House of Commons
Wednesday 27 October 2021
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Northern Ireland Protocol: EU Negotiations
We have been in discussions with the EU since the publishing of the EU’s proposals on 13 October in response to our Command Paper from July. We are seeking to understand the detail of some of the headline claims that the EU has made on issues such as sanitary and phytosanitary measures and customs checks. We continue to work closely with the EU and are hopeful that we will be able to bridge any gaps between our positions.
The law firm Carson McDowell has said that not one business has raised concerns about the European Court of Justice or its role as the court of ultimate appeal under the Northern Ireland protocol, so why are the UK Government prioritising a Brexit purity issue as their key demand in negotiations with the EU when it is completely immaterial to businesses in Northern Ireland?
Actually, a whole range of businesses and business groups, as they are working through the detail of the EU’s proposals, have concerns about whether they cover enough to deal with the issues in Northern Ireland. That is why it is important that we have these negotiations. For us, it is also important, and ultimately important for business, to ensure that the mechanism to deal with any issues is one that is licensed there and more traditional in international agreements and transactions. The role of the ECJ, as we have seen already this year, does not provide that, and ultimately, therefore, does not provide stability for Northern Ireland businesses or indeed the political structure of Stormont. It is therefore important that we make sure that that is resolved to have a proper working solution.
Why has Brussels seen the legal text on the changes that the Government want to make to the protocol but the democratic leaders of Northern Ireland are still completely in the dark? Will the Secretary of State urgently share that text with them?
This is a legal text we have shared with the EU, as we did with the papers we published earlier this year, which sadly we did not have too much feedback from the EU about. This is about engaging with the EU in a confidential manner to allow the space for these private negotiations and discussions to go ahead. It is right that we do that and do those negotiations in a proper, business-like way.
It is quite important that we have feedback from Northern Ireland as well. Not only will the Secretary of State not share that text with those I mentioned, but politicians, communities and businesses in Northern Ireland are completely excluded from the negotiations. Does he accept that it is not sustainable for a Secretary of State to say to the people of Northern Ireland, “We have decided what is best for you—take it or leave it”? Will he therefore move the talks to Belfast and give Northern Ireland’s politicians a seat at the table?
I am happy to let the hon. Lady know that the reality of what is happening is quite different from what she outlined. The politicians in Northern Ireland are involved, and not just here in this House: only yesterday Lord Frost and I engaged with both the First Minister and Deputy First Minister, as we are doing on a regular, pretty much weekly, basis. We have also engaged with businesses all the way through, via the Business Engagement Forum—indeed, I met business representatives on Friday last week—so that they, and civic society, are fully involved with feeding into the negotiations, which of course, absolutely, are quite rightly between the UK Government and the EU.
Does the Secretary of State agree that we need to see the removal of the Irish sea border on the movement of goods within the UK internal market between Great Britain and Northern Ireland, and that tinkering around the edges of the protocol without removing these unnecessary checks and impediments to trade within the United Kingdom is totally unacceptable?
I agree with the right hon. Gentleman; he is absolutely right. This is a point about consistency. We need to ensure that we have that free movement of goods—that goods are moving from Great Britain across to Northern Ireland for use and consumption in Northern Ireland—recognising also that we have a responsibility about goods moving into the EU. We are determined to deliver that. Sadly, the Opposition have been quite clear previously that they are happy to see a border between Great Britain and Northern Ireland. We are absolutely categorical about the fact that we want to ensure that goods can move freely and goods that are being consumed and used by the people of Northern Ireland can reach them in good order and in good time, as they should do and as we are determined to see happen.
I thank the Secretary of State for that answer. Does he also agree that in addition to resolving the trading issues and removing the Irish sea border, he and the Government need to pursue the full restoration of article 6 of the Acts of Union, which makes it very clear that there should be no barriers to trade within the United Kingdom and that there should be respect to the principle of consent, which is at the heart of the Belfast agreement?
The right hon. Gentleman will, I know, be aware that this issue is subject to legal proceedings, so I hope he will excuse me being relatively brief in my reply. I reiterate our commitment in the Command Paper that we need to remove the burden on trade and goods with the UK and to ensure that businesses and consumers in Northern Ireland can continue to have full and normal access to goods from the rest of the UK. It is also worth colleagues across this House remembering that not only does New Decade, New Approach ensure that we have that full internal market in the UK, but the protocol that was agreed, in its principles, is very clear that it would not only not disrupt the everyday lives of people in their communities in Northern Ireland, as is currently a problem, but will respect the internal market of the United Kingdom. We are determined to deliver on that objective.
Lord Frost recently said that there could be “no role” for the European Court of Justice in arbitrating disputes around the protocol. If that genuinely now represents the view of the UK Government, in contrast to when they negotiated and signed that protocol, can the Secretary of State tell the House how he would prefer to see disputes arising from the protocol arbitrated and settled? If he cannot share the text with politicians in Northern Ireland or in this House, can he at least give us a clue about what the outline of such a solution might be?
As the hon. Gentleman may be aware, there are different mechanisms for arbitration where there are disagreements between parties about things that have been agreed in international arrangements, including the withdrawal agreement itself. Those are working very well. What we have seen this year is how the EU has used the ECJ, even with the infraction proceedings around the processes we had to take forward in March to ensure that we could continue to get goods to Northern Ireland. It shows a very one-sided approach to this matter. It does not work, including for the stability for the Northern Ireland, and it is right we correct that. We have outlined that in the Command Paper, and that is part of the negotiations we will be having with the EU.
Northern Ireland Protocol: Cabinet Discussions
I meet regularly with Cabinet colleagues to discuss Northern Ireland-related matters, including issues surrounding the Northern Ireland protocol, where it is vital that we find more productive and sustainable arrangements to deliver more effectively on the protocol’s objectives. It is worth remembering that it is clear that the protocol should protect the integral place of Northern Ireland in the UK’s internal market, minimise the impact on the lives of citizens, maintain the necessary conditions for north/south co-operation, and, importantly, protect the Belfast/Good Friday agreement in all its strands.
There are high volumes of trade between businesses in Northern Ireland and Yorkshire, including in Harrogate and Knaresborough. Many different business sectors are involved, but food and drink is particularly prominent, and I have had concerning reports of excess bureaucracy affecting trade. What steps is my right hon. Friend taking to ensure that business and trade flows as smoothly as possible?
My hon. Friend makes an important point that has been echoed by the business community, the hospitality industry and the food and drink industry in Northern Ireland, even just late last week. It is something we need to resolve. That is why it is important we continue the work, as part of the discussions we are having with the EU, to deliver on what we set out in our July Command Paper as a way to resolve the issues over the protocol.
The Northern Ireland protocol is still causing significant damage in Northern Ireland and great anger for those who are impacted by it. Whether Ministers want to believe it or not, we are heading towards a constitutional crisis in Northern Ireland if the issue is not resolved. Does the Minister accept that the only reason we have checks and a debate about the European Court of Justice having a role in Northern Ireland is because Northern Ireland is now subject to EU law? Unless that issue is dealt with, the Northern Ireland protocol problems will not be resolved.
The right hon. Gentleman makes an important point, further highlighting the issues around the European Court of Justice. At present, we have a system where EU laws are imposed on Northern Ireland without the consent of anyone in Northern Ireland—he is absolutely right. The challenges and disputes about these laws are also settled in the Court, only one of the two signatory parties to the protocol, and that obviously came before the wider trade agreement. The CJEU sits at the apex of the system. In addition to causing an imbalance in the equilibrium of east-west and north-south arrangements, we believe the oversight is not necessary. To preserve the structure and the gains that we have seen through the peace process of 23 years in Northern Ireland, we believe they must be replaced by something much more in keeping with the intentions of the Belfast/Good Friday agreement and traditional international trade agreements.
Legacy of the Troubles
The Government will bring forward legislation to address the Northern Ireland legacy issues very soon, focusing on information recovery and reconciliation.
East Devon is home to many veterans who proudly served their country, risking everything while following orders. Can my right hon. Friend assure me that in his forthcoming legislation, we will stand by our promise to end vexatious claims against those who served in Northern Ireland?
The Government are absolutely committed to fulfilling their manifesto commitments to provide certainty to the many veterans who served courageously to defend the rule of law during the long years of the troubles. I can give my hon. Friend and his constituents the reassurance that we will deliver on our manifesto pledge, but we are also clear that this is about ensuring that we are addressing the needs of victims and veterans at the same time.
I offer my sympathies to the families of Dennis Hutchings and John Pat Cunningham during what must be an incredibly difficult period for them. The last time I raised the forthcoming Bill, I was told that veterans were being consulted. The Secretary of State will therefore be aware that a range of views are held, including in Northern Ireland where many oppose a blanket amnesty. Will he commit to continued close engagement with veterans to fully understand the views of those who served?
I join the hon. Gentleman in offering my condolences and thoughts to those families. As in the rest of our engagement, we have heard a range of views from across the community, particularly on that side of the discussion from the veterans community. We are considering that carefully.
We have always been clear that dealing with the past in Northern Ireland must equally address the needs of victims and veterans. I am happy to restate the answer that I gave the hon. Gentleman previously and say that we will continue to engage closely with veterans groups across Great Britain and Northern Ireland as we seek to bring in legislation to address those important, complex and sensitive issues.
After more than four years, two general election manifestos and a hand-signed promise in The Sun newspaper from the Prime Minister, the Secretary of State has delivered nothing. My question is very straightforward: “Where is your Bill, Brandon?”
I appreciate that my right hon. Friend has campaigned on the issue for a long time and he has been forthright in his determination to deliver for the veterans community. We set out our Command Paper in July just before the summer recess. As we said we would, we have been engaging with interested parties in the past couple of months, including not just the veterans community but victims, civic society and, more widely, the political parties in Northern Ireland. As we said in the Command Paper, we are still focused on delivering legislation to the House this autumn.
As I said when I launched the Command Paper, we appreciate that it is a very sensitive and complex issue that will affect a huge range of people. We have had wide engagement across victims groups and with victims who are not represented by groups. We are taking on that feedback at the moment and we will come forward with proposals very soon.
My constituent Edward Vaughan-Jones’ brother Robert, 2 Para, died at Warrenpoint in 1979. Some 42 years later, the family’s wounds have not healed due to repeated investigations and a lack of conclusion. Can my right hon. Friend outline when Mr Vaughan-Jones will receive a conclusive report on his brother’s death so that he can finally have some sense of closure?
My deepest sympathies are with Mr Vaughan-Jones and the many other families who have waited far too long to get answers about the circumstances of their loved ones’ deaths. We are determined that part of the process of information recovery will mean that families get the answers that they have not had. They have waited far too long and we need to resolve that issue soon.
Leaving the EU/Northern Ireland Protocol: Haulage Industry
Many of the same supply chain issues experienced in Northern Ireland are seen across the United Kingdom. We are seeing a shortage of HGV drivers across all supply chains. The Government have introduced a range of solutions to ease the pressures across the UK. We are separately in intensive discussions with the European Union to find solutions to the current issues that are being caused by how the protocol is being applied. The haulage sector has been impacted and we continue to engage with it to understand the issues it is facing to ensure that the work we do with the EU gets a resolution that works for it.
Logistics UK, which represents 400 haulage operators in Northern Ireland and is responsible for 90% of goods transferred across the Irish sea, welcomed the EU’s proposals to improve the Northern Ireland protocol as a “leap of faith” and a positive step. Why have the UK Government refused to accept those proposals and instead insisted on sinking the negotiations with ideological demands rather than practical considerations?
Again, I am afraid that I need to correct the hon. Lady’s misunderstanding of the situation. I met representatives of the haulage association on Friday who are clear that having looked at the details of the EU proposal, it does not work and it is not enough. They are much more focused on what we outlined in the Command Paper. We need to resolve those issues and I hope that, in the conversation with the EU—it has moved, which we welcome—we will get enough movement to deal with the issues that have been raised by the haulage industry, even those raised on Friday of last week.
Jobs and Investment
The Prime Minister has been very clear that our levelling-up ambitions are not about points on a compass but about people and communities throughout the United Kingdom, including Northern Ireland. We are delivering for Northern Ireland through our plan for jobs, our £600 million city and growth deal programme, and through the new deal for Northern Ireland, which will fund the promotion of Northern Ireland trade and investment globally.
I entirely agree with my hon. Friend. It is absolutely the legitimate interest of the United Kingdom Government to deliver prosperity and opportunity for every part of the United Kingdom, including Northern Ireland, and we will work in partnership with others, including the Northern Ireland Executive, to do just that.
I welcome the Minister back to the Dispatch Box. Does he agree that the £400 million that we are committing to implement the Northern Ireland new deal will not only boost economic growth and competitiveness but, taken with other recent investment, represents the largest boost from a UK Government in decades?
My hon. Friend is absolutely right. On top of the £400 new deal funding there is a swathe of other funding totalling just over £1 billion to small businesses and communities, delivering trader support new technology and the PEACE PLUS programme. This is the largest investment by any Government in Northern Ireland in decades, and it is warmly welcomed by businesses and communities in Northern Ireland.
The Liverpool city region and Northern Ireland broadly share the same population of just over 1.5 million. Does the right hon. Gentleman agree that, just as Liverpool can benefit from all the economic benefits of a freeport zone, there is no reason why we cannot extend that across the whole of Northern Ireland—and, indeed, across the whole of north Wales—so that we are not just limited to 45 km, and the whole of the UK can benefit from this excellent economic plan?
I agree with the hon. Gentleman that freeports are a vital tool in the armoury to boost prosperity, trade and investment, and to attract global investment. My right hon. Friend the Secretary of State and I are working closely with the Executive and others to find the right freeport model that will deliver for Northern Ireland.
The primary responsibility for job creation in Northern Ireland lies with the Executive, not the UK Government, so how can the Government justify their approach to the shared prosperity fund, which takes away the spending power that the Executive previously had in relation to EU structural funds, and centralises that, stopping the Executive doing any joined-up investment in skills and job creation?
The primary responsibility for job creation is private sector business. It is entrepreneurs; it is people who create products and sell them to customers. What we are doing is making sure that businesses in Northern Ireland, as across the rest of the United Kingdom, have the tools to create the jobs and to create wealth and prosperity across the whole of Northern Ireland.
The Minister will know that sport is an economic driver. He will also know of the bid for the world rally championship to take place in Northern Ireland next year. What encouragement can the Minister and the Northern Ireland Office give to ensure that that is a successful, proactive event that will lead to spin-offs and job creation?
The hon. Gentleman is a huge champion of that project. We are well aware of the proposals that are being worked up, and I understand that the Executive and Tourism Northern Ireland are looking at them. If they come forward with proposals that work they will find a willing partner in the Northern Ireland Office. I will not commit to how many wheels or what part of the vehicles we will pay for, but we will step up to help to make this project a reality.
The director of a Northern Irish retail consortium has said that Northern Ireland has a unique opportunity to become a hub of investment, because it remains within the EU single market. To have access to the EU single market is a boon for Northern Ireland, and UK Ministers who have previously defended the protocol have stated that it is a boon. Why do the UK Government deny such a best-of-both-worlds situation for Scotland, where the people also voted to remain?
The Prime Minister, the Secretary of State, Lord Frost and others have made it clear that we need to refine how systems are working in Northern Ireland. It is not working as we want it to work. It is impeding businesses, and it is disrupting communities and trade. That is why the Government at all levels are busily engaged in finding a solution that works for Northern Ireland. I am not sure that I am going to take any lectures from the Scottish National party about holding our United Kingdom together.
I welcome my right hon. Friend and Dorset colleague the Minister of State to his place. I am sure he will agree that political stability is a key element in creating jobs and attracting investment. Will he do all he can to ensure we have a fully functioning Stormont, working hard to improve the economic situation in Northern Ireland?
I entirely agree with my hon. Friend the Chairman of the Northern Ireland Affairs Committee and that is why the Secretary of State and I were both at this Dispatch Box yesterday for Report and Third Reading of the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill, a vital tool agreed under New Decade, New Approach to provide enhanced stability to the institutions in Northern Ireland, but ultimately it is for the parties in Northern Ireland to work together to deliver for the people of Northern Ireland.
We are moving to a high-wage, high-skilled economy and the Government are encouraging all sectors to rely increasingly on workers from the United Kingdom, but we have listened to the concerns of the sector and 5,500 poultry workers are now eligible to enter the UK for work, on top of the 800 butchers who were already eligible to enter the UK for six months under the skilled worker route.
It is all very well saying they are eligible to come in, but the industry is telling us that its ability to deliver the food needed, particularly for Christmas, is deeply jeopardised by the Government’s failure on both migration and skills to ensure the workers we need in our food processing industry are here. How can a Government who so passionately advocate for Brexit be so ill-prepared to deliver it?
When people voted to leave the European Union, they wanted us to level up the United Kingdom and increase wages for the workforce—including, by the way, the 60% of the hon. Gentleman’s Chesterfield constituents who voted to leave the EU. We are taking the opportunities of that and I wish he would join me in promoting Northern Ireland’s vibrant agri and food sector, including companies such as Kennedy Bacon and Ballylisk Dairies, which I have visited in the last couple of weeks and are excited by the opportunities.
For many years, agriculture in Northern Ireland and the rest of the UK has been very dependent on overseas workers, even before the high levels of EU migration of recent years, so will the Minister do everything he can to make sure agriculture in Northern Ireland can still access the overseas and seasonal workers who are so crucial to making sure our food supply is resilient?
My right hon. Friend the former Secretary of State speaks with great authority on these matters. There has been extensive engagement with the sector. My right hon. Friend the Secretary of State and I had engagements around the Balmoral Show recently. We have both visited businesses in this sector and are listening carefully to their concerns.
Northern Ireland Assembly
I continue to work closely with the whole of the Executive and the political party leaders on the issues that matter most to the people of Northern Ireland. Obviously, the promise of the Belfast/Good Friday agreement for devolved government locally accountable to the people of Northern Ireland must never be forgotten and is hugely important in making sure we deliver on the promise of a stable and genuinely co-operative Executive, built on respectful relationships and trust. That is where stability comes from and that is what I hope to see continue in Northern Ireland.
