s debate, and I congratulate my right hon. Friend the Chancellor on his autumn statement. After what has been a testing year steadying the ship, this afternoon he laid the foundations for long-term growth, and demonstrated that Britain is again on the right track to prosperity. By taking the tough decisions when he did—decisions that in just over year have seen inflation halved, recession avoided, borrowing down and unemployment remaining low—my constituents can look ahead to 2024 with renewed confidence.
My right hon. Friend’s plan for the economy balances sensible and proportionate tax cuts against the continuous threat posed by inflation. The engine of the economy—its workforce—must always be our main focus, so I particularly welcome the Government’s new back to work plan, which will help those who are long-term sick, disabled or unemployed to look for, and crucially to stay in, work. We know that not everybody is able to work, and that is obviously taken into consideration, but the new plan will provide opportunities and boost self-esteem at the same time.
Translated, the Latin motto of Ilkeston—one of the towns that I am so proud to represent—means “work conquers all”. By applying Ilkeston’s principle, this Conservative Government are building on the reforms introduced by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) a number of years ago when he served as the Work and Pensions Secretary, and unlocking the potential of up to 1.1 million people, supporting them to improve their lives away from the benefits system and achieve whatever they want to achieve in paid employment.
In a similar vein, it is estimated that the private sector alone loses over 100 million work days each year to sickness absences, greatly impacting productivity and hindering wealth creation. With targeted public health measures aimed at prevention, there is a clear opportunity to make a significant reduction in the number of days lost to the UK economy through sickness absences, as well as a financial saving for businesses and the taxpayer in terms of associated costs such as long-term sick payments and benefits. I am pleased to see the Under-Secretary of State for Health and Social Care, my hon. Friend the Member for Lewes (Maria Caulfield), on the Front Bench. I am sure that she will take those messages back to her Department, and work with the Treasury to ensure that we get the right funding and use the right fiscal measures to move public health forward in a combined way.
Using the right fiscal measures is important. Ahead of today’s statement, I raised with the Chancellor removing VAT from high-factor sunscreen as one such public health measure that could make a significant and immediate difference. This is an issue close to my heart, as I had a melanoma removed in 2019. As a former Public Health Minister, I believe that tackling preventable diseases must be a priority if we are to relieve the ever-increasing pressures on our NHS. With 90% of skin cancers estimated to be preventable by the use of high-factor sunscreens, this really is a fiscal measure that would work.
Skin cancers are estimated to cost the NHS £465 million every year. That does not take into account other associated costs, such as long-term benefits and the loss to the economy, which far outweigh the revenue from VAT on high-factor sunscreen. Removing VAT on high-factor sunscreen would also put out the message to the public that the Government are doing everything possible to help to prevent cancer, and make it easier for individuals to protect themselves from this serious killer. I therefore urge my right hon. Friend the Chancellor to look seriously again at the cross-party proposals and to work towards removing VAT on high-factor sunscreen in the Budget next spring.
In the autumn statement my right hon. Friend has already used fiscal measures to help protect the public, and I welcome the increase in duty on hand-rolling tobacco. This should act as a disincentive to smoking and help the UK realise its ambition to become smokefree by 2030, as well as, more importantly, saving lives.
Turning to the levelling-up agenda, the Government can never claim to have truly succeeded in their mission to level up the midlands and the north if they fail to invest in places such as Erewash. It is therefore deeply disappointing that once again my constituency was overlooked in Monday’s announcement relating to round three of the levelling-up fund and I want to use this opportunity to make an early bid to my right hon. Friend the Chancellor for the inclusion of new funding to support major infrastructure projects in next year’s Budget, to help develop schemes such as my campaign to secure an additional motorway junction to support the multimillion-pound development at New Stanton Park and relieve the already congested local roads around my constituency.
On the wider measures announced for the east midlands, it would be remiss of me not to put in another early bid for a fair share of the benefits that will come from the east midlands investment zone. Erewash has a proud tradition of manufacturing and adapting to changes in markets and technology over time. I am sure we can accommodate advanced manufacturing and green industries, which will help regenerate our brownfield sites and contribute to the levelling-up agenda.
Whether of a Government’s own making such as the economic crash which exposed the “no money left” mantra of new Labour or caused by unprecedented global events such as the covid pandemic followed by war in Europe, during times of great economic uncertainty sound Conservative economics have always triumphed over the reckless tax-and-spend policies of the Labour party. It is in that spirit that today’s statement has been delivered, and the British people will prosper because of it.
I am delighted to contribute to today’s debate, and I congratulate my right hon. Friend the Chancellor on his autumn statement. After what has been a testing year steadying the ship, this afternoon he laid the foundations for long-term growth, and demonstrated that Britain is again on the right track to prosperity. By taking the tough decisions when he did—decisions that in just over year have seen inflation halved, recession avoided, borrowing down and unemployment remaining low—my constituents can look ahead to 2024 with renewed confidence.
My right hon. Friend’s plan for the economy balances sensible and proportionate tax cuts against the continuous threat posed by inflation. The engine of the economy—its workforce—must always be our main focus, so I particularly welcome the Government’s new back to work plan, which will help those who are long-term sick, disabled or unemployed to look for, and crucially to stay in, work. We know that not everybody is able to work, and that is obviously taken into consideration, but the new plan will provide opportunities and boost self-esteem at the same time.
Translated, the Latin motto of Ilkeston—one of the towns that I am so proud to represent—means “work conquers all”. By applying Ilkeston’s principle, this Conservative Government are building on the reforms introduced by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) a number of years ago when he served as the Work and Pensions Secretary, and unlocking the potential of up to 1.1 million people, supporting them to improve their lives away from the benefits system and achieve whatever they want to achieve in paid employment.
In a similar vein, it is estimated that the private sector alone loses over 100 million work days each year to sickness absences, greatly impacting productivity and hindering wealth creation. With targeted public health measures aimed at prevention, there is a clear opportunity to make a significant reduction in the number of days lost to the UK economy through sickness absences, as well as a financial saving for businesses and the taxpayer in terms of associated costs such as long-term sick payments and benefits. I am pleased to see the Under-Secretary of State for Health and Social Care, my hon. Friend the Member for Lewes (Maria Caulfield), on the Front Bench. I am sure that she will take those messages back to her Department, and work with the Treasury to ensure that we get the right funding and use the right fiscal measures to move public health forward in a combined way.
Using the right fiscal measures is important. Ahead of today’s statement, I raised with the Chancellor removing VAT from high-factor sunscreen as one such public health measure that could make a significant and immediate difference. This is an issue close to my heart, as I had a melanoma removed in 2019. As a former Public Health Minister, I believe that tackling preventable diseases must be a priority if we are to relieve the ever-increasing pressures on our NHS. With 90% of skin cancers estimated to be preventable by the use of high-factor sunscreens, this really is a fiscal measure that would work.
Skin cancers are estimated to cost the NHS £465 million every year. That does not take into account other associated costs, such as long-term benefits and the loss to the economy, which far outweigh the revenue from VAT on high-factor sunscreen. Removing VAT on high-factor sunscreen would also put out the message to the public that the Government are doing everything possible to help to prevent cancer, and make it easier for individuals to protect themselves from this serious killer. I therefore urge my right hon. Friend the Chancellor to look seriously again at the cross-party proposals and to work towards removing VAT on high-factor sunscreen in the Budget next spring.
In the autumn statement my right hon. Friend has already used fiscal measures to help protect the public, and I welcome the increase in duty on hand-rolling tobacco. This should act as a disincentive to smoking and help the UK realise its ambition to become smokefree by 2030, as well as, more importantly, saving lives.
Turning to the levelling-up agenda, the Government can never claim to have truly succeeded in their mission to level up the midlands and the north if they fail to invest in places such as Erewash. It is therefore deeply disappointing that once again my constituency was overlooked in Monday’s announcement relating to round three of the levelling-up fund and I want to use this opportunity to make an early bid to my right hon. Friend the Chancellor for the inclusion of new funding to support major infrastructure projects in next year’s Budget, to help develop schemes such as my campaign to secure an additional motorway junction to support the multimillion-pound development at New Stanton Park and relieve the already congested local roads around my constituency.
On the wider measures announced for the east midlands, it would be remiss of me not to put in another early bid for a fair share of the benefits that will come from the east midlands investment zone. Erewash has a proud tradition of manufacturing and adapting to changes in markets and technology over time. I am sure we can accommodate advanced manufacturing and green industries, which will help regenerate our brownfield sites and contribute to the levelling-up agenda.
Whether of a Government’s own making such as the economic crash which exposed the “no money left” mantra of new Labour or caused by unprecedented global events such as the covid pandemic followed by war in Europe, during times of great economic uncertainty sound Conservative economics have always triumphed over the reckless tax-and-spend policies of the Labour party. It is in that spirit that today’s statement has been delivered, and the British people will prosper because of it.
18:01:39
Rachael Maskell
York Central
I concur with the commitment of the hon. Member for Erewash (Maggie Throup) to public health measures in today’s statement. It is fascinating, however, that when given a rare chance to make life better for millions of people—people just about managing, or people not managing but really struggling—the Conservatives turn on them, as we heard today, making their lives even harder.
The economic success we heard about is glossy, but we are coming down from last year’s disastrous Budget. Inflation has halved this year because it went so high last year, causing our constituents to have exceptionally high mortgage rates, which they are paying for day by day. Borrowing is at an all-time high, just shy of 100% of GDP, and the economy will be £40 billion smaller in 2027 than was predicted in March this year. That shows that the economy is still fragile and volatile, and even after 13 and a half years of this Tory Government all we have seen today is money being moved from welfare to the wealthy. Do we wonder why people are worse off when we see such decisions being made?
I believe economic policy—how we tax and spend—must focus on creating a fairer society, alleviating poverty, tackling injustice and inequality and helping people to be independent yet collectively contribute to the vital services we depend on across our society. Public sector services hardly got a mention today, yet they are on their knees. Council, health and public service leaders across the country will therefore be baffled by the decisions the Chancellor made.
