House of Commons
Wednesday 23 November 2016
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Tourism: LIBOR Funding
Lots of good causes across Scotland have put bids in to the Treasury for the next round of allocations from the LIBOR fund, but I am afraid we will need to be patient and wait for the Chancellor’s autumn statement this afternoon to hear which have been successful.
The Secretary of State knows that there is no greater cause in my constituency than Holmwood House, a fine piece of Alexander “Greek” Thomson’s architecture. Next year is the bicentenary of his birth, and the Secretary of State knows how keen I am, and the Alexander Thomson Society is, to promote that, both around the UK and internationally. Will he assure me that the full weight of his office is behind making that happen?
The hon. Gentleman is to be commended for his efforts in promoting the bicentenary of Alexander “Greek” Thomson, who is perhaps an underappreciated icon of Scottish architecture. I can assure the hon. Gentleman—especially after my own visit to Holmwood House and meeting the Alexander Thomson Society—that the UK Government will do all we can to support and promote that bicentenary.
I have written to the Chancellor of the Exchequer suggesting that LIBOR money could be used to help fund opencast coal restoration in Scotland. Has the Secretary of State had any similar discussions with the Chancellor, or has he done nothing about the opencast pledge in the 2015 Green Book?
The hon. Gentleman knows that I—and, indeed, the UK Government—have done a great deal to work with East Ayrshire Council to ensure that opencast restoration could proceed in that area following the collapse of various companies involved in opencast mining. We continue that dialogue with both the Scottish Government and East Ayrshire Council to try bring the matter to a satisfactory resolution.
Thank you very much, Mr Speaker. Scotland has some wonderful tourist attractions, many of which are in the border region and Cumbria. Does the Secretary of State agree that there are real opportunities to promote tourism in the border areas, but that that will involve close co-operation between councils on both sides of the border, and is not just about finance?
My hon. Friend knows that I am very keen to promote cross-border working between Cumbria County Council, his own local authority, Dumfries and Galloway Council and Scottish Borders Council. That is why I am a very big supporter of the so-called borderlands initiative to bring those councils together to try to secure economic development for the area, in which tourism would play a very important part.
Scotland Act 2016
We have made significant progress in transferring powers in the Scotland Act 2016 to the Scottish Parliament. A large number of provisions of the Act are already in force and we are continuing to work with the Scottish Government on the smooth transition of remaining powers.
The Scottish National party Government have failed to introduce a single piece of legislation in the past six months; the First Minister prefers grandstanding across Europe to block Brexit. Is it not time she used the powers devolved to her under the Act to start governing, rather than engaging in pointless photo opportunities?
I can update my hon. Friend. The Scottish Government have now brought forward one piece of legislation since the Scottish parliamentary elections in May. He may be interested to know that this Government currently have 19 pieces of proposed legislation before this Parliament. Of course I agree with him, and I think the majority of people in Scotland want the First Minister and the Scottish Government to get on with their day job of running Scotland and seeing to the devolved responsibilities, rather than constantly talking about independence.
The Scottish Government have announced that the new powers over benefits will be used to end the misery being meted out to disabled Scots by the UK Government. First Minister Nicola Sturgeon has pledged to reduce the need for assessments for personal independence payments and disability living allowance, in particular for those with long-term illness. Will the Secretary of State take the opportunity to welcome that and urge his UK Cabinet colleagues to follow suit?
I suppose we should view it as progress that the Secretary of State believes they are fine words, and perhaps he will follow the Scottish Government’s initiative, but it is fair to say that the majority of welfare and economic powers are not being devolved to the Scottish Parliament. Will the Secretary of State confirm that he has no plans to devolve powers to deal with Scottish legal partnerships, and the risks they pose in the fight against global money-laundering and organised crime? I have raised this matter with the Prime Minister and spoken to the right hon. Gentleman. Will he now tell the House what he and the UK Government will actually do about it?
As the right hon. Gentleman knows, the settlement in the Scotland Act 2016 was the outcome of the Smith Commission. The Scottish legal partnerships issue was not a part of that arrangement and will not be devolved, but I take it extremely seriously. I commend him for the way in which he has highlighted it in this House and elsewhere, and I commend The Herald for the way in which it has highlighted the issue. Colleagues in the UK Government are looking at how we can best take the situation forward to end the abuses, which are evident.
All Members have access to the minutes of the last meeting of the joint welfare group between myself and Scottish Government Ministers. Those minutes confirm that the introduction of the welfare powers in Scotland is indeed being delayed, potentially until 2020.
Will the Secretary of State consider the transfer of power on visas to the Scottish Government? In the Outer Hebrides, fishing boats are currently tied up because the UK Government will not enable non-EEA fishermen to come in and work on them. People are welcome and are required, but they are blocked from economic activity by the UK Government. This threatens jobs and industries in the Outer Hebrides. Will he act and do something about it, or will he do nothing as usual?
It is always a pleasure to follow Hurricane Angus. Mr Speaker, may I thank you for your generous indulgence in allowing me to appear at the Dispatch Box in the absence of my hon. Friend the Member for Blaydon (Mr Anderson), who is simply unable to be with us today? I have been immersing myself in Scottish legislation—and Irn-Bru—over the past week.
Many of us on the Labour Benches would give our eye teeth to have the powers contained in the Scotland Act 2016. Does the Secretary of State feel that the apparent reluctance of the Scottish Government to take more advantage of them indicates a surfeit of modesty, or, possibly, a lack of ambition?
I welcome the hon. Gentleman to the Dispatch Box at Scottish questions on behalf of the Labour party. The one question I have is, “Who next?” because we have had a selection of individuals. I say to the hon. Gentleman that these are very significant powers over tax and welfare. The autumn statement in this House is a very important event, but on 15 December we will see the Scottish Budget. For the first time, the Scottish Government will be able to raise income tax at their will in the Scottish Budget. That is a very significant moment in terms of taking responsibility and accountability.
Small and Medium-sized Enterprises
The Government will continue to provide an environment where small and medium-sized enterprises everywhere can thrive. That means cutting red tape, keeping taxes low, tackling late payment and improving access to finance. We are committed to ensuring the whole of the UK is a great place to start and grow a business.
Figures produced by the Scottish Government show that SMEs constitute 99% of all private sector enterprise and more than 50% of employment in Scotland. If the economy suffers any form of setback—and the Chancellor is predicting one—these enterprises will be hardest hit. Given their importance, what is the Minister doing to reduce uncertainty and to support their growth?
The UK economy is strong in spite of uncertainty. Scottish SMEs currently benefit from nearly £400 million of investment from the British Business Bank and Innovate UK aimed at helping them to grow and capitalise on new technologies and new export markets.
One of the key things that the Scottish and UK Governments could do to take away uncertainty for SMEs and businesses across Scotland is to take a second independence referendum off the table. Something else the Government could do—I hope we will hear this in the autumn statement—is conclude the Edinburgh city deal. What discussions has the Minister had with the Chancellor to make sure we hear that in the next few minutes?
I share the hon. Gentleman’s enthusiasm for that city deal, but we will have to wait another hour for more detail, and I could not agree more that the uncertainty in Scotland is coming far more from talk of another referendum than from the outcome of the EU referendum.
Yesterday it was announced that over 500 jobs in the Tannochside area of my constituency were under threat, as Ageas Kwik Fit Insurance has announced plans to axe its entire Scottish operation. If these plans proceed, it will be a devastating blow to the local community just before Christmas. What assistance can the Secretary of State and his Government provide for these constituents and families at this difficult time?
Obviously this will be a very difficult time for the Kwik Fit workforce and their families, particularly in the run-up to Christmas, as the hon. Gentleman mentioned. I understand that Kwik Fit is consulting on closure by the end of next March, and I hope that the affected workers will quickly be able to move into alternative employment. The UK Government will assist with support from the Jobcentre Plus rapid reaction service, working also with North Lanarkshire Council, to help all those being made redundant.
On 12 October, in response to a question about the deal struck with Nissan, the Secretary of State stood at the Dispatch Box and said—you can probably quote it verbatim, Mr Speaker—that
“whatever support is put in place for businesses in the north of England will apply to businesses in Scotland.”—[Official Report, 12 October 2016; Vol. 615, c. 287.]
Is the Secretary of State or the Minister willing to confirm that this is still the case? If so, will they provide us with more detail of the support? SMEs need to know.
My right hon. Friend was exactly right in what he said about the Nissan deal. The same level of support will indeed be available to Scottish businesses, but, as for the detail, the right hon. Gentleman will have to wait another hour for the autumn statement.
I am very grateful to the Minister, especially for my promotion to the Privy Council. I welcome her commitment, which I am sure will reassure SMEs and businesses of all sizes, but there must have been an analysis of the costs. What assessment has been made of the cost of this support?
EU Convergence Uplift Funding
The Secretary of State for Scotland has had numerous discussions with me about the intra-UK budget allocations under the common agricultural policy. I have also had discussions on this issue with the National Farmers Union Scotland, Scottish Members of Parliament and the Scottish Government’s Cabinet Secretary for Rural Economy and Connectivity.
The convergence uplift is worth €230 million, and the UK Government are withholding that money, which should be supporting Scotland’s rural economy. Scotland’s farmers deserve fairness. When will Scotland’s man in Cabinet, by which I mean the Secretary of State for Scotland, do something about this, or will he continue to do nothing?
I simply say to the hon. Gentleman that we will provide an update on the review of CAP allocations before the end of this year. I add that the context has changed fundamentally, following the decision to leave the EU. Some argue that the area-based payments as required under the CAP have never suited Scotland very well. Indeed, NFU Scotland has previously raised concerns about the level of payments going to very large landowners, arguing that we should instead direct support to farmers and producers through livestock payments. We now have an opportunity to look at all of these issues, and I shall work closely on that with NFU Scotland and its talented team of officials.
What we really seek in Scottish questions is the confirmation that the Secretary of State for Scotland backs Scottish farmers and will get this promised money delivered. It is fantastic that we have the Minister with responsibility for farming here, but all we have heard so far is no detail and “just warm words”, to quote the Secretary of State. Can we have the detail put in place and give Scottish farmers what they deserve?
I completely disagree with the hon. Gentleman. As I made clear, the Secretary of State for Scotland discusses this issue with me regularly. I am passionate about Scotland, and I have discussed this issue with NFU Scotland from January onwards. We are working on joint proposals and joint agreements as regards post-Brexit agricultural policy.
Leaving the EU: Scottish Businesses
Since the referendum, my right hon. Friend the Secretary of State has held 60 meetings with well over 100 Scottish organisations to hear their views. In addition, my right hon. Friend the Business Secretary has met businesses in Aberdeen, while the Minister for Trade has met business leaders in Edinburgh.
Will my hon. Friend encourage Scottish businesses to seize the opportunities of our new relationship with Europe and the wider world, including, of course, my own constituency of Louth and Horncastle? Will she urge the Scottish Government to support their businesses, stop moaning about referendums and get on with governing?
I thank my hon. Friend, and I am happy to give that encouragement. The message that the UK Government have heard loud and clear is that businesses in Scotland want stability and not another divisive referendum. Talk of independence is disruptive. What people want now is the economic stability that can be provided only by Scotland remaining in the UK.
I have No. 12, Mr Speaker.
There was no U-turn whatever on that. The UK Government will seek the best possible deal for all parts of the United Kingdom. That will include limits on free movement and the best possible access to, and trade within, the single market for British companies.
The creative industries in Scotland are one of the most successful areas of Scottish business, but there is real concern about the regulatory regime that Ofcom presides over and about what the future relationship with the European Union will look like. What discussions has the Minister had concerning that regulatory regime?
In the Northern Isles some of our most important exporting businesses are in the very successful food and drink sector, but representatives of the sector tell me that it is almost impossible for them to plan for their future until they know what access they will have to EU markets. Will the Minister ensure that their voices are heard in these negotiations, as well as those of the big boys in financial services and the automotive industries?
My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has regular meetings with representatives of the Scottish fishing industry and the agriculturel sector, and Ministers throughout the Government engage in many discussions with representatives of the Scotch Whisky Association about how they can continue to build on the strengths of their exports beyond the EU as well as within the single market.