Threats to collapse the Assembly hang over Northern Ireland and the Secretary of State is sleepwalking towards a political crisis. Key safeguards have still not reached the statute book 22 months on. Northern Ireland simply cannot afford this, so will the Secretary of State fast track the legislation through the House of Lords and commit to passing it in the coming weeks so there is at least a caretaker Executive in place?
It was disappointing in the summer when one of the political parties tried to bring down Stormont with various threats about what it was going to do. At the moment it is important that we see stability at Stormont. We had the legislation yesterday in the Chamber and I am sad the hon. Lady was unable to join us on something she clearly cares about. It is important that we see stability there, working with all the parties and making sure they are delivering on what the people of Northern Ireland care about. That has to be the main focus and the legislation going through the House at the moment will help with that, but the way we keep stability at Stormont is around not legislation in Westminster but the political parties at Stormont focusing on working together to reform education, healthcare and the other issues that matter for the people in Northern Ireland.
New Decade, New Approach
The Government are making good progress across their commitments under New Decade, New Approach. As the hon. Gentleman will know, only yesterday, the Secretary of State and I were delivering on the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill from the Dispatch Box while he was enjoying his love-in with the hon. Member for North Antrim (Ian Paisley).
On another important commitment, on abortion, we are clear that the cycle of inaction must end and we welcome the Secretary of State’s determination on this, but it is a serious matter that the legal obligations are still being ignored. Will the Minister confirm the report today in The Guardian that he intends to instruct trusts to commission services? Will that require primary legislation? When will he act?
I would like to point out that the British Sign Language interpretation of proceedings for both Prime Minister’s questions and the Budget statement from the Chancellor of the Exchequer will be available to watch on parliament.tv—[Interruption.] I think it is important that people listen to this, so I will say again that the British Sign Language interpretation for Prime Minister’s questions and the Budget statement from the Chancellor of the Exchequer will be available to watch on parliamentlive.tv.
The Prime Minister was asked—
This morning I had meetings with ministerial colleagues and others, during which my right hon. Friend the Chancellor updated the Cabinet on how the Government’s plan for jobs is working, with higher wages, higher skills and rising productivity. He will make a statement to the House shortly setting out how we will build a new age of optimism. In addition to my duties in this House, I shall have further such meetings later today.
I very much welcome the A66 northern trans-Pennine project from Penrith to Scotch Corner. That £1 billion investment will improve safety and congestion and help to level up our region, supporting jobs, essential services and tourism, but we have to get the project right. Will my right hon. Friend ask his Department for Transport, Ministry of Defence and Department for Environment, Food and Rural Affairs to work together pragmatically and reasonably with suggested route amendments to ensure that local communities such as Warcop, Musgrave and Sandford are not left blighted by the current plans?
My hon. Friend is right that the development that he refers to is part of an infrastructure revolution that I think will transform the country, but he is also right that we should consider local feedback from stakeholders and the community when finalising the design, and so we will.
I want to reassure both sides of the House: it is one time only that I am back. [Laughter.]
We all need the vital COP26 summit in Glasgow to deliver next week, because failing to limit global warming to 1.5° will have devastating consequences for our planet. That goal is shared across the House. Does the Prime Minister agree that, to keep the goal of 1.5° alive, we need to roughly halve global emissions in this decisive decade?
I welcome the right hon. Gentleman to his place. I think the whole House extends its sympathies to the Leader of the Opposition. I hope he returns soon.
It is, of course, correct that COP26 is both unbelievably important for our planet but also very difficult. It is in the balance. The right hon. Member for Doncaster North (Edward Miliband) is right in what he says about the need to keep 1.5° alive. It depends on what happens this decade and it depends on the commitments that are made. All I will say is that, under the UK presidency-designate of COP26, very substantial commitments have already been achieved. We have moved from only 30% of the global economy committed to net zero by the middle of the century to now 80%. Every day, as I talk to international leaders, we hear further commitments to make those solid commitments that the world will need. Whether it is enough, I am afraid it is too early to say.
I applaud the efforts of the UK presidency under the COP26 President-designate, the right hon. Member for Reading West (Alok Sharma). However, I want to direct the Prime Minister’s attention to the issue of this decade. I will come to net zero targets for the middle of the century in a moment, but yesterday he will know that a very important report came out from the United Nations, the United Nations Environment Programme “Emissions Gap” report. On the eve of COP, it warned that far from halving global emissions this decade, we are on course to reduce them by only about 7.5%. Does the Prime Minister acknowledge, because this is crucial for what happens at Glasgow and after Glasgow, how far away we are from the action required in this 10-year period?
Indeed I do, but what I think the House should also recognise is how far we have moved in the space of a few years since the Paris COP summit of 2015, where, as I am sure the right hon. Gentleman will remember, the world agreed to net zero by 2100, by the end of the century, and agreed to try to restrain global warming by 4°. We are now trying to keep alive the prospect of restricting that growth to 1.5°. Every day, countries are coming through with solid commitments on stopping the output of coal-fired power stations, reducing their use of internal combustion engines, planting millions of trees and investing hundreds of billions of pounds in the developing world. Those are solid commitments. Whether they will be enough, I am afraid it is still too early to say.
I will just correct the Prime Minister on one point: it was the second half of the century that was set out in Paris, not 2100 for net zero. Here is the problem on the question of net zero targets for the middle of the century: it is easy to make promises for 30 years’ time; it is much more difficult to act now. Australia recently announced a 2050 net zero target, but its 2030 target would head the world towards approximately 4° of global warming. Can I urge him not to shift the goalposts when it comes to Glasgow? It is about the emergency we face this decade. It is about the nationally determined contributions this decade. Please keep the focus on 2030, not 2050 and beyond.
The focus is certainly on 2030. We have 122 nationally determined contributions already, and 17 out of 20 G20 countries have made NDCs. The commitments are coming through. The right hon. Gentleman is right to say that we need to keep the pressure up. What you cannot do is go in advance of what is truly practicable for the world economy and for what people can do. The Government will go as fast as we possibly can. Labour’s plans, which I think he endorsed, were condemned by the GMB union—its paymasters—for meaning that it would be confiscating people’s cars by 2030 and that families would be allowed only one aeroplane flight every five years.
Let me tell the Prime Minister that what this summit needs is statesmanship, not partisanship, which is what we have just heard from him. He should not be trying to score party political points on such an important issue facing our country and our world. That is never the way I did PMQs. [Laughter.] Let me ask him about the crucial issue of climate finance for developing countries. The reason the Paris summit succeeded was that there was a coalition of vulnerable countries and developed countries that put pressure on all the big emitters, including China and India. The problem is that the world has not delivered on the $100 billion of finance promised more than a decade ago in Copenhagen. The plan is to deliver it maybe in 2023. But I want to ask him about his actions. Has it not made it much harder to deliver on that promise that we are the only G7 country to cut the aid budget in the run-up to this crucial summit?
I thought we were not going to have any partisan points. That did not last long. Actually, one of the first things I did as Prime Minister was go out to my first United Nations General Assembly as Prime Minister and announce a huge £11.6 billion commitment from the UK to help the developed world to tackle climate change. I say to the right hon. Gentleman, yes, of course it is true— [Interruption.] We have not cut that; we have not cut that, Mr Speaker. We are keeping that investment.
Let me tell the right hon. Gentleman that this country is working flat out to ensure that we do reach the £100 billion commitment from the whole of the world. We are seeing the money come in from the United States, from the Italians, from the French and from the European Union, and it is quite right that it should. We have a way to go. Whether we will get there or not, I cannot say—it is in the balance—but the challenge is there for the leaders of the developed world. I quite agree with the right hon. Gentleman that they need to rise to it.
It is one thing for the Prime Minister not to know what is in the Paris agreement, but another for him not to know what is in his own Budget. He has cut the aid budget; of course he has cut the aid budget. He has abandoned the bipartisan belief in the aid budget across both these Houses, but it is not just on aid where the Government face both ways. They have a trade deal with Australia where they have allowed the Australians to drop their temperature commitments. They are telling others to power past coal while flirting with a new coal mine, and they are saying that we have to move beyond fossil fuels but open the new Cambo oilfield. Is not the truth that the Prime Minister has undermined his own COP presidency by saying one thing and doing another?
No, Mr Speaker. The right hon. Gentleman is completely wrong, and I think he should withdraw what he has just said about the £11.6 billion, because we remain absolutely committed to the £11.6 billion that we are investing to tackle climate change around the world. That is absolutely rock solid.
The right hon. Gentleman talks about Australia. I talked to the Prime Minister of Australia only recently, and Australia has just, with great difficulty, made the commitment to get to net zero by 2050. It is a great thing. I talked yesterday to our Indonesian friends. For instance, Joko Widodo, a good friend of this country, has agreed on coal to bring forward the abolition of coal use in Indonesia to 2040—a fantastic effort by the Indonesians. I talked to President Putin—I think it was yesterday—and he confirmed his determination to get to net zero by the middle of the century. That is what the UK is doing: working with countries around the world to get the outcome we want. It is still too early to say whether that will succeed. It is in the balance.
The thing the Prime Minister has underestimated throughout these last two years is the fact that COP26 is not a glorified photo opportunity; it is a fragile and complex negotiation. The problem is that the Prime Minister’s boosterism will not cut carbon emissions in half. Photo opportunities will not cut carbon emissions in half. I say to the Prime Minister that in these final days before COP26, we need more than warm words. Above all, Glasgow has to be a summit of climate delivery, not climate delay.
The right hon. Gentleman talks about cutting CO2 in half. Well, that is virtually what this country—this Government—has done. Since 1990, we have cut CO2 by 44% and the economy has grown by 78%. That is our approach—a sensible, pragmatic Conservative approach that cuts CO2, that tackles climate change and that delivers high-wage, high-skilled jobs across this country. Our net zero plan will deliver 440,000 jobs. That is what the people of this country want to see, and that is what they are seeing. They are seeing wages up, they are seeing growth up, they are seeing productivity up under this Government. If we had left it to the Leader of the Opposition, who is sadly not in his place, we would still be in lockdown. That is a point that the right hon. Gentleman might bring to the attention of the Leader of the Opposition, wherever he is currently self-isolating.
My hon. Friend is absolutely right about Wolverhampton; that is why we are working flat out to ensure that young people in Wolverhampton benefit from the kickstart scheme, and we are working with City of Wolverhampton Council to ensure that young people get bespoke support for their return to work.
I am sure that the thoughts and prayers of the entire House will be with Walter Smith—the legend that was the Rangers, Dundee United and Scotland manager—who sadly passed away yesterday. Many of us will not forget the day he led us to victory over France at Hampden.
Naturally, most of today’s focus and attention will turn to the Chancellor’s Budget after Prime Minister’s questions, but before we turn to domestic matters, I think that it is right and important to raise the dire humanitarian situation that is developing in Afghanistan. The World Food Programme estimates that more than half the population—about 22.8 million people—face acute food insecurity, and 3.2 million children under five could suffer acute malnutrition.
Given the history of the past 20 years, it should be obvious that we have a deep responsibility to the country and its people. They are dying, and they need our help. It has only been two months since the allied forces relinquished control of the country, so can the Prime Minister update us on what exactly his Government are doing to end the famine in Afghanistan?
The right hon. Gentleman raises an issue that I know is on the mind of many people in this House and across the country. We are proud of what we have done to welcome people from Afghanistan, but we must do everything we can also to mitigate the consequences, for the people of Afghanistan, of the Taliban takeover.
What we did, as the right hon. Gentleman will recall, was double our aid commitment for this year to £286 million. We are working with the UN agencies and other non-governmental organisations to do everything we can to help the people of Afghanistan. What we cannot do at the moment is write a completely blank cheque to the Taliban Government or the Taliban authorities. We need to ensure that that country does not slip back into being a haven for terrorism and a narco-state.
The fact is that there is a humanitarian crisis and people are in need today. There was nothing there about tangible actions that the Government are taking on the ground now.
The situation is getting worse by the day. In August, the allies ran away from their responsibilities in Afghanistan, and now it very much feels as if this Government are washing their hands of the legacy that they left behind. Not only are the Afghan people being failed on humanitarian aid, but promises made to them on resettlement are being broken. When the Afghan citizens resettlement scheme was announced on 18 August, the Government talked about resettling
“up to 20,000 over the coming years”,
but, more than two months on, we have heard nothing. The Afghan people are being left with no updates and with vague targets.
Can the Prime Minister finally tell us when the resettlement scheme will open? Can he guarantee that 20,000 Afghans will be resettled? When exactly is the deadline for that to happen?
We made a commitment to resettle 20,000 Afghans in addition to those whom we brought out under Operation Pitting, which I think most fair-minded people in this country would think was a pretty remarkable feat by UK armed services. Many of those 15,000 are already being integrated into the UK, into schools and into communities, and we will help them in any way we can.
I am afraid that the right hon. Gentleman is completely wrong in his characterisation of the stance that the UK has taken towards Afghanistan and the changes there. We continue to engage. We engage with the Taliban; this country was one of the first to reach out and begin a dialogue. What we are insisting on—
Just to get to the right hon. Gentleman’s point—while he rather uncivilly calls out—what we are insisting on is safe passage for those who wish to come and settle in this country, for people to whom we owe an obligation, and that is what we are doing.
My only question is, why is it only National Cheese Toastie Day? Why is it not International Cheese Toastie Day? I hope very much that among its many other achievements, the COP26 summit will bring the entire global community to a better understanding of the Wyke Farms carbon-neutral cheese toastie.
The Prime Minister will be aware of the harm that the Northern Ireland protocol is doing to the political and economic stability of Northern Ireland and the very delicate constitutional balance created by the Belfast or Good Friday agreement. In the Command Paper published by the Government in July, they committed themselves to addressing these issues, and recognised that the protocol was simply not sustainable. Does the Prime Minister accept that the conditions now exist to trigger article 16 of the protocol in the event that the current negotiations with the European Union fail to arrive at an acceptable outcome?
The right hon. Gentleman is completely right, I am sad to say. We are working hard to secure an agreement by negotiation, but we need to see real progress, because, as the right hon. Gentleman knows, the real-life issues on the ground in Northern Ireland have not gone away. As we have been saying for some months, if we cannot see progress—rapid progress—in the way that we spelt out in our Command Paper, I think it will be clear to everybody that the conditions for invoking article 16 have already been met.
My hon. Friend—indeed, the whole House—will be hearing more about the spending for health in just a few moments, but I can tell him that we have received 120 applications for the biggest hospital building programme in a generation, and that his application will certainly be among those that will receive our most urgent consideration.
The reports of spiking are extremely disturbing, and as the hon. Lady knows, it is already a criminal offence. I know that my right hon. Friend the Home Secretary has asked the police to update her on exactly what details they have and what is happening. She wants to give them the space, for the time being, to conduct their inquiries into what is going on, but I would ask everybody with information about such incidents to come forward and contact their local police.
With COP26 imminent, I would like to draw the Prime Minister’s attention to the good work that is being done in Morecambe on the Eden Project. Wes Johnson at Morecambe and Lancaster College has put forward a programme to teach youngsters in Morecambe the international Eden ethos, in order to, shall we say, propagate the goodwill around the world. I would like to invite the Prime Minister to come to the Morecambe riviera to see the Eden Project site at his earliest convenience.
I am delighted to respond in the affirmative to my hon. Friend, because the last time he asked me about this it was to ensure that we got an Eden Project in Morecambe. It sounds from what he is saying that we are making progress in that direction, and that is thrilling.
I thank the right hon. Gentleman for his question, but the reality is that of course we monitor all the data very carefully every day. We see nothing to suggest that we need to deviate from the plan we have set out that began with the road map in February, that we are sticking to, and that has given business and this country the ability to get on and achieve the unlockings that we have seen and indeed the fastest economic growth in the G7.
My constituent Sophia Dady has composed a song about the positive action we can each take to combat climate change, which emphasises the need to “clean, repair and protect”. Will the Prime Minister join me in encouraging all UK schools to follow the lead of Fairfield Prep School in Loughborough and other schools across the world from Hawaii to Norway in raising awareness of this important issue through learning the song?
Well, yes—do I have to learn the song? I will do my best. I thank my hon. Friend for raising the work of her constituents and her constituents’ school. It is absolutely vital that we not only recycle where sensible but cut down on the use of plastics.
All our donations are registered in the normal way. I would just remind the hon. Lady that the Labour party’s paymasters, the GMB, think that Labour’s policies mean that no families would be able to take more than one flight every five years and that they would have their cars confiscated.
This week is UK Wind Week, and later this afternoon I will be welcoming some young people from my constituency who see their futures in the renewable energy sector that has done so much to level up the Grimsby, Cleethorpes and north-east Lincolnshire area. Will the Prime Minister give an assurance that the Government will continue to invest in the skills and development of our young people in order to benefit the renewable energy sector?
Yes, and I think the whole House should be proud of the fact that the UK still produces more offshore wind—[Interruption.] Not hot air, but energy for the people of this country. It is clean, green energy produced off Cleethorpes in the North sea, and we are going to be massively increasing the volume of that output.
The hon. Gentleman makes a very important point about the high energy costs for energy-intensive industries, and that is why we have abated them with about £2 billion since 2013. The answer is to do what we are doing, which is to make up the long-term baseload needs of this economy by investing in nuclear, as I am afraid Labour failed to do in its 13 lost years, and in renewables.
Ways and Means
Before I call the Chancellor of the Exchequer to make his Budget statement, it is my duty to take the unusual step of saying a few words.
As Chairman of Ways and Means, the House knows I chair and have responsibility for the House’s proceedings on the Budget. I share the concern of many Members of this House about the apparent pre-briefing of Budget material to the media before any announcement has been made in this House. I understand the Chancellor’s position, and it is well understood that, for a number of years, elements of the Budget have been pre-briefed to the media on an embargoed basis to aid their coverage, but such pre-briefing, where the embargo makes it clear that the material can be used only after the Chancellor has addressed this House, is rather different from what we have apparently experienced this year, which is the briefing to the media of details of the Budget statement for publication before the statement is delivered.
As Mr Speaker has said, and as all Ministers know, important policy announcements should be made first to Parliament. [Hon. Members: “Resign!”] There should not be shouts of “Resign” from Opposition Members. That is not what we are talking about. We are just talking about courtesy to this House.