We have seen 13 and a half years squandered, with poor economic productivity, poor investment in our people and planet, and increasingly poor social outcomes. We have more people sick—7.8 million on waiting lists—more needing a home and more in need, and we have 14.5 million people on the edge, in poverty, in debt, struggling with heating, rent and food. And of course there was no promise of additional help today. We must remember that 4.3 million children in York and across the country now live in poverty; 18% of pensioners are counting the pennies to get by and we have a harsh winter ahead of us, with the energy price cap due to go up tomorrow and a tough year beyond that. Food prices are up about 25% on April 2022 figures, while gas prices are 60% and electricity prices 40% higher, yet wages have not matched that growth. In York, residents face the fourth-highest rents in the country.
While the fall in inflation is an important factor, because it will have an impact in the long term, none of us will ever forget how we got to where we are today. The economy needed the Chancellor to do more than just talk about cutting the revenue into the Treasury; the autumn statement should have been more about redistribution and, sadly, it was lacking in that—not least when the national insurance measures that he introduced will bring the greatest benefit to the richest people, who pay more national insurance, meaning that working people continue to pay more.
Turning to those working people, we know that working hard really matters, and I want everyone to have the opportunity to use their skills and talents to the full and contribute to society, and in return receive just reward for their labours. However, our public services are on their knees. York Council has seen £11 million in cuts this year and £40 million in the last four years. York’s schools are underfunded—the 17th worst in the country—and vital services are absolutely desperate.
We must understand the consequences of the cuts that the Chancellor talks about, not least those to national insurance. We are working hard in York to create opportunities, with exceptional schools, colleges and universities, a Labour council, businesses, charities and public services. Despite our calling out for two and a half years for funding for BioYorkshire, which will create 4,000 good-quality green-collar jobs, the Government have not brought forward the investment long promised, alongside UK Research and Innovation. Likewise, the creative sector, particularly the visual effects sector, has a real impact on my constituency, and I welcome a deeper dive into that area, but why have we not seen that money bought forward until now?
All we see are services cut back, underfunded, understaffed and just not working. People are paralysed by the pressures of life, suffering with mental, economic and physical stress. They are simply not coping. Rents are too high and wages too low; there are bills to pay, but no money left and no hope.
I want to make three points. First, we have no spare social housing, as I said to the Chancellor. York is one of the worst places in the country to access housing, with rents in the private rented sector the fourth highest in the country. The broad market area is too broad. As a result, people in my constituency, even after receiving £650 a month in local housing allowance, still have to pay an additional £983 on private rent. They cannot afford to live in my city but, if they move away, it will skew the economy even more. We need the broad rental market area to be reviewed. I urge the Minister to take that away and ensure that it happens, because it really matters for my constituents.
Secondly, I am sickened by paragraph 3.25 of the autumn statement. People at their most vulnerable do not engage with the DWP because they cannot, because life is too hard for them. To introduce such punitive measures as those we have heard about from the Chancellor is a complete disgrace. It is ill-conceived, immoral and economically illiterate, because those people will end up elsewhere in our public services, creating even greater demand. They will end up in our NHS in desperate need, not least if the Government take away their prescriptions. What an utter disgrace to do that to people who are already sick and struggling. I will fight the Government every step of the way on that measure, and I trust that my party will, too. That is not how we should treat human beings who are struggling and suffering. The Government should be ashamed of themselves, not least because the Chancellor then tried to pitch those individuals against other people who are struggling—people who come to our country for sanctuary. I could not believe that I was hearing that in this House—shame. We have to change that. I trust that the Labour party will be at the forefront of that charge.
On the DWP, the bedroom tax is still hurting people, sanctions are still hurting people, and the two-child limit is still hurting families in my constituency, as is the benefit cap. If we reversed those measures, we would see a big number of people move from poverty into being able to have dignity in their lives. Surely, this place is meant to achieve that.
Thirdly, the Joseph Rowntree Foundation’s work on the basket of essentials guarantee—providing every person enough money to survive on, with £120 a week for a single person and £200 for a couple—would really make a difference for people who are dependent on social security. I often hear Members on the Treasury Bench ask, “How would you afford it?” Well, according to the University of Greenwich, a wealth tax on people with an accumulated wealth of over £3.4 billion, for example, would bring in £70 billion. We must remember that the 50 richest families in our country own 50% of the wealth.
Change is so achievable. We must think about priorities. Politics is about morals, justice and fairness, but we have not seen that today. I know that it will not be long until we have a Labour Government, who will be here to serve, give hope, and do everything humanly and economically possible to turn things around. We believe in fairness, honesty, justice and equality, and we will deliver them.
The economic success we heard about is glossy, but we are coming down from last year’s disastrous Budget. Inflation has halved this year because it went so high last year, causing our constituents to have exceptionally high mortgage rates, which they are paying for day by day. Borrowing is at an all-time high, just shy of 100% of GDP, and the economy will be £40 billion smaller in 2027 than was predicted in March this year. That shows that the economy is still fragile and volatile, and even after 13 and a half years of this Tory Government all we have seen today is money being moved from welfare to the wealthy. Do we wonder why people are worse off when we see such decisions being made?
I believe economic policy—how we tax and spend—must focus on creating a fairer society, alleviating poverty, tackling injustice and inequality and helping people to be independent yet collectively contribute to the vital services we depend on across our society. Public sector services hardly got a mention today, yet they are on their knees. Council, health and public service leaders across the country will therefore be baffled by the decisions the Chancellor made.
We have seen 13 and a half years squandered, with poor economic productivity, poor investment in our people and planet, and increasingly poor social outcomes. We have more people sick—7.8 million on waiting lists—more needing a home and more in need, and we have 14.5 million people on the edge, in poverty, in debt, struggling with heating, rent and food. And of course there was no promise of additional help today. We must remember that 4.3 million children in York and across the country now live in poverty; 18% of pensioners are counting the pennies to get by and we have a harsh winter ahead of us, with the energy price cap due to go up tomorrow and a tough year beyond that. Food prices are up about 25% on April 2022 figures, while gas prices are 60% and electricity prices 40% higher, yet wages have not matched that growth. In York, residents face the fourth-highest rents in the country.
While the fall in inflation is an important factor, because it will have an impact in the long term, none of us will ever forget how we got to where we are today. The economy needed the Chancellor to do more than just talk about cutting the revenue into the Treasury; the autumn statement should have been more about redistribution and, sadly, it was lacking in that—not least when the national insurance measures that he introduced will bring the greatest benefit to the richest people, who pay more national insurance, meaning that working people continue to pay more.
Turning to those working people, we know that working hard really matters, and I want everyone to have the opportunity to use their skills and talents to the full and contribute to society, and in return receive just reward for their labours. However, our public services are on their knees. York Council has seen £11 million in cuts this year and £40 million in the last four years. York’s schools are underfunded—the 17th worst in the country—and vital services are absolutely desperate.
We must understand the consequences of the cuts that the Chancellor talks about, not least those to national insurance. We are working hard in York to create opportunities, with exceptional schools, colleges and universities, a Labour council, businesses, charities and public services. Despite our calling out for two and a half years for funding for BioYorkshire, which will create 4,000 good-quality green-collar jobs, the Government have not brought forward the investment long promised, alongside UK Research and Innovation. Likewise, the creative sector, particularly the visual effects sector, has a real impact on my constituency, and I welcome a deeper dive into that area, but why have we not seen that money bought forward until now?
All we see are services cut back, underfunded, understaffed and just not working. People are paralysed by the pressures of life, suffering with mental, economic and physical stress. They are simply not coping. Rents are too high and wages too low; there are bills to pay, but no money left and no hope.
I want to make three points. First, we have no spare social housing, as I said to the Chancellor. York is one of the worst places in the country to access housing, with rents in the private rented sector the fourth highest in the country. The broad market area is too broad. As a result, people in my constituency, even after receiving £650 a month in local housing allowance, still have to pay an additional £983 on private rent. They cannot afford to live in my city but, if they move away, it will skew the economy even more. We need the broad rental market area to be reviewed. I urge the Minister to take that away and ensure that it happens, because it really matters for my constituents.
Secondly, I am sickened by paragraph 3.25 of the autumn statement. People at their most vulnerable do not engage with the DWP because they cannot, because life is too hard for them. To introduce such punitive measures as those we have heard about from the Chancellor is a complete disgrace. It is ill-conceived, immoral and economically illiterate, because those people will end up elsewhere in our public services, creating even greater demand. They will end up in our NHS in desperate need, not least if the Government take away their prescriptions. What an utter disgrace to do that to people who are already sick and struggling. I will fight the Government every step of the way on that measure, and I trust that my party will, too. That is not how we should treat human beings who are struggling and suffering. The Government should be ashamed of themselves, not least because the Chancellor then tried to pitch those individuals against other people who are struggling—people who come to our country for sanctuary. I could not believe that I was hearing that in this House—shame. We have to change that. I trust that the Labour party will be at the forefront of that charge.
On the DWP, the bedroom tax is still hurting people, sanctions are still hurting people, and the two-child limit is still hurting families in my constituency, as is the benefit cap. If we reversed those measures, we would see a big number of people move from poverty into being able to have dignity in their lives. Surely, this place is meant to achieve that.
Thirdly, the Joseph Rowntree Foundation’s work on the basket of essentials guarantee—providing every person enough money to survive on, with £120 a week for a single person and £200 for a couple—would really make a difference for people who are dependent on social security. I often hear Members on the Treasury Bench ask, “How would you afford it?” Well, according to the University of Greenwich, a wealth tax on people with an accumulated wealth of over £3.4 billion, for example, would bring in £70 billion. We must remember that the 50 richest families in our country own 50% of the wealth.