During a live televised debate two days before the Brexit vote, Scottish Tory leader Ruth Davidson said that the EU provided “a level playing field” for small businesses, and that if the UK were to leave the EU, the rest of the EU would impose tariffs and taxes. Will the Minister please tell us how many of the 1.2 million jobs provided by small and medium-sized enterprises in Scotland she estimates will be at risk from those tariffs and taxes once they come into force?
Food and Drink Industry
My right hon. Friend the Secretary of State for Scotland held round-table discussions with representatives of the Scottish food and drink industry in August and October, and my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs met representatives of a range of food and drink businesses during her visit to Scotland earlier this month.
I very much agree with my hon. Friend. Scotch whisky is a fantastic success story for this country: in 2015, overseas sales were worth £3.9 billion. Earlier this year I attended an event in Tokyo to promote great British drinks, including Scotch whisky, which is particularly popular in Japan.
Is the Secretary of State aware that the value of exports from the rest of the UK to Scotland is more than £50 billion? That is more than the value of Scotland’s exports to the rest of the United Kingdom. Does the right hon. Gentleman agree that, regardless of any constitutional arrangements that may be made in the future, the trading relationship between Scotland and the rest of the United Kingdom is important to both constituent parts?
Independent Fiscal Commission
I have regular meetings with Scottish Government Ministers. I last met the Cabinet Secretary for Finance and Constitution at the Finance Quadrilateral on 21 October. Both Governments are committed to providing all necessary support for the Scottish Fiscal Commission and the Office for Budget Responsibility.
Does my right hon. Friend agree that it is a core principle of stable, accountable, mature government that Governments must not fiddle their own forecasts, but must instead answer for their choices, and the consequences of those choices, to the people whom they govern?
I absolutely agree with my hon. Friend, and the transfer of income tax and welfare powers to the Scottish Parliament does just that. No longer will the SNP and the Scottish Government simply be able to complain. If they genuinely have ideas, they will be able to do something about it, and the people of Scotland will understand the tax implications.
I am sure that the Independent Fiscal Commission will have noted that my colleagues in the Conservative group in Holyrood voted against the SNP’s motion because we have absolutely no idea where the SNP stands in relation to the UK’s future relationship with the EU.
The Prime Minister was asked—
“Bairns come first” is the title of a report recently produced by a number of organisations, including Fife Gingerbread and Citizens Advice and Rights Fife. It found that a third of families who should have been claiming child maintenance support did not apply, that a major barrier to applying was the £20 application fee, and that the 4% collection fee had a serious impact on family budgets. Will the Prime Minister undertake to review those unfair charges?
Trying to ensure that those responsible for children actually pay for their children when a family has broken up has been a long-standing question which this House has addressed. There have been various ways of dealing with it through the agency that has been responsible. It is right that the changes that have been introduced are on a more level basis and more people are able to access the support they need as a result.
I thank my hon. Friend for raising that. I know that the issue of the north-west relief road in Shrewsbury has been of particular concern to him; it is a priority for him and it has received considerable local backing. I understand that the local Marches LEP has put in a bid for feasibility funding so that it can prepare a business case for the scheme. What I can say at the moment is that the announcement of the successful bids for feasibility funding is expected very shortly indeed.
The Government’s sustainability and transformation plans for the national health service hide £22 billion of cuts to our service, according to research by the British Medical Association. That risks
“starving services of resources and patients of vital care.”
That quote comes from Dr Mark Porter of the BMA. When he calls this process “a mess”, where is he wrong?
The national health service is indeed looking for savings within the NHS which will be reinvested in the NHS, and I remind the right hon. Gentleman that it is this Government who are providing not just the £8 billion of extra funding that the NHS requested, but £10 billion of extra funding. Sustainability and transformation plans are being developed at local level in the interests of local people by local clinicians.
It is very strange that the Prime Minister should say that, because the Select Committee on Health, chaired by her hon. Friend the Member for Totnes (Dr Wollaston), says that the figure is actually £4.5 billion, not £10 billion; there is quite a big difference there.
Part of the reason for the strain on our national health service is that more than 1 million people are not receiving the social care they need. As a result of that, there has been an increase in emergency admissions for older patients. Margaret wrote to me this week—[Interruption.] It is not funny. She described how her 89-year-old mother suffered two falls leading to hospital admissions due to the lack of nursing care, and went on to say,
“My mother is worth more than this.”
What action will the Prime Minister take to stop the neglect of older people, which ends up forcing them into A&E admissions when they should be cared for at home or in a care home?
Of course social care is an area of concern, and it is a key issue for many people. That is why the Government have introduced the better care fund and the social care precept for local authorities, and why we are encouraging the health service and local authorities to work together to deal with precisely the social care and bed blocking issues that the right hon. Gentleman has raised.
We have introduced the better care fund and the social care precept, but let us just look at what the Labour Government did in their 13 years. They said that they would deal with social care in their 1997 manifesto. They introduced a royal commission in 1999, a Green Paper in 2005 and the Wanless review in 2006. They said they would sort it in the comprehensive spending review of 2007, and produced another Green Paper in 2009: 13 years, and they did nothing.
As the Prime Minister well knows, health spending trebled under the last Labour Government and the levels of satisfaction with the health service were at their highest ever in 2010. This Government’s choice was to cut social care by £4.6 billion in the last Parliament, at the same time as they found the space, shall we say, to cut billions from corporate taxation bills. This is affecting patients leaving hospital as well. In the last four years, the number of patients unable to be transferred from hospital due to the lack of adequate social care has increased by one third. Will the Prime Minister ensure that her Government will guarantee all our elderly people the dignity they deserve?
I recognise the importance of caring for elderly people and providing them with the dignity they deserve. The right hon. Gentleman says that this Government have done nothing on social care, but I repeat that we have introduced the social care precept, which is being made use of by my local authorities and by his local authority. We have also introduced the better care fund. He talks about support for elderly people, but let me remind him which Government it was who put in place the triple lock for pensioners. That has ensured the largest increase in pensions for elderly people.
The precept is a drop in the ocean compared with what is necessary for social care. I shall give Members an example. I am sure the whole House will have been appalled by the revelations in the BBC’s “Panorama” programme this week. They showed older people being systematically mistreated. The Care Quality Commission’s assessment is that the care homes run by the Morleigh Group “require improvement”, and it has issued warning notices. The commission goes on to say that the owner
“has allowed the services to deteriorate even further. She has utterly neglected her duty of care to the residents of these homes.”
What action are the Government going to take to protect the residents of those homes?
The right hon. Gentleman raises the issue of the quality of care that is provided in homes and the way in which elderly people are treated. I am sure everybody is appalled when we see examples of poor and terrible treatment being given to elderly and vulnerable people in care homes. What we do about it is ensure that the Care Quality Commission is able to step in and take action and that it has powers to ensure that nobody in the chain of responsibility is immune from legal accountability. We know that there is more that can be done, and that is why the CQC is looking into ways of improving its processes and increasing its efficiency. The Minister for community health and care, will be writing to the CQC shortly to see how we can improve what it does. It is the CQC that deals with these issues, and we have that in place. Is there more we can do? Yes, and we are doing it.
The problem seems to be that that home was understaffed. We should not blame often underpaid and hard-pressed care workers; we should be ensuring that there are enough of them—properly paid— in all such homes. There was a serious problem of understaffing, and it was the last Labour Government who established the CQC. A warning notice is insufficient —we need stronger action than that.
Yesterday, the Government proposed that patients may have to show passports or other ID to access non-emergency healthcare. Have the Government considered the impact on elderly people? The last census showed us that 9.5 million people in this country do not have passports. Instead of distracting people with divisive, impractical policies, could the Prime Minister provide the NHS and social care with the money that it needs to care for the people who need the support?
Over this Parliament, the Government will be spending half a trillion pounds on the national health service. The right hon. Gentleman asks about a process to ensure that people who are receiving NHS treatment are entitled to receive that NHS treatment. For many years, there has been concern about health tourism and about people turning up in the UK and accessing health services but not paying for them. We want to ensure not only that those who are entitled to use the services are indeed able to see them free at the point of delivery, but that we deal with health tourism and those who should be paying for the use of our health service.
Simon Stevens told us two weeks ago that the next three years will be the toughest ever for NHS funding and that 2018 would see health spending per person cut for the first time ever in this country. The National Audit Office has reported that the cost of health tourism is over a hundred times less than the £22 billion of cuts that the NHS faces from this Government. The reality is that under this Government there are 6,000 fewer mental health nurses and a record 3.9 million people on NHS waiting lists. All of us who visit A&E departments know the stress that staff are under and that waiting times are getting longer and longer. One million people in this country are not receiving the social care that they need. Instead of looking for excuses and scapegoats, should not the Prime Minister be ensuring that health and social care is properly resourced and properly funded, to take away the stress and fear that people face in old age and the stress that is placed on our very hard-working NHS and social care staff?
Billions of pounds extra into social care through the social care precept and the better care fund; half a trillion pounds being spent on the national health service; a record level of investment in mental health in the national health service—[Interruption.]
There is a fundamental point that the right hon. Gentleman refrains from mentioning: we can afford to pay for the national health service and for social care only if we have a strong economy creating wealth, and that is precisely what he is going to hear from the Chancellor of the Exchequer in a few minutes’ time.
Thank you, Mr Speaker—and I will repeat it. Some remainers do not seem to understand the meaning of the word “democracy”, which I would remind them is government by the people, especially the rule of the majority. With that in mind, what reassurance can my right hon. Friend give my constituents and me that article 50 will be triggered by March next year?
I am clear that we will trigger article 50 by the end of March next year. My hon. Friend is absolutely right to make the key point: it was decided by this Parliament, six to one, that the people should have the opportunity to vote on membership of the European Union. The vote was held, the turnout was high and the public gave their verdict. There must be no second referendum and no attempt to weasel out of this, and this is the Government who will deliver on the vote of the British people.
We on the Scottish National party Benches have repeatedly brought up the issue of the devastating impact on disabled people of the UK benefits system. The Government plan to cut support for people with long-term health difficulties by £30 a week. Last week, my hon. Friend the Member for Airdrie and Shotts (Neil Gray) proposed a motion, which was passed by this House with support from both Labour and Conservative Members, for these cuts to be postponed. Will the Prime Minister act on the vote of this House?
Let me tell the right hon. Gentleman what we have been doing in relation to benefits for disabled people: the overall funding for disability benefits will be higher in every year up to 2020 than it was in 2010; we have been focusing support on those who most need it—those who are not able to get into the workplace; and for those who are able, at some stage, to get into the workplace, we have been providing a wider package of support. I am pleased to say that over the last three years nearly 600,000 more disabled people are now in the workplace, with the dignity of having a job, which is what many people with disabilities want to have. So we are focusing help on those who most need it and helping those with disabilities who want to get into the workplace to do just that.
But it is widely trailed that the Prime Minister will make changes that will impact on benefit recipients in work. Will she confirm that she has no intention of helping people with disabilities and medical conditions? Why should people who are unable to earn a living be punished for their disability or illness by losing £30 a week? Does she have any intention of changing that?
I have just set out for the right hon. Gentleman the ways in which we are providing support and help for those people who have disabilities. As I said, the overall spending on disability benefits will be higher in every year to 2020 than it was in 2010. But it is also important to recognise that when we give support for people with disabilities, it is not simply about the benefits system and how much money they are given; for those who are able to get into work and are on that part of the employment and support allowance, we provide packages that are outside the benefits as well, because we recognise that people want the dignity of getting into the workplace. That is what we are helping people with disabilities who can work to do.
My right hon. Friend is absolutely right about the importance of infrastructure expenditure in helping to deal with productivity in our economy, and I am pleased that that £1.3 billion for new roads does show us investing in the long-term future for Britain. It is about delivering jobs and economic growth, and about making sure that this economy works for everyone. It is just one part of the package that we are proposing, but of course my right hon. Friend the Chancellor will be setting our proposals out more clearly in a few minutes’ time.