Given my responsibilities to the House with regard to the Budget, I must put on record my support for Mr Speaker’s stance on this issue and express a firm hope, which I believe is felt on all sides of the House, that we do not find ourselves in this position again at future Budgets. Chancellor, we are all very much looking forward to hearing the remainder of your announcement, which you are about to make to us. [Hon. Members: “We’ve already heard it!”] Oh no you haven’t. The Chancellor has still to give us the important parts of his Budget.
I remind hon. Members that copies of the Budget resolutions will be available from the Vote Office in Members’ Lobby after the Chancellor’s statement and, of course, online. I also remind hon. Members that we will have good behaviour over the next hour or so. Interventions are not taken during the Chancellor’s statement, nor during the replies on behalf of the Opposition and the SNP.
We will now put aside all the matters we have just addressed and concentrate. I call the Chancellor of the Exchequer to make his Budget statement.
Madam Deputy Speaker, I have heard your words and those of Mr Speaker. I have the greatest respect for you both and want to assure you that I have listened very carefully to what you have said. May I also send my best wishes to the Leader of the Opposition? I know that the whole House will join me in doing that.
With your permission, Madam Deputy Speaker, let me turn to today’s Budget. Employment is up, investment is growing, public services are improving, the public finances are stabilising and wages are rising. Today’s Budget delivers a stronger economy for the British people: stronger growth, with the UK recovering faster than our major competitors; stronger public finances, with our debt under control; and stronger employment, with fewer people out of work and more people in work. Growth is up, jobs are up and debt is down. Let there be no doubt: our plan is working.
This Budget is about what this Government are about: investment in a more innovative, high-skilled economy, because that is the only sustainable path to individual prosperity; world-class public services, because they are the common goods from which we all benefit; backing business, because our future cannot be built by the Government alone but must come from the imagination and drive of our entrepreneurs; help for working families with the cost of living, because we will always give people the support they need and the tools to build a better life for themselves; and levelling up, because for too long—far too long—the location of your birth has determined too much of your future, and because the awesome power of opportunity should not be available only to a wealthy few but be the birthright of every child in an independent and prosperous United Kingdom.
Today’s Budget does not draw a line under covid; we have challenging months ahead, and I encourage everyone eligible to get their booster jabs as soon as possible. But today’s Budget does begin the work of preparing for a new economy post covid: the Prime Minister’s economy of higher wages, higher skills and rising productivity, and of strong public services, vibrant communities and safer streets—an economy fit for a new age of optimism, where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make. That is the stronger economy of the future, and this Budget is the foundation.
The House will recognise the challenging backdrop of rising inflation. Let me begin by carefully explaining what is happening in our economy and why. Inflation in September was 3.1% and is likely to rise further, with the Office for Budget Responsibility expecting the consumer prices index to average 4% over the next year. The majority of this rise in inflation can be explained by two global forces. First, as economies around the world reopen, demand for goods has increased more quickly than supply chains can meet. Having been shut down for almost a year, it takes time for factories to scale up production, for container ships to move goods to where demand is and for businesses to hire the people they need.
Secondly, global demand for energy has surged at a time when supplies have already been disrupted, putting a strain on prices. In the year to September, the global wholesale price of oil, coal and gas combined has more than doubled.
The pressures caused by supply chains and energy prices will take months to ease. It would be irresponsible for anyone to pretend that we can solve this overnight. I am in regular communication with Finance Ministers around the world and it is clear that these are shared global problems, neither unique to the UK nor possible for us to address on our own. But where the Government can ease these pressures, we will act. To address the driver shortage, the Transport Secretary is introducing temporary visas, tackling testing backlogs and changing cabotage requirements, and is today announcing new funding to improve lorry park facilities. We have already suspended the HGV levy until August, and I can do more today, extending it for a further year until 2023 and freezing vehicle excise duty for heavy goods vehicles.
To help with the cost of living, we have introduced a new £500 million household support fund, and today’s Budget will support working families further.
On our fiscal policy, we will meet our commitments on public services and capital investment, but we will do so keeping in mind the need to control inflation.
Finally, I have written to the Governor of the Bank of England today to reaffirm the Bank’s remit to achieve low and stable inflation. People should be reassured: it has a strong track record in doing so.
I understand that people are concerned about global inflation, but they have a Government here at home ready and willing to act. In a period of global uncertainty, we need to work hard to maintain a strong economy and be responsible with the public finances, and that is what we are doing. I am grateful to the OBR for its work, and I am pleased to say that it now expects our recovery to be quicker. Thanks to this Government’s actions, it forecasts the economy to return to its pre-covid level at the turn of the year—earlier than it thought in March.
Growth this year is revised up from 4% to 6.5%. The OBR then expects the economy to grow by 6% in 2022, and 2.1 %, 1.3% and 1.6% over the next three years. In July last year, at the height of the pandemic, unemployment was expected to peak at 12%.
Today, the OBR expects unemployment to peak at just 5.2%. That means more than 2 million fewer people out of work than previously feared. Wages are rising: compared with those in February 2020, they have grown in real terms by almost 3.5%. I can confirm for the House that the OBR’s forecast for business investment has been revised up over the next five years.
Because of the actions that we took to support our economy, we have been more successful than previously feared in preventing the long-term economic damage of covid.
The OBR has today revised down its scarring assumption from 3% to 2%. In the depths of the worst economic crisis on record, we set out a plan for jobs. It is a plan that was backed by business groups and trade bodies; a plan that has helped millions of people and saved millions of jobs; and a plan that the OBR has today described as “remarkably successful”. Today’s forecasts confirm beyond doubt that our plan for jobs is working.
Disruption in the global economy highlights the importance of strong public finances. Coronavirus left us with borrowing higher than at any time since the second world war. As the Prime Minister reminded us in his conference speech: higher borrowing today is just higher interest rates and even higher taxes tomorrow. We need to strengthen our public finances so that when the next crisis comes, we have the fiscal space to act. Today I am publishing a new charter for budget responsibility. The charter sets out two fiscal rules that will keep this Government on the path of discipline and responsibility. First, underlying public sector net debt, excluding the impact of the Bank of England, must, as a percentage of GDP, be falling. Secondly, in normal times the state should only borrow to invest in our future growth and prosperity. Everyday spending must be paid for through taxation. Both rules must be met by the third year of every forecast period, giving us the flexibility to respond to crises while credibly keeping the public finances under control. These rules are supplemented by targets to spend up to 3% of GDP on capital investment and to keep welfare spending on a sustainable path.
The House will be asked to vote on our charter, giving Members a simple choice—to abandon our fiscal anchor and leave our economy adrift with reckless unfunded pledges, or to vote for what we on the Government side of the House know is the right course: sound public finances and a stronger economy for the British people.
Important as the charter is, our credibility comes as much from what we do as what we say, so I am pleased to tell the House that, because our plan is delivering a stronger economy and because we have taken tough but responsible decisions on the public finances, the OBR reports today that all our fiscal rules have been met. Underlying debt is forecast to be 85.2% of GDP this year, then 85.4% in 2022-23, before peaking at 85.7% in 2023-24. It then falls in the final three years of the forecast, from 85.1% to 83.3%. Borrowing as a percentage of GDP is forecast to fall in every single year, from 7.9% this year to 3.3% next year, then 2.4%, 1.7%, 1.7% and 1.5% in the following years. Borrowing down, debt down: proving once again it is the Conservatives, and only the Conservatives, who can be trusted with taxpayers’ money.
I have made four fiscal judgements in this Budget. First, we will meet our fiscal rules with a margin to protect ourselves against economic risks. That is the responsible decision at a time of increasing global economic uncertainty, when our public finances are twice as sensitive to changes in interest rates as they were before the pandemic and six times as sensitive as they were before the financial crisis. Just a one percentage point increase in inflation and interest rates would cost us around £23 billion. My second judgment today is to continue to support working families.
Thirdly, as well as helping people at home, our improving fiscal position means that we will meet our obligations to the world’s poorest. I told the House that when we met our fiscal tests, we would return to spending 0.7% of our national income on overseas aid. Some people said this was a trick or a device. I told this House that it was no such thing, and based on the tests that I set out, today’s forecasts show that we are, in fact, scheduled to return to 0.7% in 2024-25—before the end of this Parliament.
My fourth fiscal judgment is this: today’s Budget increases total departmental spending over this Parliament by £150 billion. That is the largest increase this century, with spending growing by 3.8% a year in real terms. As a result of this spending review, and contrary to speculation, there will be a real-terms rise in overall spending for every single Department, and public sector net investment as a share of GDP will be at the highest sustained level for nearly half a century. If anyone still doubts it, today’s Budget confirms it: the Conservatives are the real party of public services.
Our stronger economy lays the foundation for everything that we want to achieve in today’s Budget: world class public services and more investment in our future growth. Before I turn to the details, I would like to thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke). Completing the spending review in such challenging circumstances was a tall order—and thankfully we had just the man for the job.
At the start of this Parliament, resource spending on healthcare was £133 billion. Today’s spending review confirms that by the end of this Parliament it will increase by £44 billion to over £177 billion; and the extra revenue we are forecast to raise from the health and social care levy is going direct to the NHS and social care as promised. The health capital budget will be the largest since 2010: record investment in health R&D, including better newborn screening, as campaigned for by my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken); 40 new hospitals; 70 hospital upgrades; more operating theatres to tackle the backlog; and 100 community diagnostic centres, all staffed by a bigger, better-trained workforce, with 50,000 more nurses and 50 million more primary care appointments. As well as funding to deliver the Prime Minister’s historic reforms to social care, we are providing local government with new grant funding over the next three years of £4.8 billion—the largest increase in core funding for over a decade.
We are investing more in housing and home ownership too, with a multi-year housing settlement totalling nearly £24 billion—£11.5 billion to build up to 180,000 new affordable homes, the largest cash investment in a decade, 20% more than the previous programme. We are investing an extra £1.8 billion—enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing, and unlock 1 million new homes. We are also confirming £5 billion to remove unsafe cladding from the highest risk buildings, partly funded by the residential property developers tax, which I can confirm will be levied on developers with profits over £25 million at a rate of 4%. We have already reduced rough sleeping by over a third, but we will go further, with £640 million a year for rough sleeping and homelessness—an 85% increase in funding compared to 2019.
Today’s Budget funds our ambition to recruit 20,000 new police officers; provides an extra £2.2 billion for courts, prisons and probation services, including £0.5 billion to reduce the courts backlog; pays for programmes to tackle neighbourhood crime, reoffending, county lines, violence against women and girls, victims’ services and improved responses to rape cases; and, over the next three years, commits £3.8 billion to the largest prison-building programme in a generation.
All Governments should aspire to provide greater life chances for future generations, but few Governments can match our ambition. So let me now turn to what this Budget does to support children. The evidence is compelling that the first 1,001 days of a child’s life are the most important. My right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) has recognised this with her inspirational report. We are responding today with £300 million for a start for life offer for families; high-quality parenting programmes; tailored services to help with perinatal mental health; and, I am pleased to tell my hon. Friend the Member for Congleton (Fiona Bruce), funding to create a network of family hubs around the country too. To improve the quality of childcare, we are going to pay providers more, with today’s spending review providing an extra £170 million by 2024-25. We are confirming £150 million to support training and development for the entire early years workforce. To help up to 300,000 more families facing multiple needs, we are investing an extra £200 million in the supporting families programme, and we will provide over £200 million a year to continue the holiday activities and food programme.
Today’s spending review also delivers our commitment to schools, with an extra £4.7 billion by 2024-25, which, combined with the ambitious plans we announced at spending review 2019, will restore per-pupil funding to 2010 levels in real terms, equivalent to a cash increase for every pupil of more than £1,500. For children with special educational needs and disabilities, we are more than tripling the amount we invest to create 30,000 new school places. We know that the pandemic caused significant disruption to children’s learning. We have already announced £3.1 billion to help education recovery. Today, as promised by the Prime Minister and the Education Secretary, we will go further, with just under £2 billion of new funding to help schools and colleges, bringing this Government’s total support for education recovery to almost £5 billion.
As we level up public services, we are also levelling up communities, restoring the pride people feel in the places they call home. To do that, we are providing £560 million for youth services, enough to fund up to 300 youth clubs in England; over £200 million to build or transform up to 8,000 state-of-the-art community football pitches across the UK; and funding to turn over 100 areas of derelict land into new “pocket parks”.
I am allocating the first round of bids from the levelling up fund—£1.7 billion to invest in the infrastructure of everyday life in over 100 local areas. With £170 million in Scotland, £120 million in Wales, and £50 million in Northern Ireland—more than their Barnett shares—this will benefit the whole United Kingdom. We are backing projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, and not one, not two, but three successful projects for the great city of Stoke-on-Trent. But that is not all. We are also going to fund projects in Ashton-under-Lyne, Doncaster, South Leicester, Sunderland and West Leeds. We are so committed to levelling up, we are even levelling up the Opposition Front Bench.
Levelling up is also about protecting our unique culture and heritage. The British Museum; Tate Liverpool; the York Railway Museum: we are investing £850 million to protect museums, galleries, libraries, and local culture. Thanks to the Culture Secretary, over 100 regional museums and libraries will be renovated, restored and revived; and she has secured up to £2 million to start work on a new Beatles attraction on the Liverpool waterfront. We are also going to review our museum freedoms and make our creative tax reliefs more generous. On current plans, the tax relief for museums and galleries is due to end in March next year, just as exhibitions are starting to tour again, so I have decided to extend it for two years to March 2024. To support theatres, orchestras, museums and galleries to recover from covid, the tax reliefs for all those sectors, from today until April 2023, will be doubled, and they will not return to the normal rate until April 2024. That is a tax relief for culture worth almost a quarter of a billion pounds.
This is a Budget for the whole United Kingdom. Through the Barnett formula, today’s decisions increase Scottish Government funding, in each year, by an average of £4.6 billion, Welsh Government funding by £2.5 billion, and £1.6 billion for the Northern Ireland Executive. This delivers, in real terms, the largest block grants for the devolved Administrations since the devolution settlements of 1998. The whole of the United Kingdom will benefit from the UK shared prosperity fund, and over time we will ramp up funding so that total domestic UK-wide funding will match EU receipts, averaging around £1.5 billion a year. We will fund projects across the UK, including funding for the Extreme E race in Scotland—the 2022 Hebrides X-Prix—accelerating funding for the Cardiff city region deal in Wales, and funding in Northern Ireland for community cohesion. While today demonstrates the indisputable fiscal benefit of being part of the United Kingdom, this is and always will be secondary to the simple truth that we are bound together by more than transactional benefit. It is our collective history, our culture and our security. We are, and always will be, one family and one United Kingdom.
While today’s Budget delivers historically high levels of public spending, its success will be measured not by the billions we spend, but by the outcomes we achieve and the difference we make to people’s lives. The budgets are set; the plans are in place; the task is clear. Now we must deliver because this is not the Government’s money—it is taxpayer’s money.
Our stronger economy allows us to fund world-class public services—the people’s priority—but over the long-term, the only way to pay for higher spending is economic growth. If we want to see higher growth, we have to tackle the problem that has been holding back this country for far too long: our uneven economic geography. As we come out of the worst economic shock we have ever seen, we have a choice—to retrench, or to invest. This Government choose to invest: to invest in our economic infrastructure, to invest in innovation, to invest in skills and to invest in a plan for growth that builds a stronger economy for the future. That is what this Budget is about and that is what this Government are about.
Infrastructure connects our country, drives productivity and levels up. That is why our national infrastructure strategy invests in economic infrastructure such as roads, railways, broadband and mobile—over £130 billion. To connect our towns and cities, we are investing £21 billion on roads and £46 billion on railways. Our integrated rail plan will be published soon, dramatically improving journey times between our towns and cities. Today, we are providing £5.7 billion for London-style transport settlements in Greater Manchester, the Liverpool city region, the Tees Valley, South Yorkshire, West Yorkshire, the west midlands and the west of England. We are helping local transport everywhere with £2.6 billion for a long-term pipeline of more than 50 local roads upgrades, over £5 billion for local roads maintenance—enough to fill 1 million more potholes a year—and funding for buses, cycling and walking totalling more than £5 billion. The Prime Minister promised an infrastructure revolution. This Budget delivers an infrastructure revolution.
Investment in our infrastructure is just the first step. We need to do what the people of this country have always done: invent, discover, and create the ideas and technologies that will change the world. So we will also invest more in innovation. The UK is already a world leader. With less than 1% of the world’s population, we have four of the world’s top 20 universities, 14% of the world’s most impactful research and the second most Nobel laureates. We want to go further. I can confirm we will maintain our target to increase research and development investment to £22 billion. But in order to get there, and deliver on our other priorities, we will reach the target in 2026-27, spending, by the end of this Parliament, £20 billion a year on R&D. That is a cash increase of 50%—the fastest increase ever. I can confirm for the House that this £20 billion is in addition to the cost of our R&D tax reliefs. Combined with those tax reliefs, total public investment in R&D is increasing from 0.7% of GDP in 2018 to 1.1% of GDP by the end of the Parliament.
How does 1.1% compare internationally? Well, the latest available data shows an OECD average of just 0.7%. Germany is investing 0.9%, France 1% and the United States just 0.7%. This unprecedented funding will: increase core science funding to £5.9 billion a year by 2024-25, a cash increase of 37%; meet the full costs of associating with Horizon Europe; establish the new Advanced Research and Invention Agency with £800 million by 2025-26; and strengthen our focus on late-stage innovation, increasing Innovate UK’s annual core budget to £1 billion, double what it was at the start of the Parliament.
There is more to becoming a science superpower than just what the Government spend on R&D. Our ambitious net zero strategy is also an innovation strategy, investing £30 billion to create the new green industries of the future. We have just issued our second green bond, making us the third-largest issuer of sovereign green bonds anywhere in the world. London last week was named the best place in the world for green finance. On Monday, the new UK Infrastructure Bank announced its first ever investment: £107 million to support offshore wind in Teesside. To build on this work, one week today I will be hosting global finance ministers and businesses at COP26.
Innovation comes from the imagination, drive and risk-taking of business. That is why we have launched Help to Grow to turbocharge SME productivity and started a new co-investment venture capital fund, Future Fund: Breakthrough. It is why I am announcing today that we will consult on further changes to the regulatory charge cap for pensions schemes, unlocking institutional investment while protecting savers. It is why we are introducing a new £1.4 billion global Britain investment fund, supporting transformative economic activity in our world-leading sectors, such as life sciences. It is why today’s Budget increases the British Business Bank’s regional financing programmes to £1.6 billion, expanding their coverage and helping innovative businesses get access to the finance they need, across the whole United Kingdom.