Change is so achievable. We must think about priorities. Politics is about morals, justice and fairness, but we have not seen that today. I know that it will not be long until we have a Labour Government, who will be here to serve, give hope, and do everything humanly and economically possible to turn things around. We believe in fairness, honesty, justice and equality, and we will deliver them.
Dame Rosie Winterton
Madam Deputy Speaker
I am afraid that I will have to take the limit down to nine minutes.
18:14:26
Kevin Foster
Torbay
It is a pleasure to speak in this debate. It is always easy to throw stones from the Opposition Benches, but it is slightly more difficult to be in government and make decisions based on the situation before us. I will focus on one or two of the things that directly affect Torbay.
Certainly, the Government need to have a clear and distinct Conservative message based on our being the party of aspiration, economic growth, home ownership and people keeping more of the fruits of their labour. Those are the principles that have seen us win general elections and reach out to a whole new group of Conservative supporters, whether in 1979, in the 1980s, or last time in 2019, when we were lucky enough to get a majority under the leadership of Boris Johnson. It is always a privilege to serve in government, and we need to ensure that we continue to deliver for those who put their faith in us.
I welcome in particular the business rates relief for tourism and hospitality. That will be of no surprise to anyone given that I represent the part of the country that we call “the English riviera”, where tourism plays a large part in the community. I was pleased to join colleagues in lobbying for the Chancellor to extend the relief, and am pleased that he has done so. We need to think about business rates because they penalise businesses that need a place to do business. Clearly, an online hospitality venue would not have quite the same outcome for people as being able to go somewhere to meet their friends and enjoy spending time together. Hospitality innately means having a place to get together, be part of a community and enjoy time with friends in celebrations and other events. That is a very serious business, so it is something that is there.
The promise to honour the triple lock will resonate strongly in Torbay among those who have worked hard all their lives and retired to enjoy the natural beauty of our bay. The other side of the issue is those who are of working age. Certainly, the rise in the national living wage will benefit quite a number of people working in the bay, and the national insurance changes are particularly welcome, enabling many workers to keep more of what they earn.
Sadly, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) is not in his place. I will miss him in the next Parliament, because he is standing down; even though we disagree on some quite profound points, particularly around the Union, he is right that we should move towards more tax simplification in the long run. Clearly, the issue with national insurance that those who are of state pension age do not pay it. Any unification would have to preserve that part of our system, so that those who are over state pension age do not end up paying the replacement or simplified tax. However, there are many arguments to be made—some of which were made very well by my right hon. Friend the Member for Witham (Priti Patel)—about how we can have not just lower taxes but simpler taxes, recognising that for many businesses, the cost can come from administering the tax as much as paying the amount that is due.
We have just heard some of the debate about welfare changes. It is welcome that we are going to make a difference to so many people’s lives by giving them support to get back into employment, and it is right that for the DWP to expect something in return. If we listen carefully to what the Chancellor actually said, it was about engagement with the DWP. It is not a high bar to say that people should at least engage with the projects and schemes that are being put in place to try to support them in getting into employment, because we know that employment makes a massive difference: it is the thing that lifts people out of poverty and gives them choices in their life, which is what all of us should aspire towards. My good and hon. Friend the Member for Corby (Tom Pursglove) is the Minister for Disabled People, and I know he is looking to make sure that the balance is struck correctly between encouragement and sending a clear sign that there is an expectation that the support that is being offered will be taken up—that that support comes with responsibilities.
Earlier this week, further support to develop Torbay’s economy was announced, in the form of an extremely welcome £20 million from the third round of the levelling-up fund. That brings the funding available to support Torbay’s regeneration to a total of around £100 million. However, I again emphasise that this is not just about Government funding for regeneration, but making sure that private businesses and investors have the confidence to invest. I very much welcome the news in the last 24 hours that two large groups, Willmott Dixon and another investment group, will not only be working with Torbay Council to deliver many of the Government-sponsored schemes, but investing in jobs and housing.
However, things like planning can make such a huge difference. I welcome some of the Chancellor’s comments, particularly around major infrastructure, because it takes far too long to deliver key infrastructure in this country. I was one of those who said we should get shot of the effective moratorium on onshore wind. In the same way, it is high time that the Scottish Government got rid of their ridiculous blocks on new nuclear, given the potential for energy independence and security—as well as jobs and prosperity—that it would bring to Scotland. Overall, we need to look at cutting the time between making a decision to do something and something happening.
Turning to housing, as I said in the debate on the King’s Speech, we need to look again at cases where local councils have come forward to say they would be happy to have flexibility in some areas, mostly in town centres and areas that are in need of regeneration. I would, however, strike a slight note of caution about the idea of allowing virtually every property to be converted into two flats. I am not necessarily sure that that would produce the best of outcomes, particularly when I look at the experience in parts of Torbay, such as Melville in Torquay. Some properties have been subdivided there, and it is safe to say that that has not produced a great standard of accommodation. There are some issues that come with that, so from what I heard today, that is an area in which I would urge the Chancellor to exercise some caution.
However, I hope the statement is a sign of a Government pointing to where they may look to go further in future. Other colleagues have rightly raised the issue of tax thresholds, not just for personal taxation but for the taxation faced by businesses. The VAT threshold is probably the most dramatically visible impact of a tax threshold. We can see guest houses and small businesses closing literally the day before they would have reached the relevant amount. They are literally stopping doing business because, unless they can jump up significantly in their trade, the cost would not be worthwhile. That is particularly true in the hospitality sector, for example, with businesses not buying large amounts of product on which they could expect to reclaim the tax.
We heard some speculation in the run-up to this statement about inheritance tax. I have to be clear that there are those in Torbay who would find that quite a thought and would like to be able to hand on a little more to the next generation, but I do accept the point that there are other priorities for easing the burden of taxation first, not least those that affect working families.
Finally, it is right that productivity has been mentioned several times. It is what drives wage growth, drives prosperity and generates more income. Clearly, there is a need to link our efforts to increase productivity with a genuine labour market strategy that also covers our immigration policies. Again, my right hon. Friend the Member for Witham mentioned the need to try to link those together, because too often we find ourselves debating one day why a sector is not being invested in and then the next day arguing that we should provide visas to avoid having to do so.
Overall, this is a welcome autumn statement. I think it shows the right direction of travel towards key and core Conservative principles, because we will need to have within the next year a clear message for the electorate on how our party seeks to back their aspirations for them and their family, how we reward innovation and how we will be responsible with the nations finances, because those are the keys to winning another term in government.
Certainly, the Government need to have a clear and distinct Conservative message based on our being the party of aspiration, economic growth, home ownership and people keeping more of the fruits of their labour. Those are the principles that have seen us win general elections and reach out to a whole new group of Conservative supporters, whether in 1979, in the 1980s, or last time in 2019, when we were lucky enough to get a majority under the leadership of Boris Johnson. It is always a privilege to serve in government, and we need to ensure that we continue to deliver for those who put their faith in us.
I welcome in particular the business rates relief for tourism and hospitality. That will be of no surprise to anyone given that I represent the part of the country that we call “the English riviera”, where tourism plays a large part in the community. I was pleased to join colleagues in lobbying for the Chancellor to extend the relief, and am pleased that he has done so. We need to think about business rates because they penalise businesses that need a place to do business. Clearly, an online hospitality venue would not have quite the same outcome for people as being able to go somewhere to meet their friends and enjoy spending time together. Hospitality innately means having a place to get together, be part of a community and enjoy time with friends in celebrations and other events. That is a very serious business, so it is something that is there.
The promise to honour the triple lock will resonate strongly in Torbay among those who have worked hard all their lives and retired to enjoy the natural beauty of our bay. The other side of the issue is those who are of working age. Certainly, the rise in the national living wage will benefit quite a number of people working in the bay, and the national insurance changes are particularly welcome, enabling many workers to keep more of what they earn.
Sadly, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) is not in his place. I will miss him in the next Parliament, because he is standing down; even though we disagree on some quite profound points, particularly around the Union, he is right that we should move towards more tax simplification in the long run. Clearly, the issue with national insurance that those who are of state pension age do not pay it. Any unification would have to preserve that part of our system, so that those who are over state pension age do not end up paying the replacement or simplified tax. However, there are many arguments to be made—some of which were made very well by my right hon. Friend the Member for Witham (Priti Patel)—about how we can have not just lower taxes but simpler taxes, recognising that for many businesses, the cost can come from administering the tax as much as paying the amount that is due.
We have just heard some of the debate about welfare changes. It is welcome that we are going to make a difference to so many people’s lives by giving them support to get back into employment, and it is right that for the DWP to expect something in return. If we listen carefully to what the Chancellor actually said, it was about engagement with the DWP. It is not a high bar to say that people should at least engage with the projects and schemes that are being put in place to try to support them in getting into employment, because we know that employment makes a massive difference: it is the thing that lifts people out of poverty and gives them choices in their life, which is what all of us should aspire towards. My good and hon. Friend the Member for Corby (Tom Pursglove) is the Minister for Disabled People, and I know he is looking to make sure that the balance is struck correctly between encouragement and sending a clear sign that there is an expectation that the support that is being offered will be taken up—that that support comes with responsibilities.
Earlier this week, further support to develop Torbay’s economy was announced, in the form of an extremely welcome £20 million from the third round of the levelling-up fund. That brings the funding available to support Torbay’s regeneration to a total of around £100 million. However, I again emphasise that this is not just about Government funding for regeneration, but making sure that private businesses and investors have the confidence to invest. I very much welcome the news in the last 24 hours that two large groups, Willmott Dixon and another investment group, will not only be working with Torbay Council to deliver many of the Government-sponsored schemes, but investing in jobs and housing.