Obviously, this is a very difficult time for the whole family. I am sure that we are all concerned about the reports of the impact that detention in Iran is having on Nazanin Ratcliffe’s health. This is an issue that has repeatedly been raised with the Iranian Government by the UK Government—by both the previous Foreign Secretary and the current Foreign Secretary. I personally raised it with President Rouhani on 20 September in New York, and I stressed the importance of finding a resolution as soon as possible. I have since written to President Rouhani requesting confirmation of the charges, the sentence and the appeals process, and I have asked for assurances that Mrs Zaghari-Ratcliffe will be allowed full legal representation and regular contact with her family. We will continue to do everything that we can for the family, and that includes the British Government remaining ready to help to bring back Mrs Zaghari-Ratcliffe’s daughter to Britain if that is the request.
I am sure my right hon. Friend will recognise that we are subject to our own Prudential Regulation Authority, but the overall point that he makes about the importance of house building is absolutely correct. We do need to build more homes. That is something that the Government have been doing. We have seen about 900,000 new homes being built since 2010, but there is more for us to do, and that is what this Government are working on.
I have been very clear in this House on many occasions about the plan that we have for Brexit. Crucially, we will be leaving the European Union and we will be triggering article 50 by the end of March next year, and that is when the formal negotiations will start. It is absolutely right that we do not set out at this stage every single detail of our proposed negotiating strategy, because that would be the best way to get the worst possible deal for Britain.
My right hon. Friend is absolutely right. The extra investment that we will be putting into research and development is a crucial part of our long-term task of ensuring that we have the economy and the growth and prosperity that we need in this country. The new funds will help to put us at the cutting edge of scientific discovery. That is already happening. I visited the Wellcome Genome Campus in Cambridge on Monday and saw for myself the really exciting and transformational work that is being done, and it is coming out of the knowledge base and the scientific research of the United Kingdom. We want to see more of that, which is why we will be investing in it.
The hon. Gentleman is right to raise the issue of the appalling atrocities that are taking place in Aleppo, and it is right that we, along with our international allies, should be doing all that we can to try to bring this to a stop. He will recognise that the issue of who hosts sporting events is not in the Government’s remit. What is in the Government’s remit and what we are doing, as I say, is working with our international allies to put more pressure on Russia to stop the appalling atrocities—the appalling attacks—that are taking place in Aleppo. What we want to see is an agreement for a political transition to a Syria without President Assad.
My right hon. Friend will, of course, be waiting in anticipation for my right hon. Friend the Chancellor’s autumn statement, but he is absolutely right that, as we look at improving productivity in this country and as we look to the economy of the future, the provision of superfast broadband and those new technological opportunities for people is absolutely a crucial part of that, and that is something that this Government recognise and will act on.
May I send our best wishes to those police officers who were assaulted in the hon. Lady’s constituency last week? It is important that we recognise that when police officers go out on duty—and, indeed, for many off duty—they sometimes find themselves intervening in situations where they are on the receiving end of assaults and violence against them. They are willing to go forward in the line of duty, where others are not, and we recognise that. One of the things we want to do in relation to this is to identify rather better the number of assaults that are taking place. That is why last year we issued some provisional figures. We are improving those figures now this year. Sentencing guidelines already allow for an assault on a police officer to be taken as an aggravating factor into account, but also new developments, like the body-worn videos, actually help to provide the evidence that ensures that people can be brought to justice and that actually deter assaults in the first place.
I know that the Prime Minister shares my concern at the level of acute hospital bed blocking. Does she agree that part of the solution is to promote community hospital beds, where they still exist in places such as Warminster and Shaftesbury, as part of the sustainability and transformation planning process?
As regards the STP process, of course, that will take place at local level—it will be at the local level that these proposals will be considered and put forward by local clinicians—but the concept of being able to deal with bed blocking in a variety of ways is absolutely right. There are good examples around the country of where having those step-down beds available is actually resolving the problem of bed blocking. There are other ways in which that is being done—in those parts of the country where social workers are being employed by hospital trusts, for example. But is it very good to recognise the good practice when it is being done, and we shall see more of that across the country.
The question of whether or not an individual would be extradited or a request would be made for extradition is for the appropriate investigation and prosecution authorities to decide. We do, of course, recognise the concerns about those cases where it is still possible to bring people to justice, and obviously we want to see that being done.
During the past six years we have had three major referendums, all eliciting varying degrees of excitement. Does the Prime Minister agree that one can have too much excitement, and will she therefore rule out any further referendums in this Parliament?
The Government are taking action in a variety of ways to address homelessness. One of the key things we need to do is ensure that we see more homes being built in this country. The hon. Lady talks about austerity in the tone that she uses, but austerity is about us living within our means. When we talk about the Government providing support for individuals, we should always remember that taxpayers have to pay for that support, and many taxpayers are themselves struggling to get by.
The Prime Minister will be aware that yesterday the Peninsula Rail Task Force launched its report, which was commissioned following the storms that severed Devon and Cornwall’s vital rail link, just as our vital rail link was severed again, this time by flooding. Does she welcome the report and will she commit the Government to ensuring that the vision it outlines is delivered?
I do not recognise the picture that the hon. Gentleman presents of what the Government are doing in relation to the armed forces. We are investing billions of pounds in ensuring that our armed forces do have the missiles, the ships for the Royal Navy and the other pieces of equipment for the other armed forces. The picture that he presents is not the picture I recognise.
In this country we value the independence of our judiciary—that is, the independence of members of the judiciary when they come to make their judgments in court. Also, they are independent and it is for them to determine what they choose to put in their speeches. It is not for the Government to tell them what to do.
As millions of public sector workers face another year of suppressed pay, after another week of shambolic Brexit negotiations, and with the national health service facing a winter crisis and crying out for cash, does the Prime Minister worry that her Government are only just about managing?
We are very clear about the amounts of money that we are putting into the national health service. The hon. Gentleman talks about the negotiations. Actually, the negotiations for us leaving the European Union do not formally start until we trigger article 50. We will trigger article 50 by the end of March next year. The hon. Gentleman wants to stop us leaving the European Union by denying the people the decision and the deliverability of the vote that they took, rightly, on 23 June. He wants to deny people what they want; we are going to give it to them.
May I raise with the Prime Minister the concerns of millions of drivers and hauliers across the United Kingdom who worry about the cost of driving and fuel duty? Will the Government look at keeping that down? Will they also look at how forecourt pricing has worked as the oil price changes? The prices jump like a rocket and fall like a feather.
I recognise that, as my hon. Friend says, many people look with very great concern at the cost of motoring in this country. I suggest, as I have to some of my other hon. Friends, that he be a little more patient and wait for the Chancellor’s autumn statement.
The Prime Minister has talked about her worries about social care, but surely we have to judge her by her actions. In the last six years there has been an average 37% cut in local authority funding—57% in my area—and nearly a quarter of all those older people in need of social care have been denied any help at all. What is she going to do about it?
The hon. Lady might have noticed that I have been asked several questions about social care—[Interruption]—and I will give the answer that I have given previously. What the Government are doing about social care is to put more money in through the better care fund, to give local authorities the opportunity that is in the social care precept and to make sure that health and social care come together to ensure that we deal with the issue of bed blocking.
How many of us would charge into a darkened store at night knowing that inside were three mask-wearing, crowbar-wielding thugs trying to rob it? My two constituents, Nigel Dunmore and Grant McGarry, did just that; as a result of their intervention, the thugs fled, leaving the money, and the staff were hurt less, although one of the gentlemen was himself hurt. Will my right hon. Friend join me in praising their courage and selflessness in carrying out this extraordinary act of bravado?
I absolutely agree with my hon. Friend and I commend the bravery and courage shown by those two individuals—Nigel and Grant, I think he said—who stepped into that situation to ensure that it was not as bad as it might have been. That is incredible bravery; many members of the public would not have been willing to step forward in that way. Will he pass my best wishes—and the best wishes of the whole House, I am sure—on to those individuals?
It is a privilege to report today on an economy that the International Monetary Fund predicts will be the fastest-growing major advanced economy in the world this year. It is an economy with employment at a record high and unemployment at an 11-year low; and an economy that, through the hard work of the British people, has bounced back from the depths of Labour’s recession. It is an economy that has confounded commentators at home and abroad with its strength and resilience since the British people decided, exactly five months ago today, to leave the European Union and chart a new future for our country.
That decision will change the course of Britain’s history. It has thrown into sharp relief the fundamental strengths of the British economy that will ensure our future success: the global reach of our services industries; the strength of our science and high-tech manufacturing base; and the cutting-edge British businesses that are leading the world in disruptive technologies. But it is a decision that also makes more urgent than ever the need to tackle our economy’s long-term weaknesses such as the productivity gap, the housing challenge, and the damaging imbalance in economic growth and prosperity across our country. We resolve today to confront those challenges head on, to prepare our country to seize the opportunities ahead, and, in doing so, to build an economy that works for everyone—an economy where every corner of this United Kingdom is part of our national success.
I want to pay tribute to my predecessor, my right hon. Friend the Member for Tatton (Mr Osborne). My style will, of course, be different from his. I suspect that I will prove no more adept at pulling rabbits from hats than my successor as Foreign Secretary has been at retrieving balls from the back of scrums, but my focus on building Britain’s long-term future will be the same. My right hon. Friend the Member for Tatton took over an economy on the brink of collapse, with the highest budget deficit in our post-war history, and brought that down by two thirds. That is a record of which he can be proud.
But times have moved on, and our task now is to prepare our economy to be resilient as we exit the EU and to be match-fit for the transition that will follow. So we will maintain our commitment to fiscal discipline while recognising the need for investment to drive productivity, and for fiscal headroom to support the economy through the transition.
Let me turn now to the forecasts. Since 2010, the Office for Budget Responsibility has provided an independent economic and fiscal forecast to which the Government must respond—gone are the days when the Chancellor could mark his own homework—and I thank Robert Chote and his team for their hard work. Today’s OBR forecast is for growth to be 2.1% in 2016—higher than forecast in March. In 2017, the OBR forecasts growth to slow to 1.4%, which it attributes to lower investment and weaker consumer demand driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation. That is slower, of course, than we would wish, but still equivalent to the IMF’s forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy. That fact will, no doubt, be a source of very considerable irritation to some.
As the effects of uncertainty diminish, the OBR forecasts growth recovering to 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021. While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is likely to be 2.4 percentage points lower than would otherwise have been the case. The OBR acknowledges that there is a higher degree of uncertainty around these figures than usual.
Despite slower growth, the UK labour market is forecast to remain robust. We have delivered over 2.7 million new jobs since 2010, and this forecast shows that number growing in every year—another 500,000 jobs created over the OBR forecast, providing security for working people across the length and breadth of Britain.
For those who claim that the recovery is just a south-east phenomenon, I have some news: over the past year employment grew fastest in the north-east, the claimant count fell fastest in Northern Ireland, pay grew most strongly in the west midlands, and every UK nation and region saw a record number of people in work. That is a labour market recovery that is working for everyone.
Monetary policy has played an important role in supporting growth since the referendum decision, but a credible fiscal policy remains essential for maintaining market confidence and restoring the economy to long-term health. In view of the uncertainty facing the economy, and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019-20, but the Prime Minister and I remain firmly committed to seeing the public finances return to balance as soon as practicable, while leaving enough flexibility to support the economy in the near term.
Today I am publishing a new draft charter for budget responsibility with three fiscal rules: first, that the public finances should be returned to balance as early as possible in the next Parliament and, in the interim, cyclically adjusted borrowing should be below 2% by the end of this Parliament; secondly, that public sector net debt as a share of GDP must be falling by the end of this Parliament; and, thirdly, that welfare spending must be within a cap set by the Government and monitored by the OBR. In the absence of an effective framework, the welfare bill in our country spiralled out of control, with spending on working-age benefits trebling in real terms between 1980 and 2010. As a result of the action that we have taken since 2010, that spending has now stabilised. The cap I am announcing today takes into account the policy changes made since the last Budget, setting a realistic baseline reflecting all announced welfare policies. I confirm again today that the Government have no plans to introduce further welfare savings measures in this Parliament beyond those already announced.
I now turn to the OBR’s fiscal forecasts, but first I will set out the key drivers of changes since the Budget: the post-Budget changes that were made to welfare and housing policies cost the Exchequer £8.6 billion over the forecast period; expected Office for National Statistics classification changes have added £12 billion since the Budget; and tax receipts have been lower than expected this year, causing the OBR to revise down projected revenues in the future. Added to this is a structural effect of rapidly rising incorporation and self-employment, which further erodes revenues.