A third of our science Nobel laureates have been immigrants. Half of our fastest growing companies have a foreign-born founder. So an economy built on innovation must be open and attractive to the best and brightest minds. Thanks to our brilliant Home Secretary, today’s Budget confirms the eligibility criteria for our new scale-up visa, making it quicker and easier for fast-growing businesses to bring in highly skilled individuals. The Trade Secretary’s new global talent network, launching initially in the Bay Area, Boston and Bangalore, will identify, attract and relocate the best global talent in science and tech sectors. It is all part of our plan to make our visa system for international talent the most competitive in the world.
If we want greater private sector innovation, we need to make our research and development tax reliefs fit for purpose. The latest figures show the UK has the second highest spending on R&D tax reliefs in the OECD. Yet it is not working as well as it should; UK business investment in R&D is less than half the OECD average. We have reviewed the reliefs and identified two issues we are solving today. First, the reliefs need to reflect how businesses conduct research in the modern world. So, as many companies have called for, I am expanding the scope of the reliefs to include cloud computing and data costs.
The second problem is this: companies claimed UK tax relief on £48 billion of R&D spending, yet UK business investment was around half of that, at just £26 billion. We are subsidising billions of pounds of R&D that is not even happening here in the United Kingdom. That is unfair on British taxpayers and it puts us out of step with places like Australia, Canada, Hong Kong, Singapore, Switzerland and the USA, which have all focused their R&D tax reliefs on domestic activity. So from April 2023, we are going to do the same, and incentivise greater investment here at home. So a £22-billion investment in R&D, the net zero strategy, the future fund, Help to Grow, more regional finance, unlocking institutional capital, a more competitive visa system and a modernised R&D tax credits regime—enough action to prove the hypothesis that we are making this country a science and technology superpower.
As well as investing in infrastructure and innovation, there is one further part of our plan for growth that is crucial: providing a world-class education to all our people. Higher skills lead to higher regional productivity and higher productivity leads to higher wages. With 80% of the UK’s 2030 workforce already in work, our future success depends on not just the schooling we give our children but the lifelong learning we offer to adults.
We have already done a lot. Our plan for jobs invested in apprenticeships, traineeships and the kickstart scheme, but we need to go further. Today’s Budget invests in the most wide-ranging skills agenda this country has seen in decades. We are increasing skills spending over the Parliament by £3.8 billion—an increase of 42%. We are expanding T-levels, building institutes of technology, rolling out the Prime Minister’s lifetime skills guarantee, upgrading our further education college estate, quadrupling the number of places on skills bootcamps and significantly increasing funding for apprenticeships.
We are also going to tackle a tragic fact: millions of adults in our country have numeracy skills lower than those expected of a nine-year-old. According to the leading charity National Numeracy, this costs individuals with poor numeracy up to £1,600 a year in lost earnings. People with poor numeracy skills are more than twice as likely to be unemployed as their peers. So today, I can announce a new UK-wide numeracy programme: Multiply. With £560 million, Multiply will improve basic maths skills and help to change people’s lives across the whole United Kingdom.
So we are building our infrastructure with new roads, railways and broadband; cementing our status as a science and technology superpower; and strengthening the skills of our people, the country’s greatest asset. That is a real plan for growth and that is how this Government are building a stronger economy for the British people.
World class public services are the people’s priority. Investment in infrastructure, innovation and skills will create the growth that we need to pay for them. But as Conservatives, we know that Government action alone will not be enough to create a stronger economy. We want this country to be the most exciting and dynamic place in the world for business. Now that we have left the EU, we have the freedom to do things differently and deliver a simpler, fairer tax system.
I want to begin with one of our smallest taxes, but a tax that plays an important role in one of our pre-eminent industries: shipping. Now that we have left the EU, today we start reforming our tonnage tax regime to make it simpler and more competitive. And we are also making it fairer for UK taxpayers.
When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours. I am sure that the Opposition will be delighted that red flags are still flying somewhere in this country, even if they are all at sea.
Let me turn now to air passenger duty. Right now, people pay more for return flights within and between the four nations of the United Kingdom than they do when flying home from abroad. We used to have a return-leg exemption for domestic flights, but we were required to remove it in 2001. But today I can announce that flights between airports in England, Scotland, Wales and Northern Ireland will, from April 2023, be subject to a new lower rate of air passenger duty. This will help to cut the cost of living, with 9 million passengers seeing their duty cut by half; it will bring people together across the United Kingdom; and because they tend to have a greater proportion of domestic passengers, it is a boost to regional airports like Aberdeen, Belfast, Inverness and Southampton.
Airports are major regional employers, so to help them get through the winter I am also extending our support for English airports for a further six months. We are also making changes to reduce carbon emissions from aviation. Most emissions come from international rather than domestic aviation, so we are introducing, from April 2023, a new ultra-long-haul band in air passenger duty covering flights of over 5,500 miles, with an economy rate of £91. Less than 5% of passengers will pay more, but those who fly furthest will pay the most.
Our approach to corporate taxation strikes a responsible balance between funding public services and encouraging the investment we need for a stronger economy. At the March Budget, we took the difficult but necessary decision to increase the rate of corporation tax to 25% from 2023, which is still the lowest rate in the G7 and the fifth lowest rate in the G20. Alongside, I introduced the new super deduction—the biggest business tax cut in modern British history—and extended, to the end of this year, the annual investment allowance at its higher level of £1 million. Now is not the time to remove tax breaks on investment, so I can confirm today that the £1 million annual investment allowance will not end in December as planned. It will be extended all the way to March 2023.
I also said in March that I would review the bank surcharge within corporation tax to maintain the competitiveness of our financial services industry. We will retain a surcharge of 3%. The overall rate for corporation tax on banks will, in 2023, increase from 27% to 28% and will remain higher than the rate paid by other companies. Small challenger banks are improving banking competition, which is good for the sector and good for consumers, so to help them, I will also raise the annual allowance to £100 million.
Our manifesto promised to review business rates. We are publishing our conclusions today. Before I set out our plans, let me say this: we on the Conservative Benches are clear that reckless, unfunded promises to abolish a tax that raises £25 billion every year are completely irresponsible. It would be wrong to find £25 billion a year in extra borrowing, cuts to public services or tax rises elsewhere, so we will retain business rates, but with key reforms to ease the burden and create stronger high streets.
First, we will make the business rates system fairer and timelier with more frequent revaluations every three years. The new revaluation cycle will be delivered from 2023. Secondly, as called for by the Federation of Small Businesses and the British Property Federation, we are introducing a new investment relief to encourage businesses to adopt green technologies such as solar panels.
I am announcing today that we will accept the CBI and the British Retail Consortium’s recommendation to introduce a new business rates improvement relief. From 2023, every single business will be able to make property improvements and, for 12 months, pay no extra business rates. That means that a hotel adding extra rooms, a manufacturer expanding their factory, and an office adding new air conditioning, CCTV or bike shelters will all pay no extra rates.
Together with the new green investment relief, we are introducing investment incentives totalling £750 million. This will make a difference, but without action, millions of businesses would see their tax bills going up next year because of inflation. I want to help those businesses right now, so our third step is that next year’s planned increase in the multiplier will be cancelled. That is a tax cut for businesses worth, over the next five years, £4.6 billion.
I have one final measure to help those businesses hardest hit by the pandemic. I am announcing today, for one year, a new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors: pubs, music venues, cinemas, restaurants, hotels, theatres and gyms. Any eligible business can claim a discount on their bills of 50%, up to a maximum of £110,000. That is a business tax cut worth almost £1.7 billion. Together with small business rates relief, this means that over 90% of all retail, hospitality and leisure businesses will see a discount of at least 50%. Apart from the covid reliefs, this is the biggest single-year cut to business rates in over 30 years. Taken together, today’s Budget cuts business rates by £7 billion.
We are unleashing the dynamism and creativity of British businesses with a simpler, fairer and more competitive tax system: the biggest business tax cut in modern British history; the biggest single-year cut to business rates for 30 years; a £1 million investment allowance; tonnage tax reformed; air passenger duty cut. That is the way to back business and build a stronger economy.
Let me turn now to alcohol duties. First introduced in 1643 to help pay for the civil war, our alcohol duty system is outdated, complex and full of historical anomalies. The Institute for Fiscal Studies has called it “a mess”; the Institute of Economic Affairs said that it “defies common sense”; and the World Health Organisation has warned that countries such as the UK which follow the EU rules are:
“unable to implement tax systems that are optimal from the perspective of public health.”
So today, we are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years. We are taking five steps today to create a system that is simpler, fairer, and healthier.
First, to radically simplify the system, we are slashing the number of main duty rates from 15 to just six. Our new system will be designed around a common-sense principle: the stronger the drink, the higher the rate. This means that some drinks, like stronger red wines, fortified wines and high-strength white ciders will see a small increase in their rates because they are currently undertaxed, given their strength. That is the right thing to do, and it will help to end the era of cheap, high-strength drinks which can harm public health and enable problem drinking. Because this is a more rational system, the converse is also true: many lower-alcohol drinks are currently overtaxed—and have been for many decades. Rosé, fruit ciders, liqueurs, lower strength beers and wines—today’s changes mean that they will pay less.
The second step I am taking today will encourage small, innovative craft producers: I am announcing proposals for a new small producer relief. This will extend the principle of the small brewers relief to include for the first time ever small cider makers and other producers making alcoholic drinks of less strength than 8.5%.
Thirdly, I am going to modernise the system to reflect the way people drink today. Over the last decade, consumption of sparkling wines like prosecco has doubled. English sparkling wine alone has increased almost tenfold. It is clear they are no longer the preserve of wealthy elites, and they are no stronger than still wines. So I am going to end the irrational duty premium of 28% that they currently pay. Sparkling wines, wherever they are produced, will now pay the same duty as still wines of equivalent strength. Because growing conditions in the UK typically favour lower-strength and sparkling wines, this means English and Welsh wines, compared with stronger imported wines, will now pay less. Sales of fruit cider have increased from one in a thousand ciders sold in 2005 to one in four today, but they can pay two or three times as much duty as cider made with apples or pears, so we are cutting the duty on them too.
The fourth step I am taking today would directly support the home of British community life for centuries: our pubs. Even before the pandemic, pubs were struggling: between 2000 and 2019, consumption in the on-trade fell by 40%. Many public health bodies recognise that pubs are often safer drinking environments than being at home. As my hon. Friends the Members for Dudley South (Mike Wood) and for North West Durham (Mr Holden) will agree, a fairer, healthier system supports pubs, so I can announce today draught relief.
Draught relief will apply a new lower rate of duty on draught beer and cider. It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs that do 75% of their trade on draught. Let me tell the House the new rate: draught relief will cut duty by 5%. That is the biggest cut to cider duty since 1923; the biggest cut to fruit ciders in a generation; the biggest cut to beer duty for 50 years. This is not temporary. It is a long-term investment in British pubs of £100 million a year and a permanent cut in the cost of a pint of 3p. I cannot wait for the Opposition to accuse me tomorrow of beer-barrel politics.
These much needed reforms will come into effect in February 2023, but I want to help the hospitality industry right now, so for my final announcement on alcohol duties today, I can confirm that the planned increases in duty on spirits like Scotch whisky, wine, cider and beer will all, from midnight tonight, be cancelled. That is a tax cut worth £3 billion.
Our reforms make the alcohol duty system simpler, fairer and healthier; they help with the cost of living while tackling problem drinking; they support innovative entrepreneurs and craft producers; they back pubs and public health; and they are only possible because we have left the European Union.
World-class public services; investment in infrastructure, innovation, and skills; simpler, fairer taxes to support businesses and consumers: all built on the foundation of a stronger economy and responsible public finances. That is our vision for the future and that is what this Budget delivers.
This Budget also supports working families. With fuel prices at the highest level in eight years, I am not prepared to add to the squeeze on families and small businesses, so I can confirm today that the planned rise in fuel duty will be cancelled. That is a saving over the next five years of almost £8 billion. Compared to pre-2010 plans, today’s freeze means the average tank of fuel will cost around £15 less per car; £30 less for vans; and £130 less for HGVs. After 12 consecutive years of frozen rates, the average car driver will now save a total of £1,900.
I can also announce today that public sector workers will see fair and affordable pay rises across the whole spending review period as we return to the normal, independent pay-setting process, and I can take action to help the lowest paid as well. It was a Conservative Government who introduced the national living wage in 2016, a Conservative Government who, according to statistics published just yesterday, have overseen the proportion of people in low-paid work falling to its lowest level since 1997, and it is a Conservative Government who are increasing the wage floor again today. The independent Low Pay Commission brings together economists, business groups and trade unions. The Government are accepting its recommendation to increase the national living wage next year by 6.6%, to £9.50 an hour. For a full-time worker that is a pay rise worth over £1,000. It will benefit over 2 million of the lowest paid workers in the country, it is broadly consistent with previous increases, it keeps us on track for our target of two thirds of median earnings by 2024, and it is a major commitment to the high-wage, high-skill, high-productivity economy of the future.
As we build this stronger economy, we are doing so at the end of an extraordinary 18 months. Covid was not just a public health challenge and an economic challenge—it was a moral challenge, too. We had to show we could pull together as a country, and we did. We had to put aside questions of ideology and orthodoxy to do whatever it took to care for our people and each other, and we did.
There is a different moral dimension to the economic challenge we face now. Last year, the state grew to be over half the size of the total economy, and taxes are rising to their highest level as a percentage of GDP since the 1950s. I do not like it, but I cannot apologise for it: it is the result of the unprecedented crisis we faced and the extraordinary action we took in response. But now we have a choice: do we want to live in a country where the response to every question is “What are the Government going to do about it?”, where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always that the taxpayer must pay? Or do we choose to recognise that Government has limits?
Government should have limits. If this seems a controversial statement to make, then I am all the more glad for saying it because that means it needed saying. And it is what we believe. There is a reason we talk about the importance of family, community and personal responsibility. We do so not because these are an alternative to the market or the state, but because they are more important than the market or the state. The moments that make life worth living are not created by Government, are not announced by Government, are not granted by Government: they come from us as people—our choices, our sacrifices, our efforts—and we believe people should keep more of the rewards of those efforts. Yes, we have taken some corrective action to fund the NHS and get our debt under control, but as we look towards the future I want to say this simple thing to the House and the British people: my goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down, not up. I want this to be a society that rewards energy, ingenuity and inventiveness, a society that rewards work. That is what we believe on this side of the House. That is my mission over the remainder of this Parliament.
The final announcement in today’s Budget takes a first step. For many of the lowest paid in society there is a hidden tax on work: the universal credit taper withdraws support as people work more hours. The rate is currently 63%, so for every £1 someone earns, their universal credit is reduced by 63p. Let us be in no doubt: this is a tax on work—and a high rate of tax at that. Organisations as varied as the Trades Union Congress, the Joseph Rowntree Foundation, the Resolution Foundation, the Centre for Policy Studies, and the Centre for Social Justice have all said it is too high. So, to make sure work pays and help some of the lowest-income families in our country to keep more of their hard-earned money, I have decided to cut this rate, not by 1%, not by 2%, but by 8%. This—[Hon. Members: “Hear, hear.”] This is a tax on working people and we are cutting it from 63% to 55%, the rate originally envisaged by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). And because I am also increasing the work allowances by £500, this is a tax cut next year worth over £2 billion. Nearly 2 million families will keep on average an extra £1,000 a year. Changes like this normally take effect at the start of the new tax year in April, but we want to help people right now, so we will introduce this within weeks and no later than 1 December.
Let me tell the House what these changes mean. A single mother of two renting and working full-time on the national living wage will be better off by around £1,200. A couple renting a home with their two children, one parent working full-time, the other working part-time, will be better off every single year by £1,800. This is a £2 billion tax cut for the lowest paid workers in our country. It supports working families, it helps with the cost of living and it rewards work.
So, fuel duty cut, air passenger duty cut, alcohol duty cut, the biggest cut to business rates in 30 years, growth up, jobs up, wages up, public finances back in a better place, more investment in infrastructure, innovation and skills, a pay rise for over 2 million people, and a £2 billion tax cut for the lowest paid. This Budget helps with the cost of living. This Budget levels up to a higher-wage, higher-skill, higher-productivity economy. This Budget builds a stronger economy for the British people. I commend it to the House.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Returns for disposals of UK land etc (motion No. 19);
(b) Diverted profits tax (closure notices etc) (motion No. 24);
(c) Rates of tobacco products duty (motion No. 39);
(d) Vehicle excise duty (exemption for cabotage operations) (motion No. 41).—(Rishi Sunak.)
Question agreed to.
We now come to the motion entitled “Income Tax (Charge)”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and the remaining motions will be put at the end of the Budget debate on Tuesday 2 November. I call the Chancellor of the Exchequer to move the motion formally.
Income Tax (Charge)
Motion made, and Question proposed,
That income tax is charged for the tax year 2022-23.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—(Rishi Sunak.)
At this point I would normally call the Leader of the Opposition to respond to the Chancellor’s statement. As Mr Speaker announced earlier, the Leader of the Opposition is sadly isolating—we all wish him a speedy recovery—and therefore, to answer on behalf of the Opposition, I call the shadow Chancellor, Rachel Reeves.
Thank you, Madam Deputy Speaker.
Families struggling with the cost of living crisis; businesses hit by a supply chain crisis; those who rely on our schools, our hospitals and our police—they will not recognise the world that the Chancellor described. They will think that he is living in a parallel universe.
The Chancellor decided in this Budget to cut taxes for banks, so at least the bankers on short-haul flights sipping champagne will be cheering it. And he had the arrogance, after taking £6 billion out of the pockets of some of the poorest people in this country, of expecting them to cheer today for £2 billion given to compensate. In the long story of this Parliament, never has a Chancellor asked the British people to pay so much for so little. Time and again today, he compared the investments that he is making to the last decade, but who was in charge in that lost decade? They were.