However, things like planning can make such a huge difference. I welcome some of the Chancellor’s comments, particularly around major infrastructure, because it takes far too long to deliver key infrastructure in this country. I was one of those who said we should get shot of the effective moratorium on onshore wind. In the same way, it is high time that the Scottish Government got rid of their ridiculous blocks on new nuclear, given the potential for energy independence and security—as well as jobs and prosperity—that it would bring to Scotland. Overall, we need to look at cutting the time between making a decision to do something and something happening.
Turning to housing, as I said in the debate on the King’s Speech, we need to look again at cases where local councils have come forward to say they would be happy to have flexibility in some areas, mostly in town centres and areas that are in need of regeneration. I would, however, strike a slight note of caution about the idea of allowing virtually every property to be converted into two flats. I am not necessarily sure that that would produce the best of outcomes, particularly when I look at the experience in parts of Torbay, such as Melville in Torquay. Some properties have been subdivided there, and it is safe to say that that has not produced a great standard of accommodation. There are some issues that come with that, so from what I heard today, that is an area in which I would urge the Chancellor to exercise some caution.
However, I hope the statement is a sign of a Government pointing to where they may look to go further in future. Other colleagues have rightly raised the issue of tax thresholds, not just for personal taxation but for the taxation faced by businesses. The VAT threshold is probably the most dramatically visible impact of a tax threshold. We can see guest houses and small businesses closing literally the day before they would have reached the relevant amount. They are literally stopping doing business because, unless they can jump up significantly in their trade, the cost would not be worthwhile. That is particularly true in the hospitality sector, for example, with businesses not buying large amounts of product on which they could expect to reclaim the tax.
We heard some speculation in the run-up to this statement about inheritance tax. I have to be clear that there are those in Torbay who would find that quite a thought and would like to be able to hand on a little more to the next generation, but I do accept the point that there are other priorities for easing the burden of taxation first, not least those that affect working families.
Finally, it is right that productivity has been mentioned several times. It is what drives wage growth, drives prosperity and generates more income. Clearly, there is a need to link our efforts to increase productivity with a genuine labour market strategy that also covers our immigration policies. Again, my right hon. Friend the Member for Witham mentioned the need to try to link those together, because too often we find ourselves debating one day why a sector is not being invested in and then the next day arguing that we should provide visas to avoid having to do so.
Overall, this is a welcome autumn statement. I think it shows the right direction of travel towards key and core Conservative principles, because we will need to have within the next year a clear message for the electorate on how our party seeks to back their aspirations for them and their family, how we reward innovation and how we will be responsible with the nations finances, because those are the keys to winning another term in government.
18:20:55
Catherine West
Hornsey and Wood Green
It is a pleasure to follow the hon. Member for Torbay (Kevin Foster), and I fully concur with his ideas on workforce planning.
I am going to focus my remarks on the poverty of ambition on public services in today’s statement. We know that we have sky-high inflation and crumbling schools and hospitals, but it is really that poverty of ambition on public services to which I want to turn. Thirteen years of Conservative cuts to social care have left elderly and disabled people going without the care they need, and long-promised social care reforms have been repeatedly postponed. The Prime Minister three Prime Ministers ago, Mr Johnson, pledged to reform social care “once and for all”, announcing a cap on lifetime care costs and a health and social care levy. The levy was scrapped by the ex-Chancellor in 2022 and the cap has been delayed until 2024, but I suspect that this will also be scrapped—chopping and changing, chopping and changing.
Following publication of the “next steps” document in April 2023, many of the remaining measures from the Government’s White Paper on social care have been cut back or even abandoned. This includes halving the funding for workforce training, and this goes to the points the hon. Member made. This is funding for qualifications, and funding for the wellbeing of individuals who need extra support to come into the workforce. There was some mention of that in today’s statement, and I do welcome that, but we need to turn our attention to the detail on the social care workforce, because unpaid carers have been left to pick up the pieces of the Government’s repeated failure to deal with the staffing crisis in social care, at huge cost to their own physical and mental health and to their finances. Every weekend people, mainly women, criss-cross the country to deal with older people, disabled people and children who are struggling. There just are not the care workers that there were before.
Over the summer I did a survey in my own constituency of social care arrangements for older people, and I was able to visit the wonderful place called the Hornsey Housing Trust. It owes its existence to one person, Margaret Hill, the sister of John Maynard Keynes. She founded it in 1933, and nurtured it because she felt that
“the underlying cause of much discomfort, ill-health and unhappiness in many families was the bad conditions of their houses”.
This little history, written by Rosie Boughton, who is the former chair of the Hornsey Housing Trust, sadly outlines so many of the issues we are seeing today. As the years of have gone on, the trust has focused more and more on older folk, but this autumn statement does not really offer to fix the crisis in social care and has failed to lay out a real vision for dignity, care and quality of life for older people. I do welcome the triple lock decision, but I think the detail of some of the issues we are facing in our care sector have been ignored.
A Labour Government would work towards a world-class national care service. We will transform access to care with new national standards, and recruit and retain more carers through better rights at work, decent standards, fair pay and proper training, with a fair pay agreement collectively negotiated across the sector as a first step towards building a national care service. The hon. Member for North East Bedfordshire (Richard Fuller) mentioned regional rates, and I just wanted to correct him. There is a London living rate for the London living wage—it is a genuine living wage, not the minimum wage—and he should definitely look at those rates.
I am going to focus my remarks on the poverty of ambition on public services in today’s statement. We know that we have sky-high inflation and crumbling schools and hospitals, but it is really that poverty of ambition on public services to which I want to turn. Thirteen years of Conservative cuts to social care have left elderly and disabled people going without the care they need, and long-promised social care reforms have been repeatedly postponed. The Prime Minister three Prime Ministers ago, Mr Johnson, pledged to reform social care “once and for all”, announcing a cap on lifetime care costs and a health and social care levy. The levy was scrapped by the ex-Chancellor in 2022 and the cap has been delayed until 2024, but I suspect that this will also be scrapped—chopping and changing, chopping and changing.
Following publication of the “next steps” document in April 2023, many of the remaining measures from the Government’s White Paper on social care have been cut back or even abandoned. This includes halving the funding for workforce training, and this goes to the points the hon. Member made. This is funding for qualifications, and funding for the wellbeing of individuals who need extra support to come into the workforce. There was some mention of that in today’s statement, and I do welcome that, but we need to turn our attention to the detail on the social care workforce, because unpaid carers have been left to pick up the pieces of the Government’s repeated failure to deal with the staffing crisis in social care, at huge cost to their own physical and mental health and to their finances. Every weekend people, mainly women, criss-cross the country to deal with older people, disabled people and children who are struggling. There just are not the care workers that there were before.
Over the summer I did a survey in my own constituency of social care arrangements for older people, and I was able to visit the wonderful place called the Hornsey Housing Trust. It owes its existence to one person, Margaret Hill, the sister of John Maynard Keynes. She founded it in 1933, and nurtured it because she felt that
“the underlying cause of much discomfort, ill-health and unhappiness in many families was the bad conditions of their houses”.
This little history, written by Rosie Boughton, who is the former chair of the Hornsey Housing Trust, sadly outlines so many of the issues we are seeing today. As the years of have gone on, the trust has focused more and more on older folk, but this autumn statement does not really offer to fix the crisis in social care and has failed to lay out a real vision for dignity, care and quality of life for older people. I do welcome the triple lock decision, but I think the detail of some of the issues we are facing in our care sector have been ignored.
A Labour Government would work towards a world-class national care service. We will transform access to care with new national standards, and recruit and retain more carers through better rights at work, decent standards, fair pay and proper training, with a fair pay agreement collectively negotiated across the sector as a first step towards building a national care service. The hon. Member for North East Bedfordshire (Richard Fuller) mentioned regional rates, and I just wanted to correct him. There is a London living rate for the London living wage—it is a genuine living wage, not the minimum wage—and he should definitely look at those rates.
18:23:58
Richard Fuller
The hon. Lady is exactly right on that. We have to have the courage to understand that there are different pressures in labour markets. As we push forward the national living wage increases, we need to take those pressures into account if we are to get the right balance for employment.
18:29:18
Catherine West
As you will know with your lifetime of experience in social care and other sorts of public services, Madam Deputy Speaker, the good councils—I have to say they are mainly Labour councils—have introduced the living wage for all their contracting and subcontracting. That makes an enormous difference in the local economy. I challenge every single council to try to push for more from its procurement pound.
In the survey results from all the places that I visited over the summer with my wonderful staff and an ex-BBC journalist who helped me to get the survey right, some 55% felt that their quality of life had deteriorated since the pandemic. The British Red Cross research reports “Life after lockdown” and “Lonely and left behind” found that 41% of UK adults feel lonelier since the start of the initial lockdown. Millions are going a fortnight without having a meaningful conversation. The pandemic showed the importance of tackling loneliness, and it is clear that the Government strategy on loneliness simply is not working. The Red Cross said that
“tackling loneliness should be built into Covid-19 recovery plans”,
and:
“Governments should ensure those most at risk of loneliness are able to access the mental health and emotional support they need to cope and recover from Covid-19.”
These are the very people whom the Chancellor was trying to address when he said that there were increased rates of worklessness in people over the age of 50. I am sure that access to mental health services and emotional support is very much a part of that puzzle.
As well as mental and physical health and wellbeing, we must also consider the impact that grief, bereavement and the economic struggles that people are facing have on people’s sense of wellbeing. Some 51% of respondents to my survey said that they are unable to participate in events because they are online, and that also needs to be looked at, because the digital divide is real and desperately needs to be addressed by local authorities and all Departments. Some 45% said that it was harder to see their GP than before the pandemic. Some 48% said they had experienced a reduction in NHS services, particularly in podiatry, chiropody and physio. Those are crucial services that people need to keep mobile, which reduces the cost to the NHS and the queue of people waiting for care in the NHS.