Combining those pressures with the impact of forecast weaker growth, and taking account of the measures I shall announce today, the OBR now forecasts that, in cash terms, borrowing is set to be £68.2 billion this year, falling to £59 billion next year and £46.5 billion in 2018-19, and then £21.9 billion, £20.7 billion, and finally £17.2 billion in 2021-22. Overall, public sector net borrowing as a percentage of GDP will fall from 4% last year to 3.5% this year, and it will continue to fall over the Parliament, reaching 0.7% in 2021-22. This will be the lowest deficit as a share of GDP in two decades. The OBR expects cyclically adjusted public sector net borrowing to be 0.8% of GDP in 2020-21, comfortably meeting our target to reduce it to less than 2% and, importantly, leaving significant flexibility to respond to any headwinds that the economy may encounter.
The OBR’s forecast of higher borrowing and slower asset sales, together with the temporary effect of the Bank of England’s action to stimulate growth, translates into an increased forecast for debt in the near term. The OBR forecasts that debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18 as the Bank of England’s monetary policy interventions approach their full effect. In 2018-19, debt is projected to fall to 89.7% of national income—the first fall in the national debt as a share of GDP since 2001-02—and it is forecast to continue falling thereafter. Members might be interested to know that after stripping out the effects of the Bank of England interventions, underlying debt peaks this year at 82.4% of GDP and falls thereafter to 77.7% by 2021-22.
It is customary in the run-up to the autumn statement to hear representations from the shadow Chancellor of the day, usually for untenable levels of spending and borrowing. Conservative Members used to think that Ed Balls’ demands were an extreme example, but I have to say that the current shadow Chancellor has outperformed him in the fiscal incontinence sweepstake. What we do not know, of course, is whether the shadow Chancellor can also dance—[Interruption.] He can. Good; a second career awaits him.
I have received some more measured representations from a range of external bodies. Some have called for fiscal expansion, while others have suggested that there is no need at all to respond to a changed economic outlook. That reflects, to be fair, the challenge that we face of resolving how best to protect the recovery and build on the economy’s manifest strengths, yet at the same time respond appropriately to the warnings of a more difficult period ahead.
But with our debt forecast to peak at over 90% next year, and a deficit this year of 3.5%, I have reached my own judgment. It is a judgment based on a sober analysis of our fiscal position, and also on a realistic appraisal of the weakness of UK productivity and the urgent need to address our fiscal challenge from both ends—continuing to control public expenditure, but also growing the potential of the economy and protecting the tax base. So we choose in this autumn statement to prioritise additional high-value investment, specifically in infrastructure and innovation, that will directly contribute to raising Britain’s productivity. The key judgment we make today is that our hard-won credibility on public spending means that we can fund this commitment in the short term from additional borrowing, while funding all other new policies announced in this autumn statement through additional tax and spending measures. That is the responsible way to secure our economy for the long term.
The productivity gap is well known to hon. and right hon. Members, but shocking none the less—it bears repeating. We lag the US and Germany by some 30 percentage points in productivity, but we also lag France by over 20 points and Italy by 8 points, which means, in the real world, that it takes a German worker four days to produce what we make in five. That means, in turn, that too many British workers work longer hours for lower pay than their counterparts, and that has to change if we are to build an economy that works for everyone. Raising productivity is essential for the high-wage, high-skill economy that will deliver higher living standards for working people across this country.
As a result of decisions taken by my predecessor, public investment is higher over this decade than it was over the whole of the period of the last Labour Government, but today I can go further. I can announce that we are forming a new national productivity investment fund of £23 billion to be spent on innovation and infrastructure over the next five years—investing today for the economy of the future.
Let me set out for the House how this money will be used. We do not invest enough in research, development and innovation. As the pace of technology advances and competition from the rest of the world increases, we must build on our strengths in science and tech innovation to ensure that the next generation of discoveries is not only made here, but developed and produced in Britain. So today I can confirm the additional investment in R and D, rising to an extra £2 billion per year by 2020-21, that was announced by my right hon. Friend the Prime Minister on Monday.
Economically productive infrastructure directly benefits businesses, but families, too, rely on roads, rail, telecoms and, especially, housing. We have made good progress, with the number of new homes being built last year hitting an eight-year high, but for too many the goal of home ownership remains out of reach. In October, my right hon. Friend the Communities and Local Government Secretary launched the £3 billion home building fund to unlock over 200,000 homes and up to £2 billion to accelerate construction on public sector land, but we must go further still. The challenge of delivering the housing we so desperately need in the places where it is currently least affordable is not, of course, a new one, but the effect of unaffordable housing on our nation’s productivity makes it an urgent one. My right hon. Friend will bring forward a housing White Paper in due course to address these long-term challenges but, in the meantime, we can take further steps.
One of the biggest objections to housing development, as hon. and right hon. Members will know from their constituencies, is often the impact on local infrastructure, so we will focus Government infrastructure investment to unlock land for housing with a new £2.3 billion housing infrastructure fund to deliver infrastructure for up to 100,000 new homes in areas of high demand. To provide affordable housing that supports a wide range of need, we will invest a further £1.4 billion to deliver 40,000 additional affordable homes. I will also relax restrictions on Government grant to allow providers to deliver a wider range of housing types. I can also announce a large-scale regional pilot of right to buy for housing association tenants, and continued support for home ownership through the Help to Buy equity loan scheme and the Help to Buy ISA.
This package means that over the course of this Parliament, the Government expect to more than double, in real terms, annual capital spending on housing. Coupled with our resolve to tackle the long-term challenges of land supply, this commitment to housing delivery represents a step change in our ambition to increase the supply of homes for sale and for rent to deliver a housing market that works for everyone.
Reliable transport networks are essential to growth and productivity, so this autumn statement commits significant additional funding to help to keep Britain moving now, and to invest in the transport networks and vehicles of the future. I will commit: an additional £1.1 billion of investment in English local transport networks, where small investments can often offer big wins; £220 million additionally to address traffic pinch points on strategic roads; £450 million to trial digital signalling on our railways to achieve a step change in reliability and to squeeze more capacity out of our existing rail infrastructure—I know the Leader of the Opposition will welcome that—and, finally, £390 million to build on our competitive advantage in low-emission vehicles and the development of connected autonomous vehicles, plus a 100% first year capital allowance for the installation of electric vehicle charging infrastructure.
The Department for Transport will continue to work with Transport for the North to develop detailed options for northern powerhouse rail. My right hon. Friend the Transport Secretary will set out more details of specific projects and priorities over the coming weeks.
Our future transport, business and lifestyle needs will require world-class digital infrastructure to underpin them, so my ambition—
Yes—it says here because I wrote it here.
My ambition is for the UK to be a world leader in 5G. That means a full-fibre network; a step change in speed, security and reliability. So we will invest over £1 billion in our digital infrastructure to catalyse private investment in fibre networks and to support 5G trials. From April, we will introduce 100% business rates relief for a five-year period on new fibre infrastructure, supporting further roll-out of fibre to homes and businesses.
We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment, but we must sustain this effort over the long term if we are to make a lasting difference to the UK’s productivity performance, so today I have written to the National Infrastructure Commission to ask it to make its recommendations on the future infrastructure needs of the country, using the assumption that the Government will invest between 1% and 1.2% of GDP every year from 2020 in economic infrastructure covered by the commission. To put that in context, we will spend around 0.8% of GDP on the same definition this year.
I am also backing the commission’s interim recommendations on the Oxford-Cambridge growth corridor, published last week, with £110 million of funding for east-west rail and a commitment to deliver the new Oxford-Cambridge expressway. That project can be more than just a transport link. It can become a transformational tech corridor, drawing on the world-class research strengths of our two best-known universities. I welcome the commission’s continuing work on delivery model options. We will carefully consider its final recommendations in due course.
The major increase in infrastructure spending I have announced today will represent a significant increase in funding through the Barnett formula, of more than £250 million to the Northern Ireland Executive, £400 million to the Welsh Government and £800 million to the Scottish Government.
Public investment is only part of the picture, however. About half of our economic infrastructure is financed by the private sector, and we will continue to support that investment through the UK guarantee scheme, which I am today extending until at least 2026. The new capital investment I have announced will provide the financial backbone for the Government’s industrial strategy that the Prime Minister spoke about on Monday, a firm foundation upon which my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy will work with industry to build our ambition of an economy that works for all.
I can announce four further measures to back business. I am doubling the UK export finance capacity to make it easier for British businesses to export. I am funding Charlie Mayfield’s business-led initiative to boost management skills across British businesses. I am taking a first step to tackle the long-standing problem of our fastest growing start-up tech firms being snapped up by bigger companies, rather than growing to scale, by injecting an additional £400 million into venture capital funds through the British Business Bank, unlocking £1 billion of new finance for growing firms. I am also launching today a Treasury-led review of the barriers to accessing patient capital in the UK, so that we can take further action to address them.
This Government recognise that, for too long, economic growth in our country has been too concentrated in London and the south-east. That is not just a social problem but an economic problem. London is one of the highest-productivity cities in the world and we should celebrate that fact. But no other major developed economy has such a gap between the productivity of its capital city and its second and third cities, so we must drive up the performance of our regional cities. Today we publish our strategy for addressing productivity barriers in the northern powerhouse, and give the go ahead to a programme of major roads schemes in the north. Our midlands engine strategy will follow shortly, but I am today providing funding so that the evaluation study for the midlands rail hub can go ahead.
In addition, we are investing in local infrastructure in every region of England. I can announce the allocation of £1.8 billion from the local growth fund to the English regions: £556 million to local enterprise partnerships in the north of England, £542 million to the midlands and east of England, and £683 million to LEPs in the south-west, south-east and London. We will announce the detailed breakdown of allocations to individual LEPs shortly.
Devolution remains at the heart of this Government’s approach to supporting local growth, and we recommit today to our city deals with Swansea, Edinburgh, north Wales and Tay cities. I can also announce today we are beginning negotiations on a city deal for Stirling so that every single city in Scotland will be on course to have a city deal. To support new mayoral combined authorities in England, I can announce that we will grant them new borrowing powers to reflect their new responsibilities.
While we continue discussions with London and the west midlands on possible devolution of further powers I can announce today that London will receive £3.15 billion as its share of national affordable housing funding, to deliver a commitment of more than 90,000 affordable homes. I can also announce that we are devolving to London the adult education budget, and giving London greater control over the delivery of employment support services for the hardest to help.
I have deliberately avoided making this statement into a long list of individual projects being supported, but I am going to make one exception. I will act today, with just seven days to spare, to save one of the UK’s most important historic houses, Wentworth Woodhouse near Rotherham. It is said to be the inspiration for Pemberley in Jane Austen’s “Pride and Prejudice”. But in 1946, in an extraordinary act of cultural vandalism, the then Labour Government authorised extensive opencast coal mining virtually up to the front door of this precious property. Perhaps that is Labour’s idea of a northern powerhouse. Wentworth Woodhouse is now—[Interruption.]
Wentworth Woodhouse is now at critical risk of being lost to future generations. A local effort has been hugely successful in securing millions in funding from various foundations and charities, subject to the balance required being found by 30 November. We will today provide a £7.6 million grant towards urgent repairs to safeguard this key piece of northern heritage—all but destroyed by a Labour Government, and saved by a Conservative one.
I can also confirm distribution of a further £102 million of LIBOR bank fines to armed forces and emergency services charities, including, my hon. Friends will be pleased to hear, £20 million to support the Defence and National Rehabilitation Centre at Stanford Hall in Nottinghamshire, as well as £3 million from the tampon tax fund for Comic Relief to distribute to a range of women’s charities.
We choose to invest in our economic infrastructure because it can transform the growth potential of our economy, as well as improving the quality of people’s lives. That investment is possible only because the Government are prepared to take the tough decisions—every one of them opposed by the Labour party—to maintain control of current spending. When we took office in 2010, public spending was 45% of GDP; this year, it is set to be 40%. During those six years, we have seen crime fall by more than a quarter, the highest proportion ever of good or outstanding schools, the number of doctors in our NHS increasing by 10,000, pensioner poverty at its lowest level ever, the lowest ever number of children being raised in workless households and the highest ever number of young people going on to study full time at university.