Let us just reflect on the choices that the Chancellor has made today. We have the highest sustained tax burden in peacetime—and who is going to pay for it? It is not international giants such as Amazon; no, the Chancellor has found a tax deduction for them. It is not property speculators; they have already pocketed a stamp duty cut. And it is clearly not the banks, even though bankers’ bonuses are set to reach a record high this year. Instead, the Chancellor is loading the burden on working people, with a national insurance tax rise on working people, a council tax hike on working people, and no support today for working people with VAT on their gas and electricity bills.
And what are working people getting in return? There is a record NHS waiting list with no plan to clear it, no way to see a GP, and people are still having to sell their home to pay for social care. We have community policing nowhere to be seen, a court backlog leaving victims without justice, and almost every rape going unprosecuted. There is a growing gap in results and opportunities between children at private and state schools, a soaring number of pupils in super-size classes, and no serious plan to catch up on learning stolen by the virus. The £2 billion announced today is a pale imitation of the £15 billion catch-up fund that the Prime Minister’s own education tsar said was needed. No wonder he resigned.
The Chancellor talks about world-class public services. Tell that to a pensioner waiting for a hip operation. Tell that to a young woman waiting to go to court to get justice. Tell that to a mum and dad waiting for their child to get the mental health support that they need. The Chancellor says today that he has realised what a difference early years spending makes. Has he ever heard of the Sure Start programme that this Tory Government cut?
Why are we in this position? Why are British businesses being stifled by debt while Amazon gets tax deductions? Why are working people being asked to pay more tax and put up with worse services? Why is billions of pounds in taxpayers’ money being funnelled to friends and donors of the Conservative party while millions of families are having £20 a week taken off them? Why can’t Britain do better than this?
The Government will always blame others: “It’s businesses’ fault”; “It’s the EU’s fault”; “It’s the public’s fault”; “They’re global problems”—the same old excuses. But the blunt reality is this. Working people are being asked to pay more for less, for three simple reasons: economic mismanagement, an unfair tax system, and wasteful spending. Each of those problems is down to 11 years of Conservative failure. Government Members shake their heads, but the cuts to our public services have cut them to the bone. While the Chancellor and the Prime Minister like to pretend that they are different, this Budget will only make things worse.
The solution starts with growth. The Government are caught in a bind of their own making, because low growth inexorably leads to less money for our public services unless taxes rise, and under the Conservatives Britain has become a low-growth economy. Let us look at the last decade. The Tories have grown the economy at just 1.8% a year. If we had grown at the same rate as other advanced economies, we could have had an additional £30 billion to invest in public services without raising the taxes that the Tories are raising on working people today.
Let us compare growth under the last 11 years of Conservative government to that under the last Labour Government. Even taking into account the global financial crisis, Labour grew the economy much faster—by 2.3% a year. If the Tories matched that record, we would have £30 billion more a year to spend on public services.
It could not be clearer: the Conservatives are now the party of high taxation, because the Conservatives are the party of low growth. The Office for Budget Responsibility confirmed that today. We will be back to anaemic growth—[Interruption.] Conservative Members might not like this, but the Office for Budget Responsibility said that by the end of this Parliament, the UK economy will be growing by just 1.3%. That is hardly the plan for growth that the Chancellor boasted about today; it is hardly a ringing endorsement of his announcements. Under the Tory decade, we have had low growth, and there is not much growth to look forward to.
The economy has been weakened by the pandemic, but also by the Government’s mishandling of it. Responding to the virus has been a huge challenge. Governments around the world have taken on more debt, but our situation is worse than in other countries. It is worse because our economy was already fragile going into the crisis, with too much inequality, too much insecure work and too little resilience in our public services. And it is worse because the Prime Minister dithered and delayed against scientific advice, egged on by the Chancellor, and we ended up facing harsher and longer restrictions than other countries. So as well as having the highest death toll in Europe, Britain suffered—[Interruption.]
So as well as having the highest death toll in Europe, Britain has suffered the worst economic hit of any major economy. The Chancellor now boasts that we are growing faster than others, but that is because we fell the furthest. While the US and others have already seen their economy bounce back to levels seen before the pandemic, the UK has not. Our economy is set to be permanently weaker.
On top of all that, the Government are now lurching from crisis to crisis: people avoiding journeys because they cannot fill up their petrol tank is not good for the economy; people spending less because the cost of the weekly shop has exploded is not good for the economy; and British exporters facing more barriers than their European competitors because of the deal the Government did is not good for our economy. If this were a plan, it would be economic sabotage. When the Prime Minister is not blagging that this chaos is part of his cunning plan, he is saying he is not worried about inflation. Well, tell that to families struggling with rising gas and electricity bills, rising petrol prices at the pump and rising food prices. He is out of touch, he is out of ideas and he has left working people out of pocket.
Conservative mismanagement has made the fiscal situation tight. When times are tight, it is even more important to ensure that taxes are fair and that taxpayers get value for money. The Government fail on both fronts. We have a grossly unfair tax system, with the burden being heaped on working people. Successive Budgets have raised council tax and income tax. Now they have raised national insurance, too. But taxes on those with the broadest shoulders, those who earn their income from stocks and shares and dividends and property portfolios, have been left nearly untouched. Businesses based on the high street are the lifeblood of our communities and are often the first venture for entrepreneurs, but despite what the Chancellor said today, businesses will still be held back by punitive and unfair business rates. The Government have failed to tax the online giants and watered down global efforts to create a level playing field.
Just when we needed every penny of public money to make a difference, we have a Government who are a byword for waste, cronyism and vanity projects. We have had £37 billion for a test and trace system that the spending watchdog says treats taxpayers like an ATM cash machine, a yacht for Ministers, a fancy paint job for the Prime Minister’s plane, a TV studio for Conservative party broadcasts that seems to have morphed into the world’s most expensive home cinema, £3.5 billion of Government contracts awarded to friends and donors of the Conservative party, a £190 million loan to a company employing the Prime Minister’s former chief of staff, and £30 million to the former Health Secretary’s pub landlord—and every single one of those cheques signed by the Chancellor. Now the Chancellor comes to ordinary working people and asks them to pay more than they have ever been asked to pay before, and, at the same time, to put up with worse public services, all because of his economic mismanagement, his unfair tax system and his wasteful spending.
Of course, there are some welcome measures in the Budget today, as there are in any Budget. Labour welcomes the increase in the national minimum wage, but the Government need to go further and faster. If they had backed Labour’s position of an immediate rise to at least £10 an hour, a full-time worker on the national minimum wage would be in line for an extra £1,000 a year. Ending the punitive public sector pay freeze is welcome, but we know how much this Chancellor likes his smoke and mirrors, so we will be checking the books to make sure that the money is there for a real-terms pay rise. Labour also welcomes the Government’s decision to reduce the universal credit taper rate, as we have consistently called for, but the system has got so out of whack that even after that reduction working people on universal credit still face a higher marginal tax rate than the Prime Minister. Those unable to work through no fault of their own still face losing more than £1,000 a year. For families who go out to work every day but do not get Government benefits, who are on an average wage, who have to fill up their car with petrol to get to work, who do that weekly shop, and who see their gas and electricity prices go up, the Budget today does absolutely nothing.
We have a cost-of-living crisis. The Government have no coherent plan to help families cope with rising energy prices. Although we welcome the action taken today on universal credit, millions will still struggle to pay the bills this winter. The Government have done nothing to help people with their gas and electricity bills through the cut in VAT receipts that Labour has called for—a cut that is possible because we are outside the European Union and could be funded by the extra VAT receipts of the last few months. Working people are left out in the cold while the Government hammer them with tax rises. National insurance is a regressive tax on working people: a tax on jobs. Under the Chancellor’s plans, a landlord renting out dozens of properties will not pay a penny more in tax, but their tenants, in work, will face tax rises of hundreds of pounds a year.
The Chancellor is failing to tackle another huge issue of the day: adapting to climate change. Adapting to climate change presents opportunities—more jobs, lower bills and cleaner air—but only if we act now and at scale. According to the Office for Budget Responsibility, failure to act will mean public sector debt explodes later to nearly 300% of GDP. The only way to be a prudent and responsible Chancellor is to be a green Chancellor: to invest in the transition to a zero-carbon economy and give British businesses a head start in the industries of the future. But with no mention of climate in his conference speech and the most passing of references today, we are burdened with a Chancellor unwilling to meet the scale of the challenges we face. Homeowners are left to face the costs of insulation on their own. Industries like steel and hydrogen are in a global race, but without the support they need. In the week before COP26, the Chancellor has promoted domestic flights over high-speed rail. It is because of this Chancellor that in the week when we are trying to persuade other countries to reduce their emissions, the Government cannot even confirm that they will meet their 2035 climate reduction target.
Everywhere working people look at the moment, they see prices going up and they see shortages on the shelves, but this Budget did nothing to address their fears. Household budgets are being stretched thinner than ever, but the Budget did nothing to deal with the spiralling cost of living. It is a shocking missed opportunity by a Government who are completely out of touch.
There is an alternative. Rather than just tweak the system, Labour would scrap business rates and replace them with something much better by ensuring online giants pay their fair share. That is what being pro-business looks like. We would not put up national insurance for working people. We would ensure that those with the broadest shoulders pay their fair share. That is what being on the side of working people looks like. We would end the £1.7 billion subsidy that the Government give to private schools and put it straight into our local state schools. That is what being on the side of working families looks like. We would deliver a climate investment pledge of £28 billion every year for the rest of this decade: gigafactories to build batteries for electric vehicles; a thriving hydrogen industry creating jobs in all parts of our country; and retrofitting so that we keep homes warm and get our energy bills down. That is what real action on climate change looks like.
This country deserves better, but it will never get it under this Chancellor, who gives with one hand but takes so much more with the other. What you get with these two is a classic con game, like one of those pickpocketing operations you see in crowded places: the Prime Minister is the front man distracting people with his wild promises, and all the while his Chancellor is dipping his hand in their pockets. It all seems like fun and games until you walk away and find that your purse has been lifted.
But people are getting wise to them. Every month, they feel the pinch. They are tired of the smoke and mirrors. They are tired of the bluster, of the false dawns and of the promises of jam tomorrow. Labour would put working people first, and would use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here in Britain. We would tax fairly, spend wisely and, after a decade of faltering growth, get Britain’s economy firing on all cylinders. That is what a Labour Budget would have done today.
I broadly welcome the Budget, which is the first my right hon. Friend the Chancellor has delivered in what we might call the second phase of this crisis, the first phase having been from a sharp contraction in the economy through to the recovery, during which period my right hon. Friend, I think it is fair to say—[Interruption.]
I was saying that in the first phase of this crisis, between the huge contraction in the economy and the recovery that we are now seeing, it is fair to say that my right hon. Friend the Chancellor did a pretty remarkable job to support the jobs market and to support jobs—not without criticism, incidentally, from my Committee, but overall it was a remarkable job.
My right hon. Friend has an even tougher job as he looks to the future, now having to deliver sustainable economic growth and ensure that the public finances are on a sustainable trajectory, as well as meeting all the other objectives the Government rightly have on levelling up, net zero and so on.
My right hon. Friend mentions levelling up. Does he not agree that this is a real workers’ budget? The funds for skills and schools will transform the prospects of our young people and our adults, and let them climb the ladder of opportunity to get skills, security, prosperity and jobs for the future.
My right hon. Friend is absolutely correct about skills. He, of course, through his Committee, has done so much to promote that agenda, which I will come to momentarily, but the background is extremely tough.
While the Chancellor is right to point out that the deficit is falling, it is none the less very highly elevated compared with historical measures. The debt, in financial terms at least, is at a record level of £2.2 billion, and the economy has the headwinds of supply chain bottlenecks and the mismatch between demand and supply that we are seeing in parts of the labour force.
However, there are reasons to be cheerful, which my right hon. Friend outlined. Those are the OBR’s revised forecast showing that growth is much stronger this year—I think the Chancellor suggested 6.5%, compared with the March forecast of just 4%—and the scarring downgrade from 3% to 2%. By my calculation, that is probably worth about £10 billion or thereabouts per year; it is a significant achievement. All that has been achieved through the hard work of the last 18 months to two years. I do not think we should take that away from my right hon. Friend.
That has left my right hon. Friend with some breathing space, and he recognises that there are many challenges facing the economy and uncertainties going forward. A big test as we unpack the Budget is what he has done with that additional headroom. Not surprisingly, he has spent quite a lot of it. It appears to me that, with his fiscal rule of keeping day to day expenditure without borrowing and debt coming down as a percentage of GDP, he has headroom of about £25 billion in 2024-25 on the net debt target, which is about 0.9% of GDP, with the OBR economic and fiscal outlook suggesting he has a 55% to 60% chance of hitting that particular metric. The Committee will want to look very closely at how prudent an approach my right hon. Friend has taken to the Budget.
I see my hon. Friend the Member for Basildon and Billericay (Mr Baron) itching to intervene, so I give way to him.
I am listening intently. I do believe that the Government have done extraordinarily well in raising the national living wage as part of that headroom. That is a major step towards a high-wage, high-tech economy, and it bolsters our one nation agenda, which is to be applauded.
My hon. Friend is absolutely right. I will come to the matter of wages and wage growth momentarily, but let me dwell on the challenges facing the economy.
Another thing that the OBR points out is the increased sensitivity to interest rate rises—the Chancellor made this point—and the damage that they can do to the public finances. I think my right hon. Friend gave the example of a 1% rise leading to a £23 billion increase in debt servicing costs. To put that in perspective, it would wipe out the value of the corporation tax increases and income tax threshold freezes that my right hon. Friend announced in the last Budget. That would be gone in one enormous gulp, so we must be careful about the vulnerability we have. Though we have low interest rates, and interest rates might move up in baby steps, that applies to a very large debt indeed.
Let me touch on inflation—I am pleased that my right hon. Friend spent quite a lot of time on it during his speech—and its impact on interest rates. We have already seen the Monetary Policy Committee beginning to divide on whether rates should go up, and there is an expectation, certainly in the markets, that rates will start to increase. We have seen 10-year gilts going up in more recent times, and it is possible that quantitative easing will start to unwind —perhaps passively initially—when we reach a certain trigger level of interest rates, so it is important that this credible plan is there to deliver on those fiscal targets.
The history, however, is not good in that respect. We have had Chancellor after Chancellor failing to meet their fiscal targets; they have either abandoned them completely or delayed or modified them in some form. Depending on what happens to demand in the economy relative to supply, there may be a case for fiscal stimulus even further down the line. One thinks of the removal of the universal credit uplift, the energy price increases, the labour market demand-supply mismatches and the rise in taxes, often taking demand out of the economy. None the less, and setting that to one side, the Chancellor’s default position must be to stick to those fiscal targets and resist the huge cacophony of demands for more and more expenditure, particularly the day-to-day expenditure that he is rightly targeting in his fiscal rules.
Some of those demands might end up being necessary. If we do not get back to the pattern of demand for public transport that we had before we locked down, it is conceivable that further subsidy will need to go to the public transport sector. Other areas, such as the health service, might have additional demands, but I point out to my right hon. Friend—he knows this more than most —that the NHS public expenditure take has risen in the last 10 years from 32% to 42%. He must get very good at saying no to Ministers when it is necessary to do so, and telling them to go back to their Departments, work harder and get more out of what they are given. That is a lesson for us all, incidentally, particularly those of us on this side of the House.
If we fail in that endeavour and inflation takes off, interest rates go through the roof, the cost of servicing our debt becomes ruinous and international markets lose faith in our economy, we will be back broadly where we were in 1992 when we had Black Wednesday. Conservative Members will remember the long, hard lesson of that: it took us a generation to re-establish our ability to look the electorate in the eye and say, “We can offer a fiscally responsible Government.”
There were some announcements on tax today. May I say first that the drop in the bank surcharge is absolutely the right thing to do? We are putting corporation tax rates up to 25% from 19%, so it would be absurd to cripple our financial institutions with uncompetitive international tax rates.
I was particularly delighted by the shift in the universal credit taper rate from 63% to 55%. That will help countless low-paid families to earn more and keep more of their money, and encourage more people into work. When I was a Treasury Minister, we looked endlessly at this and I pushed really hard on it. I know how expensive it is to do that—my right hon. Friend the Chancellor suggested £2 billion a year—so I take my hat off to him for having grasped that particular nettle.
My right hon. Friend is also right to set out an aspiration to get taxes down before the end of this Parliament. The same pattern occurred under Lady Thatcher, who is much referred to when we talk about tax. In the early years of the Thatcher Government, the tax burden rose quite strongly, and it was my right hon. Friend’s hero Lord Lawson who was able to bring tax rates down. Let us hope that my right hon. Friend is in a position to emulate that in due course.
I turn briefly to inflation, which is right at the core of what is happening in the economy. The threat to the public finances from inflation cannot be overstated. The big debate now is whether price surges and increases in inflationary expectations will be transitory or more persistent. My right hon. Friend referred to the surge in demand relative to supply, which of course will lead to price increases; all else being equal, one might imagine that it will pass relatively quickly.
We have seen the commodity, transport and energy price increases that my right hon. Friend referred to, but there are other price increases that we might expect to be stickier. There are bottlenecks that are often outside our control—a south-east Asian chip manufacturer can have a bottleneck that results in our being unable to produce cars in the United Kingdom. Structurally, the labour market has changed: as a consequence of the pandemic, there is now greater demand for goods relative to services. It will take time to mop that up.
The Bank of England MPC has expressed increasing concerns, in different ways, about inflation and has been constantly deferring the moment at which it believes inflation will peak. There is a debate as to when deferred “transitory” becomes “persistent”, but the huge danger is that we will go into a wage price spiral. One way in which that might happen is if we talk up wages by inducing companies to put them up without a coincident increase in productivity. That will simply feed the inflationary tiger. We have to be very careful on that point.
Does my right hon. Friend agree that we need to be very careful about believing any of these forecasts from the OBR and the Bank of England? They said that inflation would be down at under 2% just a few months ago and have now had to change their mind. Does he also agree that when Lord Lawson cut income tax rates, we had a surge of extra revenue?
It is certainly the case that the Bank of England’s projections on inflation have been under-baked. In fact, if we go back in time, we can see that its recent revisions have been more dramatic, which really illustrates my point. I have a feeling that there will be rather more inflationary pressure than many people imagine.