Before I conclude, I will make one point on the importance of primary care and that relationship with a GP. If individuals are not on the internet and they go to see their GP, eight minutes is not really enough. In some cases, they are not even getting eight minutes every six months. So many people are living without seeing a human being day-to-day. For 13 years now, social care has lacked the funding and attention that it deserves, with £8 billion lost from adult social care budgets. In my constituency, I hear from residents having to pay thousands of pounds for their care or care for a loved one. There are high levels of unmet or under-met care needs. The Association of Directors of Adult Social Services estimated that around 246,000 people were waiting for a care assessment in August 2022.
The final finding from my survey is that 60% of the people I spoke to in all different sorts of care settings said that they felt lonely or isolated, and 34% rarely had visitors. The loneliness strategy simply is not working. It is having a real effect on our economy and on our older folk. I hope that can be addressed as this debate goes forward.
In the survey results from all the places that I visited over the summer with my wonderful staff and an ex-BBC journalist who helped me to get the survey right, some 55% felt that their quality of life had deteriorated since the pandemic. The British Red Cross research reports “Life after lockdown” and “Lonely and left behind” found that 41% of UK adults feel lonelier since the start of the initial lockdown. Millions are going a fortnight without having a meaningful conversation. The pandemic showed the importance of tackling loneliness, and it is clear that the Government strategy on loneliness simply is not working. The Red Cross said that
“tackling loneliness should be built into Covid-19 recovery plans”,
and:
“Governments should ensure those most at risk of loneliness are able to access the mental health and emotional support they need to cope and recover from Covid-19.”
These are the very people whom the Chancellor was trying to address when he said that there were increased rates of worklessness in people over the age of 50. I am sure that access to mental health services and emotional support is very much a part of that puzzle.
As well as mental and physical health and wellbeing, we must also consider the impact that grief, bereavement and the economic struggles that people are facing have on people’s sense of wellbeing. Some 51% of respondents to my survey said that they are unable to participate in events because they are online, and that also needs to be looked at, because the digital divide is real and desperately needs to be addressed by local authorities and all Departments. Some 45% said that it was harder to see their GP than before the pandemic. Some 48% said they had experienced a reduction in NHS services, particularly in podiatry, chiropody and physio. Those are crucial services that people need to keep mobile, which reduces the cost to the NHS and the queue of people waiting for care in the NHS.
Before I conclude, I will make one point on the importance of primary care and that relationship with a GP. If individuals are not on the internet and they go to see their GP, eight minutes is not really enough. In some cases, they are not even getting eight minutes every six months. So many people are living without seeing a human being day-to-day. For 13 years now, social care has lacked the funding and attention that it deserves, with £8 billion lost from adult social care budgets. In my constituency, I hear from residents having to pay thousands of pounds for their care or care for a loved one. There are high levels of unmet or under-met care needs. The Association of Directors of Adult Social Services estimated that around 246,000 people were waiting for a care assessment in August 2022.
The final finding from my survey is that 60% of the people I spoke to in all different sorts of care settings said that they felt lonely or isolated, and 34% rarely had visitors. The loneliness strategy simply is not working. It is having a real effect on our economy and on our older folk. I hope that can be addressed as this debate goes forward.
Dame Rosie Winterton
Madam Deputy Speaker
As the hon. Lady’s speech was a little shorter, I shall allow the final speaker 10 minutes—just to prove that it is not always bad to be the final speaker.
18:30:45
Alex Cunningham
Stockton North
You are most generous, Madam Deputy Speaker. So often I have stood here and seen my time go from 10 minutes to three minutes, so I am grateful. We have an autumn statement that does no more than tickle our economy and does more harm than good for those in the greatest need. We needed to see policies that support working people and hard-pressed families, all of whom are suffering from a cost of living crisis not of their making. We need to see measures that tackle the scourge of child poverty in particular. Almost 34% of children in my constituency live below the poverty line. In the north-east, 67% of children in poverty are from working families. That is thousands of children going to bed hungry and missing the opportunities available to their better-off peers. Every parent wants the best for their children, but many are struggling. Wages are too low, childcare is too expensive, decent homes are unaffordable and the social security system is not properly protecting and supporting those who rely on it. Food bank use and in-work poverty have risen, and more than 4 million children are now living in poverty.
The social security system should provide genuine security for all families, but cuts since 2010 have pushed children into poverty. I believe that by reducing poverty and providing effective early help, we can also alleviate some of the pressures on families that are contributing to the rising numbers of children in the care system. We need to support foster and kinship carers to increase the number of secure, loving homes for children, tackle profiteering by private children’s homes and provide co-ordinated support for care-experienced people to reduce the disadvantages they face.
Responding to the King’s Speech, the interim chair of the North East Child Poverty Commission, Michele Deans, said:
“The King’s Speech spoke today about building a better future for our children and grandchildren, and yet completely failed to address one of the single biggest barriers to achieving this for the North East—unacceptably high child poverty and growing levels of hardship for families right across our region.”
Sadly, the same can be said after today’s statement. It is simply not good enough. More must be done to address the unacceptable position we are in with hundreds of thousands of children up and down the country living below the breadline.
We know that the right policies can make a difference. Analysis in 2020 by the Institute for Public Policy Research shows that the north-east saw the biggest fall in child poverty of any region from 1999 to 2013. People from all walks of life are suffering, though. Chris McDonald, who I expect to succeed me as the MP for Stockton North, was out in Wynyard, the most affluent part of my constituency, if not the north-east, and he was getting a clear message: even families with good incomes are suffering at the hands of the Tories. Some are facing increases of thousands of pounds on their mortgages as fixed-term interest rates run out, but everyone is feeling the effects of inflation, with the poorest suffering most as food inflation is way higher than the current headline figure.
The Prime Minister claims that the Government took difficult decisions to halve inflation. He has got some nerve, claiming the work of the Bank of England as a policy success. Paul Johnson, the director of the Institute for Fiscal Studies, said that the Government’s pledge to halve inflation was
“opportunistic…given the fact that the Bank was, in January, forecasting that inflation would…halve.”
At the start of the year, the Prime Minister and the Chancellor promised to get the economy growing, but growth is flattening. The Bank of England has downgraded its economic forecasts, and the IMF says that the UK will be the lowest grower in the G7 next year. In spite of that, we have a rising tax burden, and public services are on their knees, but there is little if anything for those in greatest need, and certainly not for those public services.
Job creation should have been a focus for the autumn statement. Teesside is fit to burst with potential when it comes to emerging energy-intensive industries and carbon capture, utilisation and storage. The jobs and opportunities that they could create for our area are huge, but many of the promises from the Government and the Tees Mayor remain just that—promises. Sometimes, it feels that we have heard more promises than we have seen jobs delivered.
I would have liked to have seen the Chancellor announce a proper package of support to get our net zero cluster under way and a strategy that supports businesses as they transition to net zero. Commitments have been made, and I welcome them, but the stream of organisations that have come to talk to me about net zero, CCUS and industry all say the same thing: the lack of a proper industrial strategy and snail-paced decision making is hampering their ability to get on with their job and often win the investment needed from their overseas bosses. The more the Government dither and delay, the more they will hinder the UK’s chances of leading the world on the path to net zero. The UK has led the world in clean energy investment, and its market is mature, ambitious and ready to invest to hit net zero, but the failure to get on with the decision making is impacting businesses confidence.
As chair of the chemical industry all-party parliamentary group, I attended the Chemical Industries Association dinner last week, where its president, the director of Ineos, Tom Crotty, reminded us that chemicals is one of our major industries, but that we are not getting our fair share of investment. He said:
“The most recent figures show that in the UK, the global chemical industry invests a little over 1% of what it invests in China, 4% of what it invests in Europe and 4% of what it invests in America. And the situation has significantly tipped in favour of America, away from our continent.”
The reason, he said, was the Biden’s Administration’s Inflation Reduction Act. Paul went on to say:
“12 months ago I stood here and said: Where is our equivalent of the USA’s IRA? A piece of regulation that will see an historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40% by 2030.”
Tom pleaded with the UK Government to act, but the wait goes on. Today, the CIA has welcomed some measures in the Chancellor’s statement.
No strong economy can be created without a healthy workforce. For a healthy workforce, we need a robust, 21st-century health service. For 13 years I have campaigned for a new hospital for Stockton-on-Tees, which was planned but axed in 2010 under the Conservative-Lib Dem coalition Government. Our area was lagging behind on health inequalities then, and they have got worse, not better. It is no good the Chancellor penalising sick people because they cannot work, when he fails so spectacularly to properly fund our NHS. We need our best facilities to support people to live healthier lives, and the dedicated healthcare professionals who work so hard to improve the health of our communities. Sadly, the same problem exists in communities across our country, and there was no indication of any real change. The next Labour Government will sort it out, and have a social care service that justifies the word “care” in its title.
I will finish on smoking and health. The all-party parliamentary group on smoking and health, of which I am a vice-chair, recently published data showing that smoking cost public finances in England £21 billion in 2023—nearly double the tobacco tax take of £11 billion. Of that cost, £3.5 billion is accrued by the NHS and social care, but the majority is lost productivity, which reduces direct taxes and increases social security payments.
Analysis for the National Institute for Health and Care Excellence shows that smoking cessation treatment is one of only a handful of healthcare interventions that are cost saving to the NHS. In the first year, it reduced hospital admissions, improved surgical outcomes, improved birth outcomes and was as effective at reducing anxiety and depression as anti-depressants. However, according to the Health Service Journal, NHS England has told trusts that they can cut NHS long-term plan prevention funding, which includes smoking cessation, to help balance their overstretched budgets. That is the falsest of false economies.
The solution recommended by the APPG is a “polluter pays” levy on tobacco manufacturers, which make an average 50% profit compared with less than 10% for UK manufacturing. I welcome the Government’s measures to deal with smoking, but they need to go so much further. In 2015, when the Government consulted on a polluter pays tobacco levy, it was prohibited by the EU. No more. It can be done now—it may be one of the very few benefits of our leaving the EU. We need to do much more than tickle our economy. We need to hit it with a sledgehammer of measures that will address our decline and better look after our people. We did not get that today. It is time for a Labour Government.