We have demonstrated beyond doubt that controlling public spending is compatible with world-class public services and social improvement. But, as the OBR’s debt projections demonstrate, we have more work to do to eliminate the deficit. Departmental spending plans set out in the spending review last autumn will therefore remain in place, and departmental expenditure in 2021-22 will grow in line with inflation. The £3.5 billion of savings to be delivered through the efficiency review, announced at the Budget and led by my right hon. Friend the Chief Secretary to the Treasury, must be delivered in full. I have, however, exceptionally agreed to provide additional funding to the Ministry of Justice to tackle urgent prison safety issues by increasing the number of prison officers by 2,500.
Having run two large spending Departments in previous roles, I came to this job with some very clear views about the relationship between the Treasury and spending Departments. I want Departments to be incentivised to drive efficiencies, and I want the Treasury to be an enabler for good, effective spending across government. To kick-start this new approach, I will allow up to £1 billion of the savings found by the efficiency review to be reinvested in 2019-20 in priority areas and I have budgeted today accordingly.
We manage public spending so that we can invest in the public’s priorities. The Government have underlined those priorities with a series of commitments and protections for the duration of this Parliament. I can confirm today that, despite the fiscal pressures, we will meet our commitments to protect the budgets of key public services and defence; keep our promise to the world’s poorest through our overseas aid budget; and meet our pledge to our country’s pensioners through the triple lock. But as we look ahead to the next Parliament, we will need to ensure that we tackle the challenges of rising longevity and fiscal sustainability, so the Government will review public spending priorities and other commitments for the next Parliament in the light of the evolving fiscal position at the next spending review.
I now turn to taxation. Since 2010, the Government have put a business-led recovery at the heart of our plan. We have cut corporation tax from 28% to 20%, sending the message that Britain is open for business. The additional investment in productivity and infrastructure that I have announced today underscores that message, and the raft of investments in the UK announced since the referendum—by SoftBank, Glaxo, Nissan, Google and Apple among others—confirms it. My priority as Chancellor is to ensure that Britain remains the No. 1 destination for business, creating the investment, the jobs and the prosperity to protect our long-term future. I know how much business values certainty and stability, so I confirm today that we will stick to the business tax road map we set out in March. Corporation tax will fall to 17%, by far the lowest overall rate of corporate tax in the G20. We will deliver the commitments we have made to the oil and gas sector. The carbon price support will continue to be capped out to 2020, and we will implement the business rates reduction package worth £6.7 billion. I can also confirm today that, having consulted further, my right hon. Friend the Communities Secretary will lower the transitional relief cap from 45% next year to 43%, and from 50% to 32% the year after. That’s complicated, but it’s good news—just in case anybody wasn’t sure, Mr Speaker. I will also increase the rural rate relief to 100%, giving small businesses in rural areas a tax break worth up to £2,900 a year.
In return for these highly competitive tax rates, the tax base must be sustainable. From April 2017, we will align the employee and employer national insurance thresholds at £157 a week. There will be no cost to employees, and the maximum cost to business will be an annual £7.18 per employee. Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT. In order to raise revenue, which is required to fund the spending commitments I am making today, it will rise from 10% currently, to 12% from next June. At the same time, I can confirm the Government’s commitment to legislate next year to end the compensation culture surrounding whiplash claims, a major area of insurance fraud. That will save drivers an average of £40 on their annual premiums.
Technological progress is changing the way people live and work, and the tax system needs to keep pace. For example, the OBR has today highlighted the growing cost to the Exchequer of incorporation. So the Government will consider how we can ensure that the taxation of different ways of working is fair between different individuals doing essentially the same work, and sustains the tax base as the economy undergoes rapid change. We will consult in due course on any proposed changes. In the meantime, the Government will take action now to reduce the difference between the treatment of cash earnings and benefits. The majority of employees pay tax on a cash salary, but some are able to sacrifice salary by agreement with their employer and pay much lower tax on benefits in kind. That is unfair, so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else. Following consultation with stakeholders, ultra-low emission cars, pension savings, childcare and the cycle-to-work scheme will be excluded from this change, and certain long-term arrangements will be protected until April 2021. For pensions that have been drawn down, I will also reduce to £4,000 the money purchase annual allowance, to prevent inappropriate double tax relief being gained.
This Government have done more than any other to tackle tax evasion, avoidance and aggressive tax planning. The UK tax gap, it may surprise some Opposition Members to hear, is now one of the lowest in the world. But we must constantly be alert to new threats to our tax base and be willing to move swiftly to counter them. At the Budget, we committed to removing the tax benefits of disguised earnings for employees, and I am now going to do the same for the self-employed and employers, raising a further £630 million over the forecast period. We will shut down inappropriate use of the VAT flat rate scheme that was put in place to help small businesses. We will abolish the tax advantages linked to employee shareholder status, in response to growing evidence that it is primarily being used for tax-planning purposes by high-earning individuals. We will introduce a new penalty for those who enable the use of a tax avoidance scheme that HMRC later challenges and defeats. These measures, and others set out in the autumn statement document, raise about £2 billion over the forecast period.
There is understandable public concern that the pitch is tilted in favour of large multinational groups, which are able to use cross-border structures to manage their tax liabilities. Following detailed consultation, I can confirm that we will implement our new restriction on tax relief for corporate interest expenses and reform the way relief is provided for historic losses. These measures, scored at Budget 2016, will help to ensure that large businesses will always pay tax in years where they make substantial profits. They will also mean that businesses cannot avoid tax by borrowing excessively in the UK to fund their overseas activities. They take effect in April, and will raise over £5 billion from the largest businesses in the UK.
I said that the tax system must be fair, and that means rewarding those who work hard by helping them to keep more of what they earn. There is one tax reform the Government have pursued since 2010 that has done more than any other to improve the lot of working people: raising the tax-free personal allowance. When we entered Government in 2010, it was £6,475. After six years, it is now £11,000, and will rise to £11,500 in April. As a result, we have more than halved the tax bill of someone with a salary of £15,000 to just £800. That is a massive boost to the incomes of low and middle earners. Since 2010, we have cut income tax for 28 million people and taken 4 million people out of income tax altogether. I can confirm today that, despite the challenging fiscal forecasts, we will deliver on our commitment to raise the allowance to £12,500, and the higher rate threshold to £50,000, by the end of this Parliament. Once that £12,500 has been reached, the personal allowance will rise automatically during the 2020s in line with inflation, rather than the national minimum wage, as currently planned. It will be for the Chancellor to decide from year to year whether more is affordable.
As well as taking millions of ordinary people out of tax, we are the Government who introduced the national living wage and gave a pay rise to over 1 million workers. [Interruption.] Labour Members don’t like it—a Tory Government gave a pay rise to over 1 million of the lowest-paid workers. We are the Government who introduced 15 hours a week of free childcare for all three and four-year-olds, and we will double that for working families from September. We are the Government whose education reforms have raised standards and expanded opportunity, with 1.4 million more children now in “good” or “outstanding” schools, while the new capital funding I have provided today for grammar schools will help to continue that trend. We are the Government who pledged to invest in our NHS, and we are delivering on that promise by backing the NHS’s “Five Year Forward View” plan for the future with £10 billion of additional funding by the end of 2020-21. But we recognise that more needs to be done to help families make ends meet and to ensure that every household has opportunities to prosper. So today I can announce that the national living wage will increase from £7.20 to £7.50 next April. That is a pay rise worth over £500 a year to a full-time worker.
Creating jobs, lowering taxes and raising wages address directly the concerns of ordinary families, and the revenue-raising measures that I have announced today enable me to go further to help families on low wages. Universal credit is an important reform to our benefits system and is designed to make sure that work always pays. We want to reinforce that position. I have considered very carefully the arguments made by my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others, and weighed them carefully against the fiscal constraints, and I have concluded that from April we can reduce the universal credit taper rate from 65% to 63%. This is effectively a targeted tax cut that will be worth £700 million a year by 2021-22 for those in work on low incomes. It will increase the incentive to work and encourage progression in work, and it will help 3 million households across our country.
We believe that a market economy is the best way of delivering sustained prosperity for the British people. We will always support a market-led approach, but we will not be afraid to intervene where there is evidence of market failure. We will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers. In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, despite attempts to regulate them, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. So I can announce today that we will ban fees to tenants as soon as possible. We will also consult on how best to ban pension cold calling and a wider range of pension scams.
We can also help today those who rely on the income from modest savings to get by. Low interest rates have helped our economy to recover, but they have significantly reduced the interest people can earn on their cash savings, so we will launch a new, market-leading savings bond through NS&I. The detail will be announced at the Budget, but we expect our new investment bond will have an interest rate of around 2.2% gross and a term of three years. Savers will be able to deposit up to £3,000, and we expect around 2 million people to benefit.
The announcements I have made today lower taxes on working people, boost wages, back savers and bear down on bills. In early 2017, we will begin the roll-out of tax-free childcare across Britain, providing a saving of up to £2,000 per child. Once it is rolled out, we pledge to keep it under review to ensure that it is indeed delivering the support that working families need.
There is one further area of household expenditure where the Government can help. The oil price has risen by over 60% since January, and sterling has declined by 15% against the dollar. That means, of course, significant pressure on prices at the pump here in Britain, so today we stand on the side of millions of hard-working people in our country by cancelling the fuel duty rise for the seventh successive year. In total, this saves the average car driver £130 a year and the average van driver £350 a year. This is a tax cut worth £850 million next year and means that the current fuel duty freeze is the longest for 40 years.
I have one further announcement to make. This is my first autumn statement as Chancellor. After careful consideration and detailed discussion with the Prime Minister, I have decided that it will also be my last. I am abolishing the autumn statement. [Hon. Members: “Hear, hear.”] No other major economy makes hundreds of tax changes twice a year, and neither should we, so the spring Budget in a few months will be the final spring Budget. Starting in autumn 2017, Britain will have an autumn Budget announcing tax changes well in advance of the start of the tax year. From 2018, there will be a spring statement responding to the forecast—[Laughter.]
Perhaps they should have read their briefing, Mr Speaker, because they might then have remembered that Parliament has mandated the OBR to produce a report to Parliament twice a year and has mandated the Government to reply. From 2018, therefore, there will be a spring statement responding to the forecast from the OBR but no major fiscal event. If unexpected changes in the economy require it, I will of course reserve the right to announce actions at the spring statement, but I will not make significant changes twice a year just for the sake of it. This change will allow for greater parliamentary scrutiny of Budget measures ahead of their implementation. It is a long-overdue reform to our tax policy-making process and brings the UK into line with best practice recommended by the IMF, the Institute for Fiscal Studies, the Institute for Government and many others.
The OBR report today confirms the underlying strength and resilience of the British economy. This autumn statement responds to the challenge of building on that strength, while also heeding the warnings in the OBR’s figures, as we begin writing this new chapter in our country’s history. It re-states our commitment to living within our means and sets out our choice to invest in our future. It sends a clear message to the world that Britain is open for business and it provides help to those who need it now. We have made our choices and set our course. We are a great nation, bold in our vision, confident in our strengths and determined in our ambition to build a country that works for everyone. I commend this statement to the House.
This morning, we heard the verdict from the trial, following the tragic murder of Jo Cox. That murder robbed this House of a fierce advocate for social justice and a passionate campaigner. Her killing was an attack on democracy itself. Our thoughts are with her family.
Today’s statement places on record the abject failure of the last six wasted years, and offers no hope for the future. The figures speak for themselves. Growth is down; wage growth, down; business investment, down. [Hon. Members: “Sit down.”] The Government’s own deficit targets are failed; the debt target, failed; the welfare cap, failed.
Order. Let me say now that if Members from either side want to shout out, they should not bother to stand, because they will not be called. I say that to Members on both sides—stop it. It is juvenile, low grade and hugely deprecated by the public, whose support we should be seeking and whom we should try to impress, not to repel.
Thank you, Mr Speaker.
We have heard today that there will be more taxes, more debt and more borrowing. The verdict could not be clearer. The so-called long-term economic plan has failed. As the Treasury’s own leaked paper reveals, the Government knew it had failed before the referendum result was announced. We now face Brexit—the greatest economic challenge of a generation—unprepared and ill equipped. The new Chancellor acknowledged the failure of the economic strategy in October when he promised a reset of economic policy.