Some of the drivers of inflation are outside the control of my right hon. Friend the Chancellor, but some are very much within it. One of those is immigration. I totally accept the comment from my right hon. Friend the Prime Minister that we do not want to instinctively
“reach for that…lever of uncontrolled immigration”.
He is absolutely right: this country left the EU to get control of our immigration. However, what we must not do is avoid pulling the lever where there are genuine pinch points in the labour market in the shorter term. If we do not act to bring in skills if necessary, we will simply encumber businesses in a way that may mean many going out of business, and replace them with imports, which can also be inflationary.
The other such area is skills. Further to the point that the Chair of the Select Committee on Education, my right hon. Friend the Member for Harlow (Robert Halfon), made about the importance of skills, I was really pleased by the announcements from my right hon. Friend the Chancellor about post-16 T-levels and lifelong learning. Those announcements are vital to repurposing the workforce to get the challenges of the future sorted.
In the longer term, there is a huge opportunity for us in this country. We are a world leader in life sciences, FinTech, financial services and the digital sector and we have opportunities in artificial intelligence, robotics and genetics, but if we are to grasp those opportunities, we have to get the level of business investment up. I think that my right hon. Friend referred to that level increasing over time; that may be true, but it is still quite a long way below where it ought to be, looking at it historically.
The super deduction is a very important move that the Chancellor has already made, and the extension of the annual investment allowance to 2023 is very welcome, but I think we may need to look even deeper at how, beyond the end of the super deduction, we can continue to see business investment rise.
On research and development, it seems to me that in the plethora of announcements, figures, dates, schemes and adjustments to relief that my right hon. Friend identified, we may have slipped on our target of hitting £22 billion by 2024-25—if I heard him correctly, it has slipped to 2026-27—and I am not quite sure where we are on our target of 2.4% of GDP by 2027. Those are vital targets for us to meet in the longer term.
Finally, there needs to be an overarching examination of how the recovery is balanced. Those hit hardest by the pandemic have been the poorest in our society, who are much more likely to have faced the impact of lockdown and loss of income, and young people. My Committee will look very closely at all the issues that I have raised, including that point.
Once again, I welcome the Budget. The Chancellor has been in a very difficult position and I think he has put forward a very positive set of proposals. The devil will be in the detail; my Committee will look forward to examining that detail, including with my right hon. Friend on Monday.
Thank you, Madam Deputy Speaker. I think that we are used to the Prime Minister perhaps being fast and loose with facts, making things up as he goes along, but I have to say that I think better of the Chancellor. I have to say gently to him that if he thinks he is going to cut air passenger duty for Inverness and the highlands and islands, he is wrong—because there is no air passenger duty in Inverness. One would have thought that if he were going to make announcements, he would check his facts first.
More fundamentally, COP26 kicks off this weekend. What on earth are we doing? When we are saying to the rest of the world that we are trying to engage other countries to step up to the plate with their climate obligations—the Prime Minister has spoken today about the importance of 1.5°—the Chancellor wants to cut air passenger duty on domestic flights. [Interruption.] I can see him nodding his head. He is increasing air passenger duty on long-haul flights, admittedly, but the fact is that carbon dioxide emissions per mile are much higher for domestic flights than for long-haul flights.
What on earth are we doing? How can we say that we are taking our climate obligations seriously? By the way, the Scottish Government, exactly because of our climate responsibilities, took the decision in 2019 to remove our planned reduction in air passenger duty. Chancellor, this is a disgrace. Quite frankly, it shows that this is not a Government who understand the climate challenge that we all face. The Chancellor should withdraw and remove that proposal.
The Budget that the Chancellor has just delivered is tantamount to grabbing 20 quid out of people’s pockets, handing them back a tenner and expecting them to be grateful. Today’s announcement does not even come close to compensating for the tax rises and cuts that he has imposed over the past month. Let us take our pensioners as an example: with the removal of the triple pensions lock, there will be a £6 billion saving for the Government from their raid on pension tax credit and on pensioners.
That is the harsh reality under this Tory Government. The raw reality of that fiscal trickery means that millions of families and workers will be worse off this winter. This is a Budget that brazenly cuts taxes for the banks, while it cuts universal credit for the poor. We welcome the changes to the taper relief, but they do not change the fundamental fact that everybody on universal credit has just lost £1,000.
The Chancellor who once promised to do “whatever it takes” is now a very distant memory. The true test of this Budget was whether it would act radically and tackle the cost-of-living crisis, the Brexit crisis and the climate crisis, and it has failed that test on all three fronts. Instead of doing “whatever it takes”, the Chancellor has done as little as possible. The Tories’ half-hearted rhetoric about fairness has predictably only produced half-measures when it comes to soaring household bills and the crippling cost of inflation.
Perhaps worst of all, before the Chancellor stood up today, millions in poverty knew that they were facing the choice between heating and eating this winter. The ultimate failure of this Budget is that when the Chancellor sat down, those millions of people were still left with that terrible choice. I think that once the full details of today’s announcement sink in, the Tories’ cheers for their Chancellor will quickly fall silent. We can already sense that discontent growing among Government Back Benchers in the red wall seats, because another hidden truth of this Budget is that it only promises capital spending tomorrow, but delivers austerity today.
The Chancellor is living in the naive hope that the public will somehow have forgotten what his Government have hit them with over the last few weeks. He came in today and bragged about his Government’s generosity, but for the last month his Government have hammered working people and ordinary families with regressive national insurance tax rises, the premature ending of furlough, and, worst of all, that disgraceful £1,000 cut in universal credit. I am sorry to break it to the Chancellor, but the public have far from forgotten. They know the political choices that this Government have made, and they know the choices that have made them poorer. They know that they have been badly hit in the pocket by this Government, and that today goes nowhere close to making up for it. They know, too, that the rise in the minimum wage is welcome, but I must say to the Chancellor that the Living Wage Foundation will update the real living wage on 15 November this year. That will reflect what is happening.
Perhaps the Chancellor and the Secretary of State for Scotland might listen, because this is important. This is about the poorest—this is about people in poverty—and I am asking the Chancellor to recognise the Living Wage Foundation’s announcement on 15 November of the real living costs for the poorest in society. While I welcome today’s announcement of the increase in the minimum wage to £9.50, I ask him to give a commitment that that figure will rise to the amount of the real living wage this year, because that, fundamentally, is what will keep people out of poverty. We know that a full-time worker on the minimum wage this year will still be hundreds of pounds worse off because of the cuts in universal credit.
The smoke and mirrors act about rising wages just doesn’t cut it. The Chancellor may want folk to think he is giving with his left hand, but in reality he is taking much more out of their pockets with his right hand. However, no one is fooled. The only people who are living in their own parallel universe are the neighbours in Nos. 10 and 11 Downing Street. In the real world, people are struggling with a Tory cost-of-living crisis that this Budget fails to fix.
Under the leadership of the Prime Minister and the Chancellor, the public are being hit with an energy crisis, a Brexit crisis, a labour crisis and an inflation crisis, and it all adds up to a Tory cost-of-living crisis that is punishing workers and punishing families. It is a deeply damaging pattern that has become all too familiar. What we are experiencing is a United Kingdom in constant crisis, and it is very little wonder that Scotland wants out. [Interruption.] They are predictable. I hear, from a sedentary position, the Secretary of State for Scotland—at least, that is what I think his job title is—
Who does not have a mask on, despite the fact that Members of this House are falling ill with covid.
I say to the Prime Minister and I say to the Secretary of State for Scotland that the simple fact of the matter is that all of us have to recognise democracy, and the Conservatives have to recognise that an election to the Scottish Parliament took place this year. There is a majority for independence in that Parliament, and that Parliament will bring forward a referendum Bill. It ill behoves those who lost the election in Scotland—and the Conservatives have lost every election there since 1955—to deny the right of the people of Scotland to their own sovereign will, their own sovereign decision, to have a referendum on our future, offering us the hope that is failing from this Tory Budget today. More and more people are coming to the view that independence now offers safety and stability—an escape from the constant crisis of Westminster control. They are coming to the view that we can simply no longer afford to pay the price of being part of this failing union.
The defining decision of this Budget is the failure to fully reverse the cuts in universal credit. Tapering the rate is only tinkering around the edges of the problem. The decision was fully wrong and it needs to be fully reversed, because not only was the cut to universal credit the wrong policy, but it came at the worst possible time. [Hon. Members: “ Callous!” ] It was a decision that was callous, and it was a decision made before the rapid rise in inflation was truly known. But instead of having the strength to admit that they were wrong, the Tories have decided to dig their heels in. Earlier this week, the Chancellor, in many of his pre-Budget announcements, said that this Budget was a chance for him and his Government to get back to
“a more normal way of doing things”.
It is therefore very telling that in the same Budget he has confirmed that disgraceful cut in universal credit. He is cutting the surcharge on banks from 8% to 3%. So “back to normal” for this Chancellor clearly means one thing. It means the mindless mantra of the Tory long-term economic plan. It means austerity for the many and tax cuts for the few.
There is a very simple way for the Tories to prove me wrong. They can do the right thing: reverse the cut in universal credit, and put £,1000 back into the pockets of those who desperately need it. And while they are at it, they can remove the benefit cap, the two-child limit, the rape clause, the sanctions regime and the five-week wait, and—finally—introduce statutory sick pay at the level of the real living wage.
As well as those permanent measures, specific and targeted measures are needed to help with energy prices for the winter ahead. That is particularly true for the 2 million pensioners in poverty who have been let down by the removal of the triple lock. We believe that the fairest way to help is to introduce an emergency energy payment to cover families who simply cannot afford the soaring cost of heating and electricity bills. That would be, at the very least, the best way to protect people this winter.
I suspect that inflation will not be the pressing issue of this Budget alone; I fear that it may well be the defining issue of many Budgets to come. The Bank of England’s new chief economist has warned that inflation could soon hit 5%. Mortgage holders are rightly fearful that that this inflationary spike will be met with a sharp rise in interest rates. The Chancellor seems to think that all this is merely transitory, but complacency on this issue is not an option. History shows how quickly an inflationary spiral can get out of control.
It is worth remembering that in 1980 the inflation rate hit 18%. None of us can afford to go back to that place.
However, the inflationary threat is just one element of what amounts to a perfect storm of economic vulnerability. The covid crisis can no longer camouflage the deep damage that Brexit has done, and the single biggest threat to our recovery remains being dragged out of the European Union, against the wishes of those who live in Scotland. The consequences of Brexit are here and they are hurting: our exports down 14% year on year, our fishermen blatantly betrayed, our farmers sold out in fire sale UK trade deals, labour shortages, food shortages, medical shortages. It cannot be said often enough that Scotland is paying the price for a policy that we never supported.
Brexit has already cost billions, but while the European Union is giving Ireland €1.05 billion to mitigate the damage of Brexit, Scotland has yet to receive a single penny of compensation from Westminster. So I would like to ask the Chancellor: where is same billion-pound package of support for struggling businesses that have been hit by Brexit? I know those on the Government Benches do not like to hear this, but what those businesses also need is a return to freedom of movement. They need the 1% hike to employer and employee national insurance halted, and our hospitality and tourism sector needs the 12.5% VAT rate to be made permanent. All those businesses badly need a break from Brexit.
As we know, this Budget comes a matter of days before COP26. Keeping the target of 1.5° alive depends on a Government commitment to embrace the green economy, but let us be honest: this Budget today does not help. The fact that this crucial conference is happening in Glasgow is a chance to show moral leadership, but it is also an opportunity to grasp the opportunities that the green economy can provide. Moving to a just transition from oil and gas is essential to capture the economic opportunities of the new energy technologies and to support people into new jobs. The depth of anger felt in the north-east of Scotland at this Government’s decision to renege on their promise to ensure that we have carbon capture and storage in Scotland obviously has not hit home on the Government Benches.
If this Chancellor was—[Interruption.] Chancellor, this is really important. This is about our ability to get to net zero, and it is about the fact that the Treasury has blocked carbon capture and storage in Scotland. I say this directly to the Chancellor: perhaps he will meet me in the coming days to ensure that the Scottish Acorn project is put back on track and that we increase the number of carbon capture and storage projects from two to three, for the simple reason that we need that to deliver on our net zero targets and to deliver 15,000 jobs in Scotland for that just transition.
I say to the Government directly: let us ensure that we give some hope to the north-east of Scotland, because £350 billion of tax revenues has been taken out of the North sea. We need a helping hand to deliver that just transition, and I need the Secretary of State for Scotland to stand up for us—to stand up for Scotland and ensure that we get that just transition.
If the Chancellor was serious about supporting Scotland, he would have stood up today and announced that the Scottish cluster would go ahead. The reality is that it was a purely political choice to deny Scotland carbon capture and storage. What on earth is the Secretary of State for Scotland doing? Sitting on his hands and failing once again to stand up for Scotland’s interests. [Interruption.] I hear “Hee haw” from the SNP Benches. Maybe he is the Secretary of State for hee haw.
It is not only on carbon capture where this Government are holding back our renewable opportunities. I am passionate about the potential of tidal stream energy, but the contracts for difference budget of this UK Government means there is currently no route to the domestic market for that industry. Despite the Prime Minister’s warm words in response to my questions last week, there is no ring-fenced £71 million budget for tidal stream energy—a small pot of money that would kick-start the opportunities in this industry and prevent it from being lost overseas.
Let us be real about this—[Interruption.] It is really important that the Chancellor listens to this debate. It is his debate. We are serious about the opportunities—[Interruption.] He can point to the clock all he likes, but we are talking about the future of the renewable energy industries in Scotland, and about paying attention to what the industries are saying.
We know about the breakthroughs in technology, and we know that the Royal Society has painted a picture of an industry that could represent 20% of our electricity needs throughout the United Kingdom, but it needs to be kick-started with financial support. However, when we were all talking about our responsibilities to net zero, it is the UK Government who are standing with their foot on the brake preventing this industry from getting off the ground and delivering for people— not just in Scotland, but right across the United Kingdom.
There is also no commitment to match the Scottish Government’s £500 million investment for a just transition in the north-east of Scotland. Now that the Chancellor has blown up the idea of a Boris bridge across the Irish sea, he should have plenty of spare money to invest. On that point, can I ask him whether the estimated £20 billion cost for that cancelled bridge will now be ring-fenced for future transport projects in Scotland and Northern Ireland? Or is that just one more promise that will be broken—just one more example of Westminster holding back Scotland’s green future?
This Budget could have been an opportunity to do things differently, to get a grip on the cost-of-living crisis and to kick-start a fair recovery. But this Budget does not signal recovery. It signals that this Chancellor is dragging us into another winter of discontent, but I can assure the House that Scotland has been discontent with Westminster control for more winters than one. Our country has not voted for a Tory economic plan since 1955. Westminster’s choices are not our choices. The last thing Scotland needs is another winter of discontent imposed by another Tory Government.
Ultimately, we know that democracy is the only cure and the only solution to that deep discontent. That is why, when the crisis of the pandemic has passed, Scotland’s people will have the right to choose their own future—an independent future. It is a manifesto promise that we made, and it is a democratic promise that we will keep. I look forward to the judgment of the people of Scotland. I look forward to a future that is fair, green and European. I look forward to an independent Scotland.
I think the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) was saying thank you for the extra £4.5 billion that will come to Scotland as a consequence of the Budget. I think he was also probably saying thank you for the eight allocations of UK-wide growth funds, with bids in Scotland between Aberdeen and Glasgow.
When the right hon. Gentleman talks about the support for his party, the SNP, in the polls, I am not sure whether his memory goes back to June 2017, when the SNP in Scotland got less than 37% of the vote, way behind the 44% that the Tories got across the country as a whole.
Madam Deputy Speaker, I would like to say, through you, to the Chancellor and the Prime Minister: thank you for the content, thank you for the delivery and thank you for the hope that things will go on getting better in the future. We need to have the resilience to face the unknown problems that will come, but we also need to face the known problems now. I think the whole House will agree—certainly given the reaction from the Labour Benches during some of the announcements, including on universal credit—that the Chancellor has found an imaginative way of giving help to people before the end of the year. I think that there will be a great deal of approval for that.
I would like to say something in tribute to Frank Field, who spent a long time working on child benefits. As and when there is extra money for children, I would give it through child benefit. I would not give it through the extra provision of services all the time, because parents would like to make their own choices. I believe in expanding holiday provision and activities, but I do not think that a child taking all their meals outside the home outside of term time is a good idea. Families should be able to look after themselves, and they need the resources to be able to do that.
I do not want to speak at length because of the time that has been taken up by the leader of the SNP, although he is often worth listening to.
I will not at the moment.
The hon. Member for Leeds West (Rachel Reeves) spoke for the Opposition, and I thank her for her speech, but it was not absolutely clear whether that speech had been drafted for the Leader of the Opposition or for herself. I felt that there should have been some spaces left in it so that she could pick up on what the Chancellor actually said. It seems to me that the Chancellor has been criticised for the opposite of some of the provisions he read out to the House.
I welcome the extra attention to the first 1,001 days. The earliest stages of life, and of parents preparing to have a child, matter, whether it is health, economic security or housing.
I thank the Chancellor for his commitment to returning to spending 0.7% of gross national income on overseas aid. I hope he will be able to announce that the spending will not suddenly go from 0.5% to 0.7% in two years’ time but will move from 0.5%—if we have got down that far, and I hope we have not—up to 0.6%, 0.65% and then 0.7%. It is ludicrous to think that we can suddenly pile an extra 40% into a programme and expect it to be used effectively, so please try to plan ahead.
My right hon. Friend spoke about the cladding money, and he and the Prime Minister must have a top-level forum with the cladding groups, the Leasehold Knowledge Partnership and the all-party parliamentary group on leasehold and commonhold reform to get an understanding that leaseholders, people at the beginning of their household life, are faced with bills of £20,000 and sometimes £100,000, which they cannot afford. Some people are having their equity wiped out when their flats are forfeited because they cannot afford to pay these charges. We need to find the problems, fix the problems and fund the problems, and then we need to get the money back.
As part of the £5 billion, I ask that potential claims on behalf of leaseholders, which might have to be made by landlords, can be made by an agency that has the power to go to the builders, developers, surveyors, architects and building control people, some of whom are the Government’s people although most are not, and their insurance companies. In time, the money has to come back from those who are responsible. The one group we know are not responsible are the leaseholders who do not own a single brick of the building.