The social security system should provide genuine security for all families, but cuts since 2010 have pushed children into poverty. I believe that by reducing poverty and providing effective early help, we can also alleviate some of the pressures on families that are contributing to the rising numbers of children in the care system. We need to support foster and kinship carers to increase the number of secure, loving homes for children, tackle profiteering by private children’s homes and provide co-ordinated support for care-experienced people to reduce the disadvantages they face.
Responding to the King’s Speech, the interim chair of the North East Child Poverty Commission, Michele Deans, said:
“The King’s Speech spoke today about building a better future for our children and grandchildren, and yet completely failed to address one of the single biggest barriers to achieving this for the North East—unacceptably high child poverty and growing levels of hardship for families right across our region.”
Sadly, the same can be said after today’s statement. It is simply not good enough. More must be done to address the unacceptable position we are in with hundreds of thousands of children up and down the country living below the breadline.
We know that the right policies can make a difference. Analysis in 2020 by the Institute for Public Policy Research shows that the north-east saw the biggest fall in child poverty of any region from 1999 to 2013. People from all walks of life are suffering, though. Chris McDonald, who I expect to succeed me as the MP for Stockton North, was out in Wynyard, the most affluent part of my constituency, if not the north-east, and he was getting a clear message: even families with good incomes are suffering at the hands of the Tories. Some are facing increases of thousands of pounds on their mortgages as fixed-term interest rates run out, but everyone is feeling the effects of inflation, with the poorest suffering most as food inflation is way higher than the current headline figure.
The Prime Minister claims that the Government took difficult decisions to halve inflation. He has got some nerve, claiming the work of the Bank of England as a policy success. Paul Johnson, the director of the Institute for Fiscal Studies, said that the Government’s pledge to halve inflation was
“opportunistic…given the fact that the Bank was, in January, forecasting that inflation would…halve.”
At the start of the year, the Prime Minister and the Chancellor promised to get the economy growing, but growth is flattening. The Bank of England has downgraded its economic forecasts, and the IMF says that the UK will be the lowest grower in the G7 next year. In spite of that, we have a rising tax burden, and public services are on their knees, but there is little if anything for those in greatest need, and certainly not for those public services.
Job creation should have been a focus for the autumn statement. Teesside is fit to burst with potential when it comes to emerging energy-intensive industries and carbon capture, utilisation and storage. The jobs and opportunities that they could create for our area are huge, but many of the promises from the Government and the Tees Mayor remain just that—promises. Sometimes, it feels that we have heard more promises than we have seen jobs delivered.
I would have liked to have seen the Chancellor announce a proper package of support to get our net zero cluster under way and a strategy that supports businesses as they transition to net zero. Commitments have been made, and I welcome them, but the stream of organisations that have come to talk to me about net zero, CCUS and industry all say the same thing: the lack of a proper industrial strategy and snail-paced decision making is hampering their ability to get on with their job and often win the investment needed from their overseas bosses. The more the Government dither and delay, the more they will hinder the UK’s chances of leading the world on the path to net zero. The UK has led the world in clean energy investment, and its market is mature, ambitious and ready to invest to hit net zero, but the failure to get on with the decision making is impacting businesses confidence.
As chair of the chemical industry all-party parliamentary group, I attended the Chemical Industries Association dinner last week, where its president, the director of Ineos, Tom Crotty, reminded us that chemicals is one of our major industries, but that we are not getting our fair share of investment. He said:
“The most recent figures show that in the UK, the global chemical industry invests a little over 1% of what it invests in China, 4% of what it invests in Europe and 4% of what it invests in America. And the situation has significantly tipped in favour of America, away from our continent.”
The reason, he said, was the Biden’s Administration’s Inflation Reduction Act. Paul went on to say:
“12 months ago I stood here and said: Where is our equivalent of the USA’s IRA? A piece of regulation that will see an historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40% by 2030.”
Tom pleaded with the UK Government to act, but the wait goes on. Today, the CIA has welcomed some measures in the Chancellor’s statement.
No strong economy can be created without a healthy workforce. For a healthy workforce, we need a robust, 21st-century health service. For 13 years I have campaigned for a new hospital for Stockton-on-Tees, which was planned but axed in 2010 under the Conservative-Lib Dem coalition Government. Our area was lagging behind on health inequalities then, and they have got worse, not better. It is no good the Chancellor penalising sick people because they cannot work, when he fails so spectacularly to properly fund our NHS. We need our best facilities to support people to live healthier lives, and the dedicated healthcare professionals who work so hard to improve the health of our communities. Sadly, the same problem exists in communities across our country, and there was no indication of any real change. The next Labour Government will sort it out, and have a social care service that justifies the word “care” in its title.
I will finish on smoking and health. The all-party parliamentary group on smoking and health, of which I am a vice-chair, recently published data showing that smoking cost public finances in England £21 billion in 2023—nearly double the tobacco tax take of £11 billion. Of that cost, £3.5 billion is accrued by the NHS and social care, but the majority is lost productivity, which reduces direct taxes and increases social security payments.
Analysis for the National Institute for Health and Care Excellence shows that smoking cessation treatment is one of only a handful of healthcare interventions that are cost saving to the NHS. In the first year, it reduced hospital admissions, improved surgical outcomes, improved birth outcomes and was as effective at reducing anxiety and depression as anti-depressants. However, according to the Health Service Journal, NHS England has told trusts that they can cut NHS long-term plan prevention funding, which includes smoking cessation, to help balance their overstretched budgets. That is the falsest of false economies.
The solution recommended by the APPG is a “polluter pays” levy on tobacco manufacturers, which make an average 50% profit compared with less than 10% for UK manufacturing. I welcome the Government’s measures to deal with smoking, but they need to go so much further. In 2015, when the Government consulted on a polluter pays tobacco levy, it was prohibited by the EU. No more. It can be done now—it may be one of the very few benefits of our leaving the EU. We need to do much more than tickle our economy. We need to hit it with a sledgehammer of measures that will address our decline and better look after our people. We did not get that today. It is time for a Labour Government.
18:34:57
Tulip Siddiq
Hampstead and Kilburn
Listening to the Chancellor today, one would believe that the economy has turned a corner and the cost of living crisis is over. The truth is that after 13 years of economic failure, millions of people are struggling to make ends meet. Some of the comments we have heard from the Government Benches show just how completely divorced the Government are from the reality of working people’s lives.
We hear heartbreaking stories every single day from our constituents about how they skip meals to pay higher bills, with the price of food up 30% in the past two years, electricity up 40% and gas prices up 60%. We hear how they are struggling with the highest tax burden this country has seen in 70 years. The freezing of current thresholds has confirmed an additional 4 million of the poorest in society will now pay income tax by 2029. We hear from constituents worrying about where to find the money to pay their mortgage, to avoid having to sell their family home due to the reckless actions of this Government. Millions continue to pay the price of the Tory mortgage penalty. Working families will see an average increase of £220 a month in mortgage costs because of Tory economic failure and 1.5 million households are also set to suffer as they re-mortgage their deals next year.
We hear heartbreaking stories every single day from our constituents about how they skip meals to pay higher bills, with the price of food up 30% in the past two years, electricity up 40% and gas prices up 60%. We hear how they are struggling with the highest tax burden this country has seen in 70 years. The freezing of current thresholds has confirmed an additional 4 million of the poorest in society will now pay income tax by 2029. We hear from constituents worrying about where to find the money to pay their mortgage, to avoid having to sell their family home due to the reckless actions of this Government. Millions continue to pay the price of the Tory mortgage penalty. Working families will see an average increase of £220 a month in mortgage costs because of Tory economic failure and 1.5 million households are also set to suffer as they re-mortgage their deals next year.
18:40:00
Dr Fox
If it is because of the Government’s economic mismanagement that the Bank of England’s rates are at 5.25%, why is the American rate at 5.5%?
18:40:45
Tulip Siddiq
I think the right hon. Gentleman is trying to absolve himself of the fact that it was his former Prime Minister and Chancellor who crashed the economy of this country. He just needs to go to his constituents and, I tell you what, they will provide him with the answer at the next election.
The OBR revealed today that household incomes will still be 3.5% lower next year in real terms than before the pandemic hit. To put that in context, it is the biggest hit to living standards since records began, as my hon. Friend the Member for Hemsworth (Jon Trickett) neatly summarised in his speech. My hon. Friend the Member for Wallasey (Dame Angela Eagle) brilliantly articulated, as she always does, the biggest insult to working people, which is that in return for their hard-earned contribution, their reward is crumbling public services. The Conservatives’ mismanagement of the economy has left our public services on their knees, with people unable to get hospital appointments and waiting lists 7.8 million people long.
According to the latest IMF forecast, if people have not seen it, the UK will have the slowest growth in the G7 next year. Today, we learnt that growth in the economy has been downgraded not only for next year, but for two years after that. As British people already know, the promises made today cannot compensate for the damage that has already been done. The measures announced today are equivalent to handing back £1 for every £8 of the Conservatives’ tax increases in 2019 alone. The freeze in the personal allowance threshold means that a couple on an average wage will still be £350 worse off per year, even after all of today’s announcements. After 13 years of economic failure, the Chancellor is asking people to be grateful and telling them that their lives will suddenly improve, despite the Government’s continuing to make them worse off. So the question is this: do people feel better off today than they did 13 years ago? I think our constituents know the answer.
Before I sum up the powerful contributions to the debate that we have heard from the Labour Benches, it would be remiss of me not to welcome the hon. Member for—[Interruption]—the hon. Member for Hitchin and Harpenden (Bim Afolami). Excuse me for forgetting, but he is the fourth Economic Secretary I have shadowed in two years. I know he is an ambitious young man, but he will have a very hard job trying to get the title of the most charismatic Economic Secretary I have shadowed so far. The right hon. Member for Salisbury (John Glen) has earned that. I shall watch the new Economic Secretary to see how he performs in his job. If there are any words of wisdom he wants from me, he is welcome to contact me. I hope he lasts longer than his predecessors.