Today, we expected a change of direction after those six wasted years. Instead, we have seen further cuts to earnings for those in work through cuts to universal credit, and a living wage increase that is lower than expected under the previous Chancellor. This is a new Conservative leadership with no answers to the challenges facing our country following Brexit, and no vision to secure our future prosperity.
Labour respects the decision of the British people to leave the European Union, but the chaotic Tory handling of Brexit threatens the future prosperity of this country. The Chancellor must now do the right thing for British workers and businesses. He must insist on full, tariff-free access to the single market. He and the Treasury know that that is what will get the best deal for jobs and prosperity here. It may not be in the Chancellor’s nature, but in the national interest I urge him to stand up to the Prime Minister and the extreme Brexit fanatics in her Cabinet. If he stands up for British businesses and jobs by fighting for single market access, he will have our full support.
After six wasted years, wages are still lower than they were in 2008. Self-employed people are, on average, paid less than they were a generation ago. Six million people are earning less than the living wage. Too many people are having to worry about buying school uniforms, affording a family holiday or even just paying the rent or mortgage.
We have had a month of briefing from the Conservative party on those people who are called “just about managing”—the JAMs. To the Conservative party, these people are just an electoral demographic. To us, they are our friends, our neighbours and the people we represent. Let me tell the House why those people are just managing. It is the result of Tories imposing austerity on an economy that could not bear the strain. We have seen productivity stagnate, but there is nothing in the autumn statement on the scale needed to overturn those six wasted years.
If the Chancellor really wants to make a fairer tax system as well, he can start by bringing back the 50p tax rate for the richest in our country. We have heard familiar hollow rhetoric from the Tories on tax avoidance, when they have cut the resources of Her Majesty’s Revenue and Customs—the very people who collect these taxes. The resources available to HMRC today are 40% less than they were in 2000.
The Chancellor has frozen in-work benefits at a time when food prices are rising and we do not expect wages to keep up. We need an economy that is fundamentally more prosperous and where prosperity is, yes, shared by all. The increases in the national living wage announced today are lower than expected and leave the poorest-paid workers still earning less than they need to live on. So I ask the Chancellor to adopt a real living wage level, as Labour has pledged, and abandon his predecessor’s empty rhetoric.
Regrettably, the Chancellor is still going ahead with some of the cuts to universal credit. Thanks to pressure—I pay tribute to Members of all parties who have campaigned on this issue—he is offering to soften the blow. We do not want the blow softened; we want it lifted altogether. Today’s changes will leave a single parent on average at least £2,300 worse off. These are the very people who are working hard to deliver for their families, and the Government are betraying them.
People with disabilities, who have been put through the ordeal of the discredited work capability assessment and are trying to get themselves ready to return to work—they are “just about managing”—still remain in the Chancellor’s firing line. He is cutting £30 a week from the support that these disabled people receive. In our society, that is scandalous.
Those who are “just about managing” also rely on our public services. They send their children to local schools; they depend on their local hospital; they rely on local council services to clean their streets, tend to their parks and playgrounds and open their libraries. The reality, however, after six wasted years is that our public services are just not managing. Today, the childcare that parents rely on remains underfunded, as the Public Accounts Committee has reported—and it will remain underfunded, even after today’s announcements.
I want to pay tribute to my hon. Friends the Members for Swansea East (Carolyn Harris) and for Erith and Thamesmead (Teresa Pearce) for the important work they did in bringing the issue of child burial fees to public attention. I ask the Government to do the right thing on child burial fees and reconsider making funding available for families in these desperate circumstances.
Councillors from all political parties are reporting that they are at a tipping point in the provision of social care. The previous Chancellor cut nearly £5 billion from social care, meaning that over 1 million people who need care are not getting it. They are not even “just about managing”, and they got little help today. We call for additional support for social care, because the funding being provided today is only a stop-gap measure. Our social care system will not be secure without long-term funding. Tonight, many elderly people will remain trapped in their homes, isolated and lonely, lacking the care they need because of continuing cuts to social care—and social care cannot be cut without also hitting the NHS.
The supposed £10 billion funding allocated to the NHS is a restatement of an earlier commitment, but the Health Committee described this £10 billion claim as “misleading and incorrect”. The real amount is less than half that claimed. As a result, we now have 3.9 million people on NHS waiting lists—more than ever—and many of those 3.9 million people are waiting in pain, and they got no relief today. Across the country, hospitals face losing their A&E units, their maternity units and their specialist units. This Tory Government are failing patients, as well as failing the dedicated NHS staff who serve us so well. This is the first time that healthcare spending per head has declined since the NHS was created, and I fear there will be a crisis in funding and care over this Christmas. The NHS cares for us, and we should care for the NHS.
Members of this Government have also overseen the biggest real-terms cuts in education for four decades. One pound in every seven has been cut from further education college budgets, and Conservative policy has saddled a generation of students with a lifetime of debt. How can a Government seriously talk about supporting a 21st-century economy when they are planning to pour tens of millions into the failed 20th-century policy of grammar schools, segregating our children at an early age?
As for housing, the Chancellor announced today that he was scrapping “pay to stay” proposals and letting agents’ fees—a U-turn that is a victory for Labour’s campaigns against both the “tenant tax” and letting fees. The Chancellor has spoken before about the dream of home ownership for the young. Nothing that he has announced today is of the scale that is needed to suggest that that will remain anything other than a dream. The hard facts are these. The Government of which the Chancellor was a member built fewer homes than had been built at any point since the 1920s, and there are now a third of a million fewer home owners under the age of 35. Today the Chancellor could have delivered the scale of investment that is required to build the homes that we need and to create a new generation of home ownership. He significantly failed to do so.
Thanks to campaigning by my right hon. Friend the Member for Wentworth and Dearne (John Healey), the Wentworth Woodhouse building will be saved. I am grateful for that. The accusation was that a Labour Government had sited an opencast mine near the building and threatened it. That, I believe, was in 1947. I only wish that some of the policies pursued by Tory Governments since the 1950s could be reversed so easily.
The Government’s biggest investment failure is this: the Chancellor has failed to address properly the Government’s most consistent shortcoming. His predecessor cut public investment to the lowest that it had been since the 1990s. Instead of delivering the ambitious investment that our economy needs throughout the country, the Chancellor has failed to recognise the scale of the challenge. He also risks repeating the mistakes from last year, with the national flood resilience plan failing to provide the protection that our communities need.
Just one in five of the projects in the investment pipeline is under construction, and shovel-ready projects worth £82 billion are still being delayed. The infrastructure gap between London and the rest of the country remains unbridged. London was scheduled to receive 12 times as much public investment per head as the north-east of England. The announcement of a £1.1 billion investment in transport is a reannouncement. The Oxford-Cambridge rail link is significantly delayed against Network Rail’s original planned completion date of March 2019. There are no new ideas here, just a promise to deliver what the Government have previously failed to deliver. This is press-release policy-making, not provision. All that we need now is the return of the high-vis jacket.
The “fourth industrial revolution” will not be delivered on delays, old news and reannouncements. The Government have, at last, realised their mistake, and now talk about an industrial strategy—words that Ministers refused even to refer to in the past—but it is not enough to change a few ministerial titles. The Government and the Chancellor need to deliver. We have yet to see the proposed Green Paper on industrial strategy that was promised over the summer.
The same Government who now talk up high-tech investment oversaw a real-terms cut of £1 billion in science funding during the last Parliament. The OECD recommends that developed countries should be spending 3% of GDP on science. On the basis of what we have heard today, the new spending will lift our expenditure from 1.7% of GDP to a mere 1.8%.
It is the same familiar story for business. The Chancellor is continuing the race to the bottom on corporation tax, and, while continuing the cuts in public services, he is cutting taxes for big business. We know that it is not headline tax rates that encourage long-term investment by businesses. Business investment has been revised down every year under this Government. What encourages businesses to invest is the knowledge that they have access to skilled workers, world-class infrastructure and major markets.
Today’s grim economic forecasts reveal the challenge that lies ahead. The Chancellor admitted over the summer that it was time for a change of course. He has now had to abandon the Government’s fiscal charter, with its failed hard surplus target. Labour warned that a hard surplus target lacked the flexibility to adapt to economic circumstances and the capacity to allow investment. The Chancellor’s U-turn today demonstrates just how right we have been over the past year.
Only weeks ago, the Prime Minister offered the hope of change and the Chancellor offered to “reset” economic policy. Today, we have seen the very people whom the Prime Minister promised to champion betrayed. The Chancellor has failed to break with the economic strategy of austerity. The country remains unprepared and ill-equipped to meet the challenges of Brexit and secure Britain’s future as a world-leading economy. I fear that, after all the sacrifices that people have made over the last six years, today’s statement has laid the foundations for more wasted years. Only a Labour Government will deliver on the ambition and vision to rebuild and transform our economy so that no one and no community is left behind.
Let me begin by associating myself with the right hon. Gentleman’s remarks about the Jo Cox trial and sending my deepest condolences to her family and friends, who will be suffering again today.
I congratulate the right hon. Gentleman on his appointment to the Privy Council. I only wish that I could have been present at the investiture. I remember the procedure quite well: they give you a little red book to hold. [Laughter.]
I listened carefully to the right hon. Gentleman’s response to my statement. His central argument appears to be that the deficit is too high and borrowing is too high. That is a bit of a problem, because, as I have understood it, his central proposal for our economy is to borrow more and spend more. Under his rule, Labour would always be borrowing, in good times as well as bad. His analysis of the problem of the last Labour Government is not that they spent too much money, but that they spent too little. Indeed, his rule has remarkable similarities to Gordon Brown’s “golden rule”, and we all know where that got us. His big idea is to spend an extra £500 billion, without any notion of how he would pay for it.
The right hon. Gentleman welcomed the industrial strategy. I am not sure that I welcome his welcome, but I warn him not to welcome it too quickly, because it will not look anything like an industrial strategy that would come out of his office. What he has heard about today is a responsible set of decisions, such as the decision to borrow £23 billion of tightly targeted investment while paying for every single penny of every other commitment that has been made.
The right hon. Gentleman talked about Brexit, and attacked us over the way in which we are handling the Brexit process. I honestly do not know whether he has ever been involved in a negotiation—I suspect not—but I invite him to look across the continent for a moment and note the admirable discipline that our negotiating counterparts are displaying in their messages, revealing nothing as they prepare to go into this negotiation with us. My advice is this: if we want to secure the best possible deal for Britain, we must keep our cards appropriately close to our chest.
The right hon. Gentleman may have heard “cuts in people’s incomes” in my announcement about universal credit. Let me explain to him how this works. When we cut the taper from 65% to 63%, we allow people to keep an extra 2% of the income they are earning. I would have thought he welcomed that.
This is all about making tough decisions, and I am very happy to debate with the right hon. Gentleman, but I just wish he would be honest enough to accept that we cannot shower money everywhere, proposing to spend money on everything, without having to raise that money, either by taxes on ordinary people or by cutting spending elsewhere. It is simply no good to keep on pretending that we can do that just by taxing the rich. The top 1% of people in this country already contribute 27% of income tax paid, and unfortunately there are just not enough of them to be able to finance all the right hon. Gentleman’s ambitions.
The right hon. Gentleman said he was disappointed by the announcement on the national living wage. I do not remember—perhaps one of my hon. Friends can remind me—the level of the national living wage during the 13 years of Labour’s Government. He might note that the level I have announced today is precisely the level recommended by the Low Pay Commission, the body set up to pronounce on these things.
I wish the right hon. Gentleman would also be honest when he talks about the work-related activity group in the employment and support arrangements. This applies to new claims only, as he very well knows, so nobody is going to have £29 a week taken away from them however many times he says it. He also knows that it is not a stand-alone measure; it is part of a package. The money saved is being reinvested in a £330 million package to get these people into work, with targeted support to help them to be ready for work.
The right hon. Gentleman talks about house building starts. House building starts were 45% down under the last Labour Government.
The right hon. Gentleman and the Leader of the Opposition have spread division and disunity through the Labour party, and that is exactly what they would spread through the country if they ever—God forbid—got into government. The right hon. Gentleman says there are no new ideas; I have to say that he needs to check the opinion polling, because that is not quite what public opinion believes. Instead of carping and opposing every measure we propose, why doesn’t he roll up his sleeves and support us in the hard work of building an economy that works for everyone?