As a life member of the Campaign for Real Ale, I thank the Chancellor for what he has done on the draught beer tax. In Worthing, which has a good reputation for hospitality, the business rates relief will be greatly welcomed by 90% of businesses. Some people think of Worthing as a place that is not only represented by a mature MP but has a lot of mature people. They are wise people.
We have had one of the youngest mayors and council leaders in the country. As Dan Humphreys prepares to stand down after six and a half years, I thank him for doing the kinds of things that the Government are trying to do. He has increased digital capability, sought regeneration funds that work, worked and shared offices with other councils to get the best value for money and provided the kind of leadership and quiet, undramatic provision of local services that gives local government a good reputation.
If my right hon. Friend the Chancellor can continue doing sensible things that get support from both sides of the House, as he has today, we will be glad that he has joined that company, too.
I hope we can manage the rest of today’s debate without a formal time limit. We have plenty of time, but a great many people wish to contribute. If everyone were to keep to around seven to eight minutes, which is much longer than we have had recently, we will manage without a time limit. That always makes for a much better-flowing debate.
It is always a pleasure to follow the Father of the House.
This Budget could be described as a pork barrel Budget. The Chancellor talked about a beer barrel Budget, and I have yet to look at the detail of the beer duty, but small breweries in my constituency will be grateful for that measure. That is my thank you to the Chancellor.
The Budget has pulled rabbits out of hats, and there has been a lot of smoke and mirrors. When we look at the detail of the funding, as we do on the Public Accounts Committee, we can see the holes in this Swiss cheese Budget. We have again had the mantra of levelling up, but there is no acknowledgement of the reality of the lives of many of my constituents who will not qualify for levelling up, by the Chancellor’s definition, because of where they live. Of course we are still waiting for the new Secretary of State for Levelling Up, Housing and Communities to define what “levelling up” means.
I have many constituents living in overcrowded housing with one family living in the living room and another family living in the bedroom. They are not street homeless and they are not living in temporary accommodation, although I have plenty of those too, yet there is nothing in the Budget for them on housing. The cost of living is hitting all our constituents very hard, and it is clear that this Budget will not tackle a lot of those problems for a lot of people, many of whom will be made poorer as a result of these decisions.
Of course, the Chancellor has announced £150 billion for Departments this year. We have to be wary of such global figures. It sounds like a lot of money, but it is dwarfed by the spending on covid. Compare that with the steady state of the NHS budget pre-covid, which was about £150 billion, and with the £37 billion allocated over two years to test and trace. I have to wonder where the Government’s priorities are.
I thank my hon. Friend for the Public Accounts Committee’s report on the spending of NHS Test and Trace. It is 20% of the NHS budget, yet the money was spent in such a way that how effective it was in meeting the main purpose could not be demonstrated. Taxpayers’ money was treated like an ATM. Does she agree that if we are to spend such money, it needs to be spent wisely and properly?
I completely agree with my hon. Friend, and I hope the Chancellor does, too. I hope the Treasury is acknowledging the lessons that have been learned. We were very tolerant on the Public Accounts Committee, as we understood that spending in those early days would be challenging and money might be spent in the wrong way. The ventilator challenge, for example, means we now have ventilators that will not be used, but it was the right thing to do at the time because that is what the Government thought they needed, and any Minister in that position would have considered making such decisions.
Test and trace is one example where money kept following money without clear outcomes, without clear challenge and without a clear approach to spending taxpayers’ money. These are eyewatering sums. When we think of the NHS backlog, there have obviously been pre-announcements on NHS funding, but there is still so much work to be done to make sure that patients get the treatment they need. The money spent on test and trace could have been much better spent on the backlog.
Once again, we have heard very little about the detail of housing policy. The Government have promised to build 1 million homes over this Parliament, a statement that the Chancellor repeated. There had been a promise of 300,000 homes a year, so the figure is shifting. One hopes it means that the homes will be built eventually, but the Red Book confirms that, of the £11.5 billion that has already been allocated, £7 billion or so is owed from the spending review onward. That is enough to deliver 180,000 affordable homes, and we can add the 160,000 homes being built through mayoral combined authority and local authority funding. We are still getting very low figures.
The affordability of affordable housing, of course, depends on a person’s income. In my constituency, people in receipt of housing benefit, including housing benefit through universal credit, cannot rent a three or four-bedroom property because the rents are above the cap. That is just the market in Hackney South and Shoreditch and across the borough. It is impossible to buy. More people rent privately than own their own home, and more people rent social housing than both of those combined. Those in generation rent and those who cannot get on the waiting list for social housing are left in limbo. They are left out in the cold. Where is the levelling-up agenda for them?
The Father of the House mentioned the terrible issue of dangerous cladding on tower blocks, and this Budget only reconfirms the existing £5 billion set aside for remediation. This is the biggest consumer and regulatory failure in a generation, and many of my constituents, like many people across the country, are living in unsaleable homes. I should declare my interest, as I live in one, too, although my developer has shouldered the entire cost. As the Father of the House said, we need more developers to take that on.
The £5 billion is about a third of what is needed to sort it out. I am the Chair of the Public Accounts Committee, so I do not want to see money given out willy-nilly, but if the remediation is not funded now, there will be no confidence in the sector to get started. Even as somebody who lives in a property surrounded by scaffolding right now, and as an early adopter because the developer paid, it will take many years before the remediation is delivered. For those who have not got to that point, we are talking about well over a decade before this problem will be solved. It is about certainty of funding from the Government. As the Father of the House said, there are ways of getting this money back from developers. We need to be more imaginative. I challenge the Chancellor to work with his Cabinet colleagues on that.
There was some mention of street homelessness in the Budget. Getting “Everybody In” was a covid success story; let us not squander that opportunity for the lack of a bit of funding now. The money to make sure that people get into the 6,000 new homes that are supposed to be provided for people who are sleeping rough on the streets needs to be delivered. If it is not and they go back on the streets, it will end up costing the taxpayer and the Exchequer considerably more. The Department for Levelling Up, Housing and Communities—I hope I have got the new title right—has been slow to confirm the figures on progress, so it is right that the Treasury should keep an eye on how the money going into that Department is spent and on whether it will actually deliver those homes, which will, as I say, save the taxpayer money in the end.
I could speak at length about the cost-of-living issue but, given the time, I shall touch only on the main issue. Universal credit has been cut by £20. I welcome the offer to revise the taper, but it will affect only those who are in work and rather plays into a negative narrative that some people are scrounging off the state. People have lost their jobs during the covid pandemic. People have struggled to get back into work, despite the situation not being as bad as some had predicted. On top of that, we see fuel prices increasing, energy bills going through the roof and inflation. That £20 a week is still a real issue for people.
According to the Red Book there will be a 3% real-terms increase in local government funding over the spending review period, but that comes on the back of cuts of up to 40% or more in some boroughs over the past decade. Since 2019, we have seen an increase year-on-year, but 2019 is only two years ago; let us not forget the deep and swingeing cuts to local government, which has proved itself an effective deliverer of vital services during covid but cannot be squeezed further. We are still nowhere near to the previous levels of funding.
On school funding, there is another smoke-and-mirrors promise. Again, increases are talked about, but after years of cuts. Per-pupil funding is still way lower than it was in 2010 and we are only inching back up to that level. A Public Accounts Committee report showed that the per-pupil increase is lower for pupils in the most-deprived areas and much higher for those in the least-deprived areas, thereby widening the gap in funding. The gap in attainment between the least-deprived and the most-deprived was narrowing, but we now see it growing as a result of covid. This is not the time to cut funding, or to reduce funding even if it is not seen as a cut. It is clever how the Government try to present it, but let us be clear that in effect we are talking about a cut to the poorest, with money going to the wealthier pupils.
The Government have also promised a £30,000-a-year salary for teachers; as far as I can see, having read the Red Book quickly, there is not enough in the settlement for schools to pay for that even if, now that the pay freeze has been lifted, the basic pay increase is taken on board—and we do not yet know what that will be.
The hon. Lady mentions having read the Red Book and says there is no new money for housing, but the Red Book announces
“an additional £1.8 billion for housing supply”
and for the regeneration of brownfield land; is that not new money?
It is not clear to me that it is new money. I have acknowledged the figures for housing on brownfield sites and other housing, but let us be clear: the Government promised 1 million new homes over the Parliament, and they had said 300,000 a year, so they are already watering down the promise on the number of homes. Crucially, there is no figure for proper affordable housing that is actually affordable, so many of my constituents who are priced out of the private rented market and home ownership have no option. There is a real gap there and, as I have said, it is not levelling up for many of my constituents.
As I was saying, even if the pay review bodies come forward with an increase to the basic pay for teachers, as we expect they might, it will be very hard for schools. In effect, it will mean cuts to the number of teachers and to other school services to pay for that promised salary, because there is not enough money in the pot to be carved up all ways. Even the catch-up money will not cover that issue.
Let us look at the detail over the coming days and weeks. The flourish with which the Chancellor finished at the Dispatch Box will wither away as we see the reality that this Budget does not exactly deliver everything that he has promised.
I refer the House to my entry in the Register of Members’ Financial Interests.
First, I commend my right hon. Friend the Chancellor for the good news in the Budget. It is indeed good news that the economy is growing faster than was predicted and it is good news that we are bouncing back from the pandemic not just faster than predicted but faster than other countries in the G7, with the OBR confirming the 6.5% growth that the International Monetary Fund and OECD predicted. It is good news that unemployment is lower than the very dire predictions that we heard at the beginning of the pandemic, largely owing to the action that the Government have taken. It is good news that, as my right hon. Friend announced, the national living wage has increased to £9.50, thereby putting, as he said, just over £1,000 into the pockets of some of the lowest paid. It is also good news for public sector workers that the pay freeze is going to be lifted.
It is good news that the Chancellor has felt able to announce, albeit over a number of days publicly rather than to the House today, increased spending on issues such as infrastructure, the NHS and science. I agree with my right hon. Friend that we must today start to build the new economy post covid and that we are on the verge of what could be an economy fit for the new age of optimism. Like my right hon. Friend, I have always been optimistic about what can be achieved by the talents, hard work and initiative of the British people and what they can do to build a brighter future for themselves, their families and the country. But the brighter future will not be built simply by telling people that it will be there: a new economy needs sure foundations and optimism needs to be backed by practical delivery.
As we know, there are headwinds that mean that however optimistic people are for the future, many are finding it difficult to manage today. As the Chairman of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride) said, there is a debate to be had about what is going to happen to inflation and whether higher inflation is here to stay or just temporary. Of course, that will have an impact on interest rates.
Increased taxes will have both direct and indirect impacts on individuals, as will increased costs in other areas. We must never forget, as the Labour party so often does, that people are hit by increased taxes on business, because those increased costs often cannot be absorbed and are passed through to consumers—to members of the public.
I welcome the significant cut in the universal credit taper rate announced by my right hon. Friend the Chancellor. It is true to say that it is something that Conservative Governments have been working for, but previous cuts have been rather less dramatic than the one he announced today. What he has done is extremely good news.
Let me focus briefly on three particular issues in the Budget and spending review, the first of which is the forecast for the future growth of the economy. As I said, yes, we are bouncing back well, but our economy will be smaller for a number of reasons, some of which are specific to the UK, and the predicted rate of growth is below that which would normally be seen as an acceptable growth trend rate.
I am interested by the fact that the Government appear to think that they can sustain a situation wherein public spending increases by, as I think my right hon. Friend the Chancellor said, 3.8% a year, but the economy grows at less than half that rate. I welcome the fact that my right hon. Friend has introduced new fiscal rules, but I may have misheard or misunderstood: I think he said that the new fiscal rules will be met in the third year of every forecast period, but the forecast period rolls forward every year, which suggests to me that we will never reach the fiscal rules and they will just be rolled forward every year. As the Chairman of the Treasury Committee said, it is not the case that previous Governments have not been guilty of changing the date at which the fiscal rules were going to be met, but it seems to me that, unless I have misunderstood, it is baked in that they never necessarily need to be met.
The answer to the issue of the balance of increased public spending versus growth is, of course, to increase the growth rate of the economy. I support the desire for a green industrial revolution, but that brings me to my second point: the green industrial revolution is about not just providing support to businesses, to different sectors and to initiatives such as hydrogen. Those moves are important, though, and I welcome the fact that the Minister of State, Department for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) has introduced the Nuclear Energy (Financing) Bill and is finding a way to ensure that the RAB—regulated asset base—financing model will work for new nuclear in future.
To deliver the green economy of the future, we will have to ensure that we have the green skills of the future, which means that the issue involves not just the Treasury and the Department for Business, Energy and Industrial Strategy but the Department for Education. It is about ensuring that at every stage in our education system we prepare people for the jobs of the future and ensure that they have green skills. There were a lot of references to skills in the financial statement, but I did not hear any specific reference to green skills, which are very important. Young people are hugely enthusiastic about saving the planet, as I know from when I raised the seventh green flag for St Mary’s Catholic Primary School in Maidenhead recently. We need to ensure that young people’s education provides them with what they need to be able to take up the green jobs of the future.
I am grateful to the right hon. Lady for giving way and even more grateful that she is mentioning the whole issue of the climate emergency and green skills. It felt like the Chancellor was skating over that vital issue—I do not think he got the memo on the climate emergency. Does she agree that if we had much greater investment in the net zero review, we would be able to scale up the jobs at the level she is describing? At the moment, we have a pitiful amount going into that net zero review. We have a Budget that is making more car driving more likely. It is making that cheaper. It is making short-haul aviation less cheap. So it is sending out the wrong messages at the wrong time. We need a test that would make sure that every single spending decision is measured against its climate impact.
The hon. Lady has always spoken passionately on these issues in this House, but I think she has overlooked the fact that the Chancellor announced a significant number of green jobs—several hundred thousand of them—for the future. Investment is going in from the Government, but the point I am making is that it is not just about the investment that the Government are putting directly into these areas; it is also about ensuring that our whole Government, on a cross-Government basis, understand the importance of this issue. That includes education. I had a positive meeting with the Secretary of State for Education earlier this week on that and other issues. So it is a cross-Government exercise and it needs to be understood as such.
My third and final point is on a different issue, which is about the NHS and social care spending. I recognise the increased money going to local authorities, but there are local authorities that feel they will be hit with significant costs with the new social care provisions. This is about not just the costs over the next couple of years before the levy money comes into social care, but those authorities that are in areas where the provision of care is more costly than in other parts of the country and where they have a very high proportion of self-funders. That includes both Wokingham Borough Council and the Royal Borough of Windsor and Maidenhead.
My main and final point is that in the necessary bid to deal with the backlog in the NHS—obviously more funding has been announced in relation to that—we do not lose sight of the long-term plan. Crucially, the long-term plan had commitments on areas such as mental health, prevention and workforce planning. Those commitments need to be met if we are to put the NHS on a sustainable footing for the future. For example, the young person whose mental health needs are identified and provided for at an early stage is the person who will not then turn up at A&E in a crisis situation, costing the NHS more.
Another important aspect in the long-term plan is that it was matched with measures and metrics that the Treasury was going to be able to use to ensure that money was spent effectively and wisely. As we know, the NHS does not always spend the money as well and as effectively as it could. People want to see more going into the NHS, but they want it to be spent properly with value for money, so it is important that the Government do not lose sight of that.
As a Conservative, I believe in low taxes, fiscal prudence, and sound management of the economy. I look forward to our being able to be in a position to deliver that at the same time as we are delivering that green economy for the future and that optimistic future that the Chancellor referred to in his speech.
It is a pleasure and indeed an honour to follow the right hon. Member for Maidenhead (Mrs May) in this debate. I am not sure that either of us would have thought that we would find ourselves doing this, but we do, and I have to say that I agreed with a great deal of what she had to say. I certainly agreed with far more than is probably good for me nowadays, but I did and I will say so in my speech.
I have been a Member of this place since 1983 and have heard a great deal of just about every Budget speech. The style has changed rather a lot. There was a time when we used to get a long lecture about monetarism and the money supply—the whole theory would be explained to us, with special emphasis on M4. I may have got this wrong, but the present Chancellor’s heart seems to still be with that school of thought, but to his credit he has realised the extraordinary nature of the circumstances that currently confront us and taken what for him, and I guess the Prime Minister as well, has been a philosophically broader view.
The current circumstances are quite mind-boggling. We have not done this voluntarily, and I do not blame the Government for it, but we have borrowing at a peacetime record now. It stands at some £320 billion, which is the equivalent of 14.9% of GDP. Government debt has increased now to about 96% of GDP. Spending, I acknowledge, is falling, but it is still at what for us is a high level and what for the Conservative party must be a very high and worrying level, surpassing anything that we have seen in peacetime.
As well as the national finances being under great strain, the finances of my constituents are too. I welcome some of the measures in the Chancellor’s speech, including the capital funding for the national health service to try to clear the backlog. Whether it is enough, it is certainly more than we were going to get, so I welcome it on those terms. I am very sceptical as to whether the funding for the announced changes will find its way later into the social care budgets. The cost of that—we all see this is necessary, and it is necessary now and not in a few years’ time—will end up with local government. As we work through the details of the Budget—the ones that were not leaked to the newspapers in advance—I think that we will find that local government will be forced, particularly in metropolitan areas, to pick up the burden.
I join the right hon. Lady in welcoming the long overdue—from my point of view—addressing of the taper on the universal credit interface with increased work earnings. Universal credit affects some 9,000 households in east Newcastle, and 35% are in employment so will almost certainly come up against the clawback of 63% as it was and 55% as it is now. It is not as big a deal as it sounds, but it is going in the right direction. It is welcome. The problem of the interface between benefits to people who are in work is not a new one, and my view is that more thought needs to be given to this to find a more equitable solution. The marginal tax rate is still quite high. It was 75% on the old clawback when national insurance and other taxes are added in, and it will be something of that order even with the Government’s announcement, but that does not stop me welcoming it. I do.
Discretionary incomes, particularly those of the poor, are under significant pressure and I regret the fact that the present Government have decided to break their manifesto promise and take more from those who do not really have it, with their 1.25% increase in national insurance. I can see why the Government—a Conservative Government—see the need to raise tax, but there were other ways of doing it and I would like a lot more reassurance that these were explored properly before we arrived at the solution that the Government have arrived at.