I am grateful to my Labour colleagues for their important contributions. My hon. Friends the Members for York Central (Rachael Maskell) and for Hackney South and Shoreditch (Dame Meg Hillier) rightly talked about the huge demand for social housing. Private renters are paying the price of Tory failure, along with mortgage holders. My right hon. Friend the Member for East Ham (Sir Stephen Timms) rightly argued that we need to go further on the consolidation of defined contribution pension funds and questioned whether the Government are rushing their reform of work capability assessments. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) gave an important speech on the complete failure of the Government to strengthen adult social care. My hon. Friend the Member for Stockton North (Alex Cunningham) powerfully raised the plight of rising child poverty and once again raised the need for a hospital in his local area.
A Labour Government will always prioritise supporting working people. We will deliver an ambitious plan for growth that meets the scale of the challenge that we face—to turn around the UK economy. Labour will get Britain building again. We will deliver a robust industrial strategy on a statutory footing that will in turn deliver high-skilled, high-paying jobs across the country. We will close unfair tax loopholes to ensure that we can support our schools and hospitals with the investment that our people are crying out for. We will scrap the non-dom tax status loophole, which costs the Exchequer £3 billion in revenue. That money will help us to reduce the NHS waiting list and provide free breakfast clubs for all children of primary school age.
Labour is leading the charge on unlocking investment in high-growth firms. Through our national wealth fund, a Labour Government will work in partnership with industry to deliver the investment that our businesses need to scale up and deliver growth across the economy. We will empower industry to invest, alongside our Labour Government, in the industries that are crucial to Britain’s success, such as hydrogen, electric battery factories, wind and nuclear, and we will do so in a way that meets our fiscal rules. We will set the fund a target to ensure that for every pound that Labour puts in, we leverage three times as much in private investment. That is because we believe in growing the economy. We want to raise living standards, and we will fund our public services better.
The Tories have claimed that they have a plan for growth, but forecasts are down. They claim to be reducing debt, but it remains at record levels. Despite their claim to be reducing taxes, the tax burden will be the highest since the war. After 13 years of failure, this Government cannot deliver a serious plan to address the fundamental challenges faced by our constituents and the country. All they can do now is take their record to the voters, and call a general election.
The OBR revealed today that household incomes will still be 3.5% lower next year in real terms than before the pandemic hit. To put that in context, it is the biggest hit to living standards since records began, as my hon. Friend the Member for Hemsworth (Jon Trickett) neatly summarised in his speech. My hon. Friend the Member for Wallasey (Dame Angela Eagle) brilliantly articulated, as she always does, the biggest insult to working people, which is that in return for their hard-earned contribution, their reward is crumbling public services. The Conservatives’ mismanagement of the economy has left our public services on their knees, with people unable to get hospital appointments and waiting lists 7.8 million people long.
According to the latest IMF forecast, if people have not seen it, the UK will have the slowest growth in the G7 next year. Today, we learnt that growth in the economy has been downgraded not only for next year, but for two years after that. As British people already know, the promises made today cannot compensate for the damage that has already been done. The measures announced today are equivalent to handing back £1 for every £8 of the Conservatives’ tax increases in 2019 alone. The freeze in the personal allowance threshold means that a couple on an average wage will still be £350 worse off per year, even after all of today’s announcements. After 13 years of economic failure, the Chancellor is asking people to be grateful and telling them that their lives will suddenly improve, despite the Government’s continuing to make them worse off. So the question is this: do people feel better off today than they did 13 years ago? I think our constituents know the answer.
Before I sum up the powerful contributions to the debate that we have heard from the Labour Benches, it would be remiss of me not to welcome the hon. Member for—[Interruption]—the hon. Member for Hitchin and Harpenden (Bim Afolami). Excuse me for forgetting, but he is the fourth Economic Secretary I have shadowed in two years. I know he is an ambitious young man, but he will have a very hard job trying to get the title of the most charismatic Economic Secretary I have shadowed so far. The right hon. Member for Salisbury (John Glen) has earned that. I shall watch the new Economic Secretary to see how he performs in his job. If there are any words of wisdom he wants from me, he is welcome to contact me. I hope he lasts longer than his predecessors.
I am grateful to my Labour colleagues for their important contributions. My hon. Friends the Members for York Central (Rachael Maskell) and for Hackney South and Shoreditch (Dame Meg Hillier) rightly talked about the huge demand for social housing. Private renters are paying the price of Tory failure, along with mortgage holders. My right hon. Friend the Member for East Ham (Sir Stephen Timms) rightly argued that we need to go further on the consolidation of defined contribution pension funds and questioned whether the Government are rushing their reform of work capability assessments. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) gave an important speech on the complete failure of the Government to strengthen adult social care. My hon. Friend the Member for Stockton North (Alex Cunningham) powerfully raised the plight of rising child poverty and once again raised the need for a hospital in his local area.
A Labour Government will always prioritise supporting working people. We will deliver an ambitious plan for growth that meets the scale of the challenge that we face—to turn around the UK economy. Labour will get Britain building again. We will deliver a robust industrial strategy on a statutory footing that will in turn deliver high-skilled, high-paying jobs across the country. We will close unfair tax loopholes to ensure that we can support our schools and hospitals with the investment that our people are crying out for. We will scrap the non-dom tax status loophole, which costs the Exchequer £3 billion in revenue. That money will help us to reduce the NHS waiting list and provide free breakfast clubs for all children of primary school age.
Labour is leading the charge on unlocking investment in high-growth firms. Through our national wealth fund, a Labour Government will work in partnership with industry to deliver the investment that our businesses need to scale up and deliver growth across the economy. We will empower industry to invest, alongside our Labour Government, in the industries that are crucial to Britain’s success, such as hydrogen, electric battery factories, wind and nuclear, and we will do so in a way that meets our fiscal rules. We will set the fund a target to ensure that for every pound that Labour puts in, we leverage three times as much in private investment. That is because we believe in growing the economy. We want to raise living standards, and we will fund our public services better.
The Tories have claimed that they have a plan for growth, but forecasts are down. They claim to be reducing debt, but it remains at record levels. Despite their claim to be reducing taxes, the tax burden will be the highest since the war. After 13 years of failure, this Government cannot deliver a serious plan to address the fundamental challenges faced by our constituents and the country. All they can do now is take their record to the voters, and call a general election.
Dame Rosie Winterton
Madam Deputy Speaker
Order. Before I call the Minister, may I say how important it is for Members to return to the Chamber in good time for the winding-up speeches? There are still some Members who are not present. It is extremely discourteous not to get here in good time to hear from the Opposition spokesperson and the Minister, and I hope that that will be conveyed to those who are not present.
18:47:28
Bim Afolami
The Economic Secretary to the Treasury
I am delighted to bring today’s debate on the measures in the autumn statement to a close, and also to pay tribute to my shadow, my good friend the hon. Member for Hampstead and Kilburn (Tulip Siddiq). I am very glad to follow in the footsteps of Members as eminent and as good at this job as my right hon. Friend the Member for Salisbury (John Glen). He was excellent in his job, and I am happy to follow his example.
18:47:47
Tulip Siddiq
I miss him!
18:47:50
Bim Afolami
Don’t miss him; he’s still here.
Make no mistake, Madam Deputy Speaker: this is an autumn statement for growth—one that supports entrepreneurs, cuts business tax, rewards work and brings prosperity to every corner of our wonderful country, and one that the OBR says will permanently increase the size of our economy. [Interruption.] That is what the OBR says. As my right hon. Friend the Chancellor said this afternoon, the Government understand that a successful economy depends less on the decisions and diktats of Ministers than on the “energy and enterprise” of its people, and that is the thrust of this autumn statement. It is about a Government taking action that reduces the burdens on businesses, while also empowering people and getting Great Britain growing and moving again.
But the context really matters. We are only able to pursue these policies now because of what the Government, under our Prime Minister, have achieved up to this point. We have brought inflation down from 11.1% to 4.6%, meeting the Prime Minister’s pledge, and we are on track to meet the 2% target by the middle of 2025. The OBR has confirmed that the measures announced today will make inflation next year lower than it would otherwise have been. We have achieved this while growing our economy, which is already bigger than it was pre-pandemic, contrary to what was often said on the Opposition Benches in debates in recent weeks and months. Our economy has grown faster than many of our competitors since 2010, which is when this Government first came into office.
Make no mistake, Madam Deputy Speaker: this is an autumn statement for growth—one that supports entrepreneurs, cuts business tax, rewards work and brings prosperity to every corner of our wonderful country, and one that the OBR says will permanently increase the size of our economy. [Interruption.] That is what the OBR says. As my right hon. Friend the Chancellor said this afternoon, the Government understand that a successful economy depends less on the decisions and diktats of Ministers than on the “energy and enterprise” of its people, and that is the thrust of this autumn statement. It is about a Government taking action that reduces the burdens on businesses, while also empowering people and getting Great Britain growing and moving again.
But the context really matters. We are only able to pursue these policies now because of what the Government, under our Prime Minister, have achieved up to this point. We have brought inflation down from 11.1% to 4.6%, meeting the Prime Minister’s pledge, and we are on track to meet the 2% target by the middle of 2025. The OBR has confirmed that the measures announced today will make inflation next year lower than it would otherwise have been. We have achieved this while growing our economy, which is already bigger than it was pre-pandemic, contrary to what was often said on the Opposition Benches in debates in recent weeks and months. Our economy has grown faster than many of our competitors since 2010, which is when this Government first came into office.
Ian Blackford
I welcome the Minister to his position. Will he not acknowledge that, under the current plans, it will take until 2028 for wages to get back to their 1998 levels in real terms—a 20-year absence? That is the reality.