I congratulate the Chancellor on reverting to the extremely sensible practice of having only one Budget a year, which Gordon Brown abandoned in order to try to buy votes twice a year, with disastrous consequences. I also congratulate him on easing the taper on tax credit, because it is having distorting effects on the labour market at the moment, for example by discouraging part-time workers from working extra hours. I particularly thank him for the money he has spent on the very valuable work rehabilitating the disabled at Stanford Hall in my constituency.
With those notable exceptions, will the Chancellor reassure me he will resist political pressures of all kinds over the coming years to move away from the very sensible fiscal discipline he has set out, because the major risk to his period of office would come—and it would affect every section of our society, including the JAMs that the media have discovered—if he were unable to avoid or mitigate the risk of recession, which global uncertainty undoubtedly poses to us in the real world?
Finally, will he confirm that, wherever he holds his cards, he will continue, inside the Government if necessary, to spell out economic reality and the long-term benefits to this country, if he wants to develop a modern, competitive economy, of retaining access to our most important market, in Europe, by retaining the benefits of the single market and the customs union, and that no amount of short-term political pressure will allow him to be deflected from that?
I am grateful to my right hon. and learned Friend. I am delighted that we have been able to lower the taper rate of universal credit, because of course it is absolutely in line with our principle that we should be supporting and encouraging people into work. He says the taper rate discourages people, but it is of course a much lower rate of withdrawal than under the old tax credit system it replaces.
Let me reassure my right hon. and learned Friend that I and my right hon. Friend the Prime Minister remain absolutely committed to the sound Tory principle that a country has to live within its means. Of course we have to deal with the realities the world throws at us, and that is why today I have adopted, as an interim measure for the remainder of this Parliament, a cyclically adjusted target which will always allow us to respond to any downturn that occurs. However, I certainly understand the importance of economic reality, and I also understand, as does my right hon. Friend the Prime Minister, the extreme desirability of achieving the very best access to markets in Europe for those who produce our goods and services.
First, may I associate myself with the words of the shadow Chancellor and the Chancellor on the late Jo Cox? May I also thank the Chancellor for what he said about the Tay cities deal? I note that what he said was slightly different from the words in the Red Book, so we will take him at face value from the Dispatch Box. In his attempt to clamp down on evasion, it was disappointing that no reference was made to Scottish limited partnerships. One would have thought that there would be more, too, in terms of fairness overall, and a reference to the Women Against State Pension Inequality campaign and the unfairness for those women.
The Chancellor gave us plenty of information today, but with no more than a glib reference to being match fit at the beginning and a bit of deflection there was very little on the elephant in the room, which is Brexit. It is not as if the Treasury does not know what the consequences of it will be; its own assessment tells us that tax yields could be down by £66 billion a year after 15 years and GDP down perhaps by 9.5% —a figure confirmed by the London School of Economics—as a result of reduced trade lowering productivity. That amounts to some £6,500 per year per household. So where was the plan to ensure that there is no hard Brexit and to maintain access to the single market? Where was the plan to mitigate the losses in tax yield and GDP? Although the Chancellor said a considerable amount about capital investment and research and development—and I welcome some of it up to a point—where was the fully developed scheme actually to boost productivity?
We do not go into this next period from a position of strength. As the Chancellor knows, UK GDP is already nearly 20% lower than it would have been had we achieved even a 2% trend growth rate since 2008. Our argument is that the austerity of this Government and the previous Government sucked consumption out of the economy, weakening recovery. This Government are set to repeat the error. Growth barely reaches 2% for the forecast period, and although the Chancellor sensibly did not put a date on it, he is still targeting a surplus in the economy, perhaps again before recovery has been secured.
I am glad the Chancellor has changed the fiscal charter, because the previous permanent surplus rule, taking £10 billion a year more out than required to run a balanced economy and cutting £50 billion a year more than required to run a balanced current budget, left us with some terrible consequences. As discretionary consolidation, cuts and tax rises took place, the ratio of cuts to tax rises also increased, placing the burden of austerity and an arbitrary fiscal target on the back of the poor. That has made the poorest decile 5% worse off and the richest 10% almost entirely better off. The Government have clearly worked out something, and I welcome the move on the taper, but let us be clear: at 2p in the pound, on the minimum wage that is 14p an hour.
It is not a king’s ransom and it will not cure poverty. The squeeze has not been lifted from the poor, and the screw of the welfare cap has not been turned off; this has simply made a brutal regime slightly less brutal.
I am glad that the Chancellor mentioned the actions of the Bank of England. Our party very much welcomes what the Governor has done. He has introduced an increase in quantitative easing and £60 billion of extra Government bond purchases, made £10 billion available for corporate bond purchases, set a 0.25% base rate and enabled additional term funding to encourage more and cheaper long-term lending from the banks. However, there has been a more or less complete absence of a fiscal policy stimulus to match the incredible monetary policy activism of the central bank.
The key part of today’s autumn statement—I am pleased to hear that this is the last one; it is my 25th Budget, autumn statement or pre-Budget statement—was the increase in total managed expenditure, but like, for like, it amounts to 1.5% of total managed expenditure over the forecast period from 2015-16 to 2020-21. It is to be welcomed, and it certainly represents a break from the recent past, but it can in no way be described as the sort of fiscal stimulus required to match the monetary policy discipline of the central bank.
The Chancellor talked about an increase in capital investment, which I very much welcome. He also talked about an increase in funding for research and development. However, given the fact that the description of research and development has changed in the Green Book, as has the description of the UK Trade & Investment funding—he said that there would be a doubling of some aspects of export support—it is hard to tell precisely what the impact of some of those measures will be. Will he tell us what the total increase in cash and percentage terms of this vital export support will be? Will he also tell us what the overall increase in research and development funding will be across the piece? How does he intend to deploy the £23 billion of what he described as capital investment?
Oh, it was not. What we have announced today is a significant increase in capital investment, which includes research and development under the Office for National Statistics definition, and Scotland will get £800 million of that. Research and development is not Barnettised, so the increase will be spread across the whole of the UK, but the infrastructure element will be Barnettised and Scotland will get £800 million. I would point out to the hon. Member for Dundee East (Stewart Hosie) that Scotland’s economic performance needs attention, and that its productivity needs addressing. I am sure that families and businesses across Scotland will hope that he or one of his colleagues can confirm that the Scottish Government will use this additional funding—in the spirit in which it is being raised for the rest of the United Kingdom—to invest in raising the productivity performance of the Scottish economy. I would very much welcome that.
The hon. Gentleman asked about details of the productivity message. I can assure him that there is no lack of enthusiasm in this Government for tackling the productivity challenge. My right hon. Friend the Business Secretary, the Treasury and other Departments are involved in a process that will lead to a Green Paper that will allow us to consult extensively with business and other outside bodies before we firm up exactly how to deliver the strategy. What the House has seen today is £23 billion of additional investment, alongside the £150 billion that we have already committed to investing in economic infrastructure over the period, which will form the backbone for that policy and its delivery.
The hon. Gentleman knows very well—although he probably would not admit it—that survey after survey has shown that the biggest drag on growth and business investment in Scotland is the continuing threat of a second referendum.
The right hon. Gentleman needs to go back and look at the polling data. The concern about a second Scottish independence referendum is bigger than any concerns about possible Brexit arrangements.
In response to the specific points raised by the hon. Member for Dundee East, I am publishing a distributional analysis—I believe that it is available in the Vote Office now—of the measures that have been announced today and, cumulatively, of the measures that have been announced throughout this Parliament. It will not show the outcome that he suggested, so perhaps he would like to look at it and we can no doubt have another exchange on this at Treasury questions.
The overall package of measures announced today represents a fiscal loosening of around £23 billion. I acknowledge that that is a reduction of a planned fiscal tightening, but of course there has to be a fiscal tightening over time because we are moving towards living within our means, with a balanced budget in the next Parliament, and we are not going to be deflected from that intention. Finally, just to clear up the confusion, UKTI’s budget is now rolled into the budget of the Department for International Trade. What I announced in my statement was that the risk capacity of UK Export Finance will be doubled so that it can provide finance to enable exporters from all over the UK to sell their goods abroad on credit.
I warmly congratulate my right hon. Friend and successor on his strong statement and assured delivery. I particularly welcome the additional support for the northern powerhouse. The independent Office for Budget Responsibility has given us a sober assessment of the economic and borrowing challenges that Britain faces, and the Chancellor is right to keep his powder dry. However, he is also right to adhere to the principles that we control current spending, that we ensure that work pays and make the welfare and tax reforms necessary to deliver that, that we make Britain the best place to attract business and that we have the freest possible trade with our key export markets. I support all the things that he is doing to deliver on those principles.
I am extremely grateful to my right hon. Friend. He is absolutely right to say that those principles will guide the actions of this Government—as they should guide the actions of any sensible Government —as we try to future-proof our economy in a time of extraordinary political and technological change. We are facing a period of 20 or 30 years in which the way we work, the way we live and the way we do business will change fundamentally, and unless we invest now in our infrastructure, our science and technology base and our innovation capability, we risk being left behind. That would not deliver the economy and the country that works for everyone that we are committed to.
I welcome the fact that the Chancellor of the Exchequer has adopted the fiscal rules that his predecessor described as the single biggest risk to economic recovery. They are the ones that we proposed in 2015. I want to ask him about Brexit. He said at the Tory party conference that the British people did not vote to become poorer. However, on page 19 of the Office for Budget Responsibility’s report, we see that £58 billion of the worsening in the public finances is due to the Brexit decision. Is this not a salutary warning to us about the decisions that we will take over the coming months and years? Is it not also a strong argument for us to remain as close as possible to our largest trading area, the single market, and inside rather than outside the customs union?
The Prime Minister has said many times—I shall undoubtedly repeat this many times today—that it remains our objective to try to get the closest possible trading arrangement with the European Union and the greatest possible access for our goods and services to be sold into European markets after we leave the European Union. In response to the right hon. Gentleman’s question, I think we have to disaggregate two effects. There is of course going to be a period of uncertainty as we go through the process of exiting the European Union, and that has had a dampening effect on business investment, as the OBR has identified. However, we have to rise to the challenge of getting ourselves match-fit to seize the opportunities that this country will have after we complete that process, and I would urge him to think about that longer-term challenge as well as the short-term issues.
I congratulate the Chancellor on delivering a crucial statement for the country. It was a Budget in all but name, and I strongly support his decision to make it the first of many autumn Budgets, for which a number of us on the Treasury Committee have been pressing for a while.
The statement will provide reassurance and certainty for the whole country. Given that the education sector creates export earnings of £20 billion—about the same as the car manufacturing sector—will the Chancellor soon be able to provide our colleges and universities with the certainty and reassurance they need that foreign students will not be caught by the 100,000 migration target?
I am grateful to the Chairman of the Treasury Committee for his remarks and for the Committee’s work on a single fiscal event—it is much appreciated and the right way for us to go. On his specific question, students are included, as he knows, in the 100,000 or tens of thousands target, and my right hon. Friend the Home Secretary is looking at how best to manage student flows in the interests of what, as he says, is an important industry in this country.
A few months ago, the Foreign Secretary promised the general public that we would by now have an extra £350 million a week for the national health service. Strangely, however, the Chancellor has just announced that growth is falling and business investment is collapsing and that there will be an extra £110 billion of borrowing over the forecast period when compared with March. I do not see any of his leave-campaigner colleagues on the Front Bench, but has he received an apology yet from the Foreign Secretary or any of them?
I am not responsible for remarks that may or may not have been made during political campaigns. The British people made a decision to leave the European Union, and we must respect that decision. If we are to make a success of this process and if we are going to ensure the success of the British economy in the future, we must move on and not repeat this sterile debate over and over again. We must focus our attention on building an economy that is match-fit for the future and that will enable us to deliver high living standards as we make our way in the world.
As someone who is much more optimistic about the UK economy’s prospects under the Chancellor’s stewardship than the OBR usually is, I welcome the increased OBR forecast for this year—a faster rate of growth than in its pre-vote forecast. I also welcome its recognition that there will be no post-vote winter recession, as was forecast by some. Does the Chancellor agree that the OBR is probably still quite wrong about 2017? Its forecast is too low, its borrowing forecast is far too high, and we will get good access to the single market once we are out of the EU.