18:50:30
Bim Afolami
The measures here are designed to grow the economy, to make us more prosperous, to make businesses invest more and to cut taxes for working people, so I am confident that that prediction will not be borne out in the way that the right hon. Gentleman suggests. This autumn statement provides the foundation for the next decade of growth—not just for next year or the year after that. Next year, just as a start, the economy will be 2% higher—that is worth around £40 billion—than was forecast only in March this year. That is a result of the actions we have taken today.
I have been hearing about what the shadow Chancellor said to the parliamentary Labour party earlier this week. I am told that this is what she said, but I am happy to be intervened on if it is incorrect. She said that the next election would be a fight on the economy, a fight on fiscal responsibility, a fight on making working people better off and a fight on who would be the party to show that it backed British business. This autumn statement firmly shows that this Government and this party are the only choice for the British people and the British economy on these measures—[Interruption.] I see chuntering among Opposition Front Benchers. If they and the shadow Chancellor wish to fight an election on those matters, I say bring it on.
Let us talk about fiscal responsibility—[Interruption.] The Opposition do not want to hear about that. This Government have brought inflation down by half. Debt is falling by the end of this forecast period. We have the second lowest debt in the G7. We are only able to have this sort of growth Budget because of the prudence and careful measures that we have so far undertaken. Indeed, if I may use language that the Opposition might understand, this is prudence with a purpose. Let us contrast that with the record of the Labour party and Opposition Members. They are still saying that, on top of everything we have heard today, they are going to borrow an extra £28 billion. That will lead to higher debt, because they are borrowing, and higher inflation, which will lead to high interest rates for longer.
I have been hearing about what the shadow Chancellor said to the parliamentary Labour party earlier this week. I am told that this is what she said, but I am happy to be intervened on if it is incorrect. She said that the next election would be a fight on the economy, a fight on fiscal responsibility, a fight on making working people better off and a fight on who would be the party to show that it backed British business. This autumn statement firmly shows that this Government and this party are the only choice for the British people and the British economy on these measures—[Interruption.] I see chuntering among Opposition Front Benchers. If they and the shadow Chancellor wish to fight an election on those matters, I say bring it on.
Let us talk about fiscal responsibility—[Interruption.] The Opposition do not want to hear about that. This Government have brought inflation down by half. Debt is falling by the end of this forecast period. We have the second lowest debt in the G7. We are only able to have this sort of growth Budget because of the prudence and careful measures that we have so far undertaken. Indeed, if I may use language that the Opposition might understand, this is prudence with a purpose. Let us contrast that with the record of the Labour party and Opposition Members. They are still saying that, on top of everything we have heard today, they are going to borrow an extra £28 billion. That will lead to higher debt, because they are borrowing, and higher inflation, which will lead to high interest rates for longer.
Dame Angela Eagle
I also welcome the Minister to his position. Does he not distinguish between borrowing for capital investment and borrowing for current expenditure? If he does not, he has a very peculiar view of the national accounts.
18:54:13
Bim Afolami
Of course I understand that distinction, but that does not take away from the fact that if we are borrowing, it has to be paid for. Unless the Labour party can show how it is going to raise that money—[Interruption.] Look, the non-dom tax has been used about 15 times to pay for 15 different things; that is not going to cut it. Unless the Labour party can say how it is going to pay for that extra £28 billion, it is not fiscally responsible. So on that measure, I say bring it on.
Let us look at whether working people will be better off as a result of this autumn statement. My right hon. Friend the Member for North Somerset (Dr Fox) talked about the need to responsibly bring down taxes for working people, and that is what we have done. The cut in the national insurance rate, worth £450 to the average worker, will benefit 29 million people. That matters to my constituents and to all the constituents we represent in this House. That is what this autumn statement delivers. The national living wage is up 30% in real terms—30% after inflation—in this Parliament. Again, that is what this autumn statement delivers. As a result of the measures on the local housing allowance, 1.6 million of the most vulnerable households in this country are all going to get an extra £800.
Contrast that with the record of the Labour party. Do not let them fool you, Madam Deputy Speaker; Labour Members do not believe in tax cuts. They do not believe in low tax. They are trying to pretend that they do, but we all know that they do not. They believe—and it is a reasonable, principled position—in ever greater, ever expanding Government control, debt and tax. That is their position.
Those of us on this side of the House and this Government have a different philosophy and a different policy. We believe in backing British business. We believe in backing the British people. We believe in cutting taxes for working people. We faced a once-in-a-lifetime pandemic earlier in the Parliament, and we spent over £450 billion supporting the lives, jobs and health of our constituents. That has led to an increase in our tax burden. But that is why this autumn statement is so important—because we are turning the corner.
Let us look at whether working people will be better off as a result of this autumn statement. My right hon. Friend the Member for North Somerset (Dr Fox) talked about the need to responsibly bring down taxes for working people, and that is what we have done. The cut in the national insurance rate, worth £450 to the average worker, will benefit 29 million people. That matters to my constituents and to all the constituents we represent in this House. That is what this autumn statement delivers. The national living wage is up 30% in real terms—30% after inflation—in this Parliament. Again, that is what this autumn statement delivers. As a result of the measures on the local housing allowance, 1.6 million of the most vulnerable households in this country are all going to get an extra £800.
Contrast that with the record of the Labour party. Do not let them fool you, Madam Deputy Speaker; Labour Members do not believe in tax cuts. They do not believe in low tax. They are trying to pretend that they do, but we all know that they do not. They believe—and it is a reasonable, principled position—in ever greater, ever expanding Government control, debt and tax. That is their position.
Those of us on this side of the House and this Government have a different philosophy and a different policy. We believe in backing British business. We believe in backing the British people. We believe in cutting taxes for working people. We faced a once-in-a-lifetime pandemic earlier in the Parliament, and we spent over £450 billion supporting the lives, jobs and health of our constituents. That has led to an increase in our tax burden. But that is why this autumn statement is so important—because we are turning the corner.
Dame Meg Hillier
Will the Minister give way?
18:58:37
Bim Afolami
I will not.
Members may wonder how we are able to cut taxes and bring our debt down at the same time in a fiscally responsible way. We are able to do it because we back British business. There are over 100 growth measures in this autumn statement. The policy of full expensing means that for every pound that our businesses are able to invest, they will get 25p off their tax bill. There are measures to protect small businesses on business rates; on R&D tax credits, we are reducing the rate at which the credit is taxed from 25% to 19%; and we have introduced investment zones across huge swathes of our country. A few years ago, I co-authored with the Chief Secretary to the Treasury a policy on accelerator zones. These have been ideas on this side of the House for a long time, and this autumn statement puts them into practice. My good friend and constituency neighbour, my hon. Friend the Member for North East Bedfordshire (Richard Fuller), knows that I share his view that we need to make sure that regulators adhere to the need to focus on growth and competitiveness.
It would be remiss of me not to address some of the comments made during the debate. The Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), addressed many points. I listened carefully to her concerns about the welfare measures, which were shared by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms). I say gently to them both that what we are trying to do with the back to work plan and reform of the work capability assessment is to support the most vulnerable while making sure that taxpayers’ money is used sensibly and that only those who need it are given that support.
My right hon. Friend the Member for Witham (Priti Patel), who is a good friend, focused in her excellent speech on the need for a low-tax economy. She said that she would like to see some more “cheeky measures”—her words, not mine—to get personal tax down. I assure her that I will constantly listen to her and take her advice. Given her great experience, I am sure others on the Treasury Bench will do so too.
This country is full of potential, with the most innovative industries in Europe and the best minds in the world. With this autumn statement, this Government are backing this country. Labour do not have a plan. They do not understand the economy. They want to borrow £28 billion extra, yet they want to take everything in the autumn statement. How are they going to pay for it? We have a plan; they do not. I commend the autumn statement to the House.
Ordered, That the debate be now adjourned.—(Mark Fletcher.)
Debate to be resumed tomorrow.
Members may wonder how we are able to cut taxes and bring our debt down at the same time in a fiscally responsible way. We are able to do it because we back British business. There are over 100 growth measures in this autumn statement. The policy of full expensing means that for every pound that our businesses are able to invest, they will get 25p off their tax bill. There are measures to protect small businesses on business rates; on R&D tax credits, we are reducing the rate at which the credit is taxed from 25% to 19%; and we have introduced investment zones across huge swathes of our country. A few years ago, I co-authored with the Chief Secretary to the Treasury a policy on accelerator zones. These have been ideas on this side of the House for a long time, and this autumn statement puts them into practice. My good friend and constituency neighbour, my hon. Friend the Member for North East Bedfordshire (Richard Fuller), knows that I share his view that we need to make sure that regulators adhere to the need to focus on growth and competitiveness.
It would be remiss of me not to address some of the comments made during the debate. The Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), addressed many points. I listened carefully to her concerns about the welfare measures, which were shared by the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms). I say gently to them both that what we are trying to do with the back to work plan and reform of the work capability assessment is to support the most vulnerable while making sure that taxpayers’ money is used sensibly and that only those who need it are given that support.
My right hon. Friend the Member for Witham (Priti Patel), who is a good friend, focused in her excellent speech on the need for a low-tax economy. She said that she would like to see some more “cheeky measures”—her words, not mine—to get personal tax down. I assure her that I will constantly listen to her and take her advice. Given her great experience, I am sure others on the Treasury Bench will do so too.
This country is full of potential, with the most innovative industries in Europe and the best minds in the world. With this autumn statement, this Government are backing this country. Labour do not have a plan. They do not understand the economy. They want to borrow £28 billion extra, yet they want to take everything in the autumn statement. How are they going to pay for it? We have a plan; they do not. I commend the autumn statement to the House.
Ordered, That the debate be now adjourned.—(Mark Fletcher.)
Debate to be resumed tomorrow.
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