I hope that my right hon. Friend is right on that last point, which will of course be our objective. I am grateful to him for his implicit confidence in my stewardship. I am well aware of his views, which are, as always, long standing and utterly consistent. However, it is not my job to opine on the report that the OBR has made by statute to Parliament; it is my job to respond to it. That is what I have done today. Obviously, economic forecasting is not a precise science, and I absolutely recognise, as would the OBR, that individual Members will have their own views on the likely future trajectory of our economy. It is probably worth mentioning that the OBR specifically says in its report that there is an unusually high degree of uncertainty in its forecasts because of the unusual circumstances.
In a long statement, we had no mention of the national health service. After the first six months of this year, the deficit is £648 million for trusts alone, with a year-end deficit forecast of £669 million. Given the extraordinary measures to which the Department of Health had to go to balance its budget in the last financial year and given those projections, what is the Chancellor doing to ensure that our national health service has a sustainable future?
I might be a novice at autumn statements, but I am not such a rookie that I did not mention the NHS, so I suggest that the hon. Lady checks Hansard, where she will find that I definitely did. She talks about an aggregate trust deficit of £648 million that was projected at a point that is four months out from the end of the fiscal year. That is in the context of a budget of £110 billion in an NHS that holds a contingency reserve at the centre. My right hon. Friend the Health Secretary is well aware of such pressures, which are not particularly unusual. They are being managed inside the NHS, and I am of course keeping and will continue to keep a close eye on them with the Health Secretary.
I congratulate my right hon. Friend on a wide range of measures—short term, medium term and long term—that will undoubtedly turbocharge our economy and give it the boost it needs as we face the realities of Brexit. Does he agree that it has never been more important for British business to be at the heart of local enterprise partnerships, great ideas such as the midlands engine, and all the infrastructure plans? Such projects should be driven by British business, not politicians.
I absolutely agree with my right hon. Friend and I am grateful for her comments. I passionately believe that business should be engaged at the heart of this process—that is the right way to do it—and local enterprise partnerships and area-specific project organisations are a good innovation for delivering it. However, this is also part of meeting the challenge of regional imbalance, which as I said earlier is not just a social problem, but an economic problem. When we look at our productivity gap when compared with other advanced economies, we should logically look for the things in our country that are different from those in our comparators. The gap between our capital city and our other cities and regions is one of the defining features of the UK economy. By working with businesses from across the country and the regions, in particular by promoting our regional cities, we can at last start to address the problem.
The north of England is crying out for a plan for investment in rail, and people will be left asking today, “Where is it?” It is also crying out for investment in social care. It is quite frankly unbelievable that the Chancellor could find no place to mention it today. Six years of cuts to social care have left a record number of older people trapped in hospital and the NHS on the brink. With a dangerous winter now facing us, can he say a little more about how he came to the judgment that new grammar schools are a higher spending priority than the funding of care for older people?
I am a little surprised that the right hon. Gentleman—a former Chief Secretary to the Treasury—is not actually able to distinguish between capital and resource, because the funding that we are talking about for grammar schools is capital spending. I said in the course of my statement that the Department for Transport will continue the discussions on northern powerhouse rail with Transport for the North and will make announcements in due course.
The right hon. Gentleman also asked specifically about social care. Opposition Members are fond of talking about cuts to social care budgets, but local authorities have to manage their budgets as they think best. They have to manage the envelope of resource that they are given. We have created a better care fund that will be delivering £1.5 billion a year into social care by the end of this Parliament. We have allowed local authorities to raise a social care precept, which will be delivering another £2 billion a year by the end of this Parliament. That is £3.5 billion a year of additional funding into the social care system. I accept that there is an issue that local authorities are raising—we have heard what they are saying—about profiling and how this large amount of additional money ramps up. My right hon. Friends the Health Secretary and the Communities and Local Government Secretary are extremely aware of the issue and I am discussing it with them.
The Care Quality Commission has warned that social care is at a tipping point and vulnerable people across the country are being left without the care and support that they need, which is adding hugely to costs for the NHS. I am disappointed that the better care fund has not yet been brought forward, but encouraged to hear that that is actively under discussion. Will the Chancellor confirm that we should try to get away from this divisive debate in the House about how we are going to fund our health and social care, and that all parties should work together for a new, sustainable, long-term settlement?
I am all in favour of discussing these big strategic questions in a grown-up way, trying to build a consensus across the House, but I see little interest from Opposition Members in doing that. We have made a commitment of £10 billion of additional funding for the NHS over this Parliament—[Interruption.] Yes, we have. It is £10 billion of additional funding by the end of this Parliament. A senior management team in the NHS has drawn up a plan, set the budget and asked for the money. It has been given the money and I think we should allow it to show what it can do.
The Chancellor’s autumn statement suggests yet more public borrowing, with total public debt due to increase to £1.6 trillion in the new year and £1.9 trillion by 2020, when it will be four times what it was in 2005. Rather than being a reflection on Brexit, is not the accumulation of these unsustainable levels of public debt due to his predecessor’s failure to match words with deeds and get a grip on public spending?
No. I appreciate that the hon. Gentleman will not have had a chance to read the report, but when he does so, he will see that the big drivers of debt are: the deteriorating forecast for growth, which of course has a big impact; the structural change that appears to be taking place in the relationship between a given level of GDP and tax receipts—I mentioned in my statement that we will have to address that—and the measures that the Bank of England took, which have a direct impact on public debt, but only in the short term, because they do unwind over the course of a few years.
I warmly welcome the Chancellor’s significant commitment to British science today, regarding both research and commercialisation. As he moves towards his next Budget, may I urge him to look carefully at removing many of the regulatory barriers and at providing greater tax incentives for individuals to invest in science and technology start-ups so that we can start to build a true enterprise culture in which everybody participates?
My hon. Friend has been kind enough to come to see me over the past few weeks to make some suggestions in this area. I did announce in my statement that the Treasury will conduct a review of the availability of patient capital in this country, and I include in that genuine individual investment in start-up businesses and how we make sure that that is incentivised to stay in for the long haul. I thank him for his input and we will look at this further.
May I start by associating myself with the comments made by the Chancellor and the shadow Chancellor about the verdict in the Jo Cox trial? I hope that the whole-life sentence for Jo’s murderer can at least give some comfort to her family at this incredibly difficult time, and will also enable us to remember Jo for the way she lived, rather than the way she was murdered.
May I ask the Chancellor about the changes to universal credit that he announced today? The taper rate will now be 63p in the pound, which means that for every additional pound earned, the recipient of universal credit will lose 63p. That marginal tax rate is three times higher than the basic tax rate. Does he honestly think that sufficiently rewards work and encourages people to take on those extra hours that we all want them to do?
Again, I associate myself with the hon. Lady’s remarks. I am sure that she is right that the entirely sensible sentence that has been handed down will be a source of some comfort to the family.
The hon. Lady asks whether the taper rate is a disincentive or an incentive to work. Of course the lower the taper rate, the greater the incentive to work—I readily recognise that. I said in my statement that I had listened carefully to representations about doing something in this area and balanced those against my judgment about our fiscal capacity. I have funded every single spending commitment made today. If we had gone further than 63%, we would have had to raise more money somewhere else, and I judged that at the present time that was not the right thing to do. I also gently remind her that 65%, never mind 63%, is a lot lower than a marginal withdrawal rate of 90%, which was what many people were facing under the tax credits system.
May I welcome the steps that the Chancellor has taken to tackle some of the issues facing rural businesses, particularly the extension of rural rate relief and of fibre broadband? I particularly thank him for the £1.4 million that will be going to the Alder centre, which will help to build a new building for the provision of counselling services across the north-west to bereaved parents. I know that the trustees are absolutely delighted.
So that there can be no doubt, may I welcome the fact that the Northern Ireland Executive will have £250 million of additional capital spending, as well as the commitment to reduce corporation tax, which should lower the bill for the devolution of corporation tax to Northern Ireland without damaging our ability to compete with the Republic? The Chancellor says that growth is still damagingly imbalanced across the United Kingdom. If the Northern Ireland Executive make sensible proposals of further measures to address that issue, will he pay attention and respond to those? Does he agree that his acceptance of the lower forecast of growth for the UK in the long term, despite the fact that it contradicts totally the short-term forecasts, can be self-fulfilling and can damage places such as Northern Ireland disproportionately when compared with other parts of the UK?
I am not sure that receiving the OBR report constitutes an acceptance of anything; the report is the report and we have to respond to it. The hon. Gentleman asks about the imbalance in growth; of course that is a problem, and increasing economic growth in Northern Ireland is a high priority. Wages and living standards are lower in Northern Ireland than we would like, and the only way to address that is to improve productivity, increase the size of the private sector and get more investment into Northern Ireland so that growth rates are increased. Obviously I will respond to any proposals that come from the Northern Ireland Executive. I cannot promise him how I will respond to them, but I can promise him that I will respond.
The extra investment in building affordable homes and infrastructure is excellent news. Does the Chancellor agree that cheaper homes are one of the most important ways of raising living standards for everyone and improving economic productivity? Will he therefore also support reported moves to increase the supply of urban house-building sites by allowing owners to build up, not out, to the height of other buildings in the same block without planning permission?
My hon. Friend is right to say that making sure that housing is affordable is not only a key social priority, but a key economic priority. As I said in my statement, it is clear that the unaffordability of housing, certainly in many areas of the country, has become a drag on productivity, economic growth and investment. Investment in housing not only advantages the economy, but directly helps families, so I am pleased that we have been able to do something on that front today. As I said, my right hon. Friend the Communities Secretary will be bringing forward a housing White Paper in due course and he will address the longer-term strategic problems, one of which is the subject of the point that my hon. Friend has made.
Further to the questions asked by my right hon. Friend the Member for Leigh (Andy Burnham), my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) and the hon. Member for Totnes (Dr Wollaston), may I point out that there is not one mention in the 72-page autumn statement document of the words “NHS”, “social care”, “mental health” and “public health”? The Chancellor cannot ignore the fact that our health and social care services are in crisis and face massive deficits. Surely the many economists in his Department will have told him that it is economically illiterate to ignore the massive decrease in people receiving social care in the community, and the cuts to public health and NHS staff training. Why was the NHS missing from his autumn statement?
We have been round this loop before. We are putting £10 billion a year more into the national health service by the end of this Parliament. We are delivering exactly what the senior management of the national health service asked for, and we will work with them to ensure that it is effective, because the money has to be spent and delivered effectively. I keep in close contact with my right hon. Friend the Secretary of State for Health. He is working very closely with NHS management. I know that it is tempting for Opposition Members to paint everything as a crisis or to talk of looming chaos, but that is not the case. We have a programme for investment in the NHS. It is being delivered and we will keep a close eye on the way it is being delivered.
I welcome today’s announcement and the autumn statement. I am particularly pleased to welcome the extra £2 billion for research and development that was announced earlier this week—it is absolutely pivotal. Does my right hon. Friend agree that it will help to underpin our leadership in life sciences, which is a key sector for success in the northern powerhouse?
I completely agree. To be clear, by the end of the Parliament, an additional £2 billion a year will go into research and development. My hon. Friend is right that life sciences and synthetic biology are an area in which the UK has gained a really significant lead in a disruptive area of technology that will shape the future of our economy and the economy of the world. There are three or four such areas in which we really have to invest now to ensure that we get the critical footprint that will allow us to be leaders in this fourth industrial revolution, just as we were in the first industrial revolution.
May I welcome those elements of this statement that are positive? I am talking about the spending for infrastructure, especially in broadband and mobile phone signals, the reduction in fuel duty and the changes to universal credit. They are all steps in the right direction, but we wanted extra cash to be given to the NHS and social care, where it is needed, because as winter comes on we risk the problems becoming acute. I understand the difficulties that face the Chancellor today. He has a £122 billion black hole as a result of Brexit. As the hon. Member for Totnes (Dr Wollaston) said, instead of using the NHS as a political football, will he work with people of all parties and none to identify where that money can be found because, frankly, the NHS is too important to be treated like this?