Mention has been made of the inflationary pressures that are now loose in the economy. I take this very seriously—
May I take the right hon. Gentleman back to those halcyon days when he enjoyed lectures on monetarism and remind him that inflation is always and everywhere a monetary phenomenon? There is no such thing as cost-push inflation.
If the right hon. Gentleman would let me make a little more progress, I was going to quote Mrs Thatcher with approval; I rather thought that would catch his interest. What he says is essentially correct, and when these issues were more contentious, it was recognised very vigorously indeed by the then Conservative Prime Minister, Mrs Thatcher, who once said that
“inflation is the biggest destroyer of all—of industry, of jobs, of savings, and of society”,
briefly acknowledging, untypically for her, that there was such a thing as society—perhaps her better known quote.
Although I seem to have lost my copy of the 1987 Conservative manifesto, I have a memory that it contained the memorable phrase, “Inflation is an evil and must be exterminated”. I commend that point of view to the present Government if inflationary forces are unleashed again, given all the other problems we have to face up to at the moment. The victims are my constituents: the poorest and those who are least able to find the extra money—or, indeed, to find the goods to buy, given the way in which the distribution sector is currently challenged. These higher priced products could only be purchased if people found a supermarket that was still selling them and that had not been disrupted by a lack of delivery and HGV drivers. Retailers’ stock levels are at their lowest—or reportedly at their lowest; I cannot claim personally to have done a stock check—since I entered the House in 1983.
We know that inflation will hit our constituents hard. The situation with gas prices needs a response from the state, at least temporarily. My preference would have been Labour’s proposal to remove VAT from fuel bills, at least temporarily—for, say, six months. The Government could do more, and I urge them to, to help our more vulnerable constituents through this winter. That brings me, inevitably, to covid.
The R rate is reportedly now more than 1 and is said to be as high as 1.2. I understand that the Government’s underlying assumption is that the booster vaccine will provide a countervailing policy and that that will be enough to bring the rate back down. But if it is not, the Government need seriously to focus on whatever plan B actually is, because putting the country through a lockdown or some other set of restrictive policies again in the current circumstances will have a devastating effect on our hopes for a recovery.
I will finish soon, because I know that other Members want to get in. It is a fact that, in 2014, 27% of children in my constituency lived in poverty, and the latest child poverty figure that I have for my constituency is 38%. The adjustments that have been made and announced—pre-announced, if you will—in this year’s Budget do not serve to relieve that burden on the bulk of my constituents. All 12 local authorities in the north-east of England are in the top 20 of those that have seen the highest increases in child poverty rates.
The Government used to say that the way through this situation was to increase economic activity through the northern powerhouse. The Chancellor did not mention the northern powerhouse in his address at all, unless the Government have renamed it Teesside. However, the thrust of the argument is still clear and I would like it to succeed; I would like properly paid, well-resourced jobs to be brought to the region, and for them to endure. It is not a quarrel between the parties that we want to drive up the living standards of our constituents in our region. We can make much more common cause here in Parliament on the details of the issue. I tried to tackle that when I was the Regional Minister, with some success—I am not going to say with anything else!
One of the galling announcements in the Chancellor’s statement was the reference to family hubs. What happened to Sure Start? What was wrong with that? If the incoming Conservative Government had thought it was a poor initiative that could have been configured differently, why did they not just pick it up and configure it differently, and shape it like they say they now want to shape the family hubs? The underpinning reasons for the policy are wholly justified. It did deliver results. The Government are right to have found their way to it now, but they should have got there 10 or 11 years ago.
Finally, the greatest question facing our country and the world at large is climate change, and the prospects seem absolutely terrifying. I wish the Government well with COP26 and taking the issues forward internationally. Are we going to get there? I share the concerns and worries of, frankly, every thinking Member of this House. It is essential to the community that I represent that the Government do get there and that we are able to carry international partners with us. The Government’s proposals include industrial jobs—jobs that we could do in the north-east of England and projects that our communities could bid for. We want to play our full part in taking a green industrial strategy forward.
It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). He is right that many of us share common ambitions across the House—ambitions for COP26, and to bring better jobs to his constituents and constituents across much of the country in areas where such jobs have not necessarily been in the past.
I was Employment Minister back in 2010, in the wake of the last economic crisis. It is therefore with a particular sense of pride—I emphasise, pride—that I listened to today’s Budget and I congratulate the Chancellor. Back in 2010, there were 2.7 million people unemployed; the numbers were rising, the pressures were upward and the challenges were enormous. I listened to economists saying, “This is going to get worse and worse.” The achievement of the Conservative party, over a decade in government, of which I am proudest is the transformation of employment prospects for the people of this country. As we went into the pandemic, we were as close as we have been in modern times to full employment. After some tough economic and spending decisions, and some tough challenges met after 2010, we collectively—through smart management of the economy and the right employment programmes to support the long-term unemployed—delivered a transformation in job prospects, particularly of young people in the United Kingdom.
It was with huge trepidation, at the start of the pandemic, that I saw that work at risk, with forecasts of 3 or 4 million people unemployed and a whole generation’s prospects disappearing. I have to say that the Chancellor stepped up to the plate. It was not easy—he was right in saying that these have not been easy decisions for a Conservative Government, but they were the right thing to do. After a large amount of money spent on the employment support programme, the furlough scheme and the loan support for businesses, we are coming out of this pandemic with unemployment at 5.4%. Yes, that is higher than it was, but there are not many in the House who, in March 2020, contemplating the prospects for the labour market, would not have been pleased and surprised to see unemployment at that level coming out of the pandemic, and falling, with 1 million vacancies in the economy and decent prospects for people. The Chancellor, single-handedly—and we have to bear in mind that he had only been in the job for about half an hour when this all started—delivered programmes that have made a massive difference to this country. I hope he will always be proud of that.
But we do now have 1 million vacancies in this country. We have businesses with skills shortages, against all our expectations. We will not solve that through mass immigration. One reason that the haulage sector is lacking people is that there was so much cheap migration of both migrant workers and trucks from eastern Europe that drove down prices and left people thinking, “This is not an industry to be part of—I am going to retire, or go elsewhere.” The solution in that industry will be about paying more, but the solution in our country to these labour shortages will be about automation and productivity.
We have taken too much advantage of a steady flow of unskilled or semi-skilled labour over a long period of time. I remember talking a few years ago to the logistics director of a big retailer, who said to me, “If we leave the European Union, where am I going to get my warehouse staff from?”, to which my answer was, “Why do you need warehouse staff—surely you are automating your warehouse?” He said, “Actually we do not need to automate our warehouse because we have access to low-cost staff.” That has to change. I welcome the measures taken by the Chancellor last year and this year to drive business investment. Much of the solution to the skills shortage in our society—although not all; there are areas where it is a real problem—will come through a drive on productivity, innovation and automation. That is the way forward and that is the challenge that not just Government but business in this country has to grasp right now and deliver on, because that will be as big a part of transforming our economy and transforming our prospects as anything the Government do.
The Chancellor was also right to stress the benefits of leaving the European Union. We have only just started to scrape the surface of the benefits that can be obtained. I look forward to seeing a process of sensible deregulation. I am not in favour of the abolition of all regulation—it is there to protect people, and rightly so—but there are things we can do in areas like artificial intelligence, and financial services and the City, to make the UK more competitive. The job of getting that done has only just started. There is work to be done. I look forward to seeing, I hope, in the months ahead more announcements from the Treasury and from other Departments about what we will do in future to maximise the potential of Britain outside the European Union.
I have two final points, briefly, because I know we are short on time. First, I welcome the return to 0.7% because we must help countries around the world to deal with the challenges they face, particularly around energy and climate change, but also in something that I feel passionately about—the protection of the natural world and habitats. Deforestation happens for a number of reasons, but one of them is simply that people cut down trees to make charcoal to cook their food. I want to see more support provided for the creation of proper sources of renewable energy in the developing world so that that element of deforestation no longer happens. There is a huge amount that we need to do in tackling climate change, but looking after the natural world is one very important part of that.
My final point is about what the Chancellor said at the end of his speech. As Conservatives, we believe in low taxation and leaving people to make their own choices. He set a direction today. My message to the Treasury is that I—and, I am pretty sure, an awful lot of people on the Conservative Benches—will be holding the Chancellor’s feet to the fire to deliver on that, because we cannot plan a future, as Conservatives, as a big-state, high-tax party. We are a small-state, free-enterprise party. We know that that is what leads to prosperity and we all want prosperity for the people of this country, particularly those who are struggling and those on low pay. This needs to be an equal, levelled-up society, and we will not do that with a big state and high taxes.
Order. I remind everybody that Dame Eleanor suggested contributions of between seven and eight minutes in order that people lower down the list will get fairly equal time as well. Mr Grayling, you did that—congratulations—but the average is 11 minutes, so please could people be a little bit more conscious of the timing of their contributions?
We will see whether the Chancellor’s optimistic forecasts for the economy come true. I believe we have many more difficult times still to come. I particularly note that he skipped over the threat of inflation, which I will mention quickly, and the damage that will do to the economy and household income. He did not even really mention the potential of interest rate rises, which we may face in the future and would have a substantial impact on people’s standard of living. We have already seen and heard that the tax burden is rising to its highest sustained level in history. This Budget will not properly address the real concerns of my constituents over the rising cost of their weekly shop, the huge increase in the price of fuel at the pump and the eye-watering increases expected in energy bills. This Budget shows that the Government are out of touch with ordinary people.
Even the rise in the living wage, alongside the announced universal credit taper change, will not offset the £20 loss in universal credit that has hit families hard. Many people in my constituency have had no pay rise for years. There is also the Government’s culpability in the lack of planning to deal with our increasing need for energy, its supply and the rising costs, or to deal with things such as the shortage of HGV drivers, which was well known before. All those problems are down to the Government’s lack of planning and foresight to come up with solutions to help address them.
My hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) raised the issue of the Test and Trace organisation and system and the eye-watering waste of £37 billion of taxpayers’ money, which is about a fifth of the NHS budget. That shows that the Government are guilty of wastage not just here, but in various contracts they have let in the past 12 months or so.
I will spend the brief time that I have on the NHS. As we know, the NHS is in crisis. It is just about coping only because of the dedication and hard work of its staff in a perilous situation. The Government’s focus since March 2020 was on covid, and that was understandable and right, but it was at the cost of treating people with other conditions such as cancer and coronary disease. It may be that more people will lose their lives over time as a result of conditions other than covid because of that problem. Until recently, the Government had no plan in place to deal with that foreseeable problem. Even now, with the additional funding the Government have announced for the NHS, there is no guarantee as to when wating lists will be brought down to pre-pandemic levels.
It is now more difficult to see a GP face-to-face. That is partly because Tory Governments since 2010 have failed to ensure that the NHS and general practice doctors and nurses have the staff they need. The British Medical Association medical staffing report was published in July 2021. It shows that across primary and secondary care, there are currently 2.8 doctors per 1,000 people in England, while the average in comparable OECD EU countries is 3.7. If the rate of medical workforce growth remains the same, it will take until 2046 before the NHS has the number of practising doctors needed to match that average. That puts us 25 years behind where we should be today. The number of patients per GP practice is 22% higher than it was in 2015, but the GP workforce has not expanded with that rise in patient need. As a result, there are now just 0.46 fully qualified GPs per 1,000 patients in England, down from 0.52 in 2015. As we all know, there is also an urgent retention issue with GPs.
I raise that issue because, despite the significant money the Government are putting into the NHS, the significant problem is that we just do not have enough staff. The shortage of doctors, nurses and specialist staff in our hospitals has happened on this Government’s watch, and I repeat that they have been in power since 2010. The latest NHS vacancy statistics for England relate to June 2021. There were 93,806 full-time-equivalent vacancies in hospital services in England, amounting to a 7.2% vacancy rate. For nursing posts, there were 38,952 vacancies, which is a 10.3% vacancy rate. For medical posts, there were 9,691 vacancies. Constituents are finding it increasingly difficult to get an NHS dentist.
When it comes to social care, local authority budget pressures are immense. My local authority has faced a cut of almost 60% in its funding since 2010. It has to make £21 million more of savings in the coming years. It is the 23rd most socially deprived borough in England and Wales. The social care crisis is forcing councils to hike council tax, and the Government are of course trying to deflect blame for that when they are not funding councils properly for social care. We are seeing increasing problems, which will get worse this winter, with discharges from hospitals into a care setting. The Budget does not go anywhere near funding the shortage that councils are facing because of Government cuts. On education, the catch-up funding and the money that the Chancellor announced is something like a third of what Sir Kevan Collins asked for before he resigned earlier this year.
I am clear that as a result of the Budget, low and middle-income families in my constituency will struggle with the cost of living, but those on high incomes and the very rich will not. The Chancellor has failed to bring forward any real sustainable solutions to the cost of living crisis coming this winter. He has proved that he is out of touch.
What a fantastic Budget. It is fantastic for all sorts of reasons. It demonstrates how incredibly well our Chancellor and our Government did during the covid pandemic in supporting lives and livelihoods. The much more optimistic economic forecasts that have come out are testament to the effort that was put in and the result that we are starting to see.
The Budget is also fantastic for the support it gives to the leisure and hospitality sector, which will help businesses in South Northamptonshire. I thank my right hon. and learned Friend the Financial Secretary to the Treasury, who is sitting on the Front Bench, for that.
Many people wrote to me about universal credit, and the taper will help people who are in work and receive universal credit. Speaking as a former Business Secretary, the investment in R&D is superb. It will create the jobs—particularly the green jobs—and productivity that we want to see across our country.
The Budget is particularly fantastic, however, because of babies. I happen to be holding “The Best Start for Life”—it is not a prop, merely something to lean on. I thank the Prime Minister, the Chancellor, the whole Front-Bench team and many Opposition and Conservative Members for their commitment for many years to making sure that every family gets the support they need to give their baby the best start for life. The Prime Minister is totally committed to that, as is the former Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May). When she asked me to chair an inter-ministerial group to look at the early years, she was completely clear that babies are vital. On that inter-ministerial group a couple of years ago were two Ministers, one of whom was Rishi Sunak, a local government Minister, and the other was Nadhim Zahawi—
Thank you, Mr Deputy Speaker. I should know that by now.
Of course, those Ministers have gone on to fulfil a fantastic pledge for every baby. I also pay tribute to parents and carers across England for their amazing contribution and their determination to have their voices heard and to make sure that “The Best Start for Life” works for all parents and carers.
I will take a moment to explain why that period of life is vital. Essentially, human babies are unique in the animal kingdom in the extent of their underdevelopment at birth. Every other animal can fend for itself pretty well from minutes, or at least hours, after it is born. Human babies cannot do anything for themselves until they are at least one year old, and often they are two before they can really fend for themselves.
The physical and brain underdevelopment of human babies means that they adapt to the environment in which they find themselves, so the baby who is born into a secure and happy home with a loving family will grow up learning that as an instinct for life. They will be able to do well at school, make friends, learn, get a job, hold down friendships and relationships, and then be a good parent themselves. Conversely, the baby who is born into a situation where there is interparental conflict, drug or alcohol misuse, mental health problems or severe deprivation will not have the same life chances. All the research demonstrates in spades that, for those babies, life is much harder. Their instinct for life is not good and they often go on to have all sorts of problems.
I am glad that the hon. Lady, whom I consider a friend, has given me a chance to tackle that, because the standard response is “What about Sure Start?” I have paid tribute in the House to the excellent efforts of many Sure Start centres and I worked with hon. and right hon. Members across the House on that subject, but Sure Start did not provide what most families need. Unfortunately—I can vouch for this, having led a charity that had to pay rent to provide a parent-infant mental health service within the walls of a Sure Start over 20 years ago—Sure Start did not stipulate services for families. It was all about the buildings, and therein lies the problem.
With the Government’s policy of family hubs, I hope we have something that Sure Start will build into: a welcoming place where families can go to find antenatal classes, meet health visitors, meet other parents and get support, whether for smoking cessation, mental health issues or breastfeeding advice and so on. Multidisciplinary services will be available under one roof, not just physically but virtually. One thing that we learned in lockdown was the incredible value that parents placed on being able to take part in something remotely, whether breastfeeding support or perhaps dads’ mental health support. These things can very well be provided online and remotely in the 21st-century digital age, so that if someone’s baby is crying and will not sleep in the middle of the night they can look at something online rather than waiting for Sure Start to open. Unfortunately, in many cases, a Sure Start centre might be open for only a few hours a week.
I must take the hon. Lady to task, because there are 3,000 Sure Start centres in England as we speak. My hope is that local authority areas will use that as a foundation and build on them to create the family hub model proposed by the Government.
I want to move on to other action areas in “The Best Start for Life: a Vision for the 1,001 Critical Days”. I am delighted that the Chancellor has announced funding for every local authority area to publish its own Start4Life offer. One critical thing that parents and carers said to us in the early years review was that they just did not know what they needed, let alone how to access it if they did know. If someone was pregnant for the first time, why would they know that they might need smoking cessation advice, breastfeeding and weaning advice, support to avoid oral decay and help with brushing their baby’s teeth? They might need debt advice or nursery advice and so on. When someone first finds out the hopefully, but not always, fantastic news that they are expecting a baby they do not know where to go, so the news that local authority areas can publish and offer parents a range of Start4Life services will be transformational.
The third measure for which the Chancellor is offering money is a digital version of the red book. Many of us have a plastic red book, with bits of paper falling out. We forget to take it to health visitor meetings and to immunisations, so the record is incomplete. Sadly, having spoken during the research phase of the project to many foster carers, including some fabulous people who had fostered 40 babies between them, I heard that only two of those babies had turned up with a red book. Those foster carers knew nothing about what had happened to that baby, what the baby’s birth experience was, what the situation was with the birth parents—there was no information at all. That must stop, so in the digital age, a digital version of the red book will be a game changer for every family. It will be important not just for families to see what happened—when did I wean my first baby? When do I need to meet the health visitor again?—but for early years professionals. Very often, parents say, “I have had to tell my story six times this week to six different people. Why don’t you ever talk to one another?” When there is a serious case review, all too often it is a case of “These people didn’t speak to those people” or “This team didn’t know what that team was doing”.
Joining up services in Start4Life for the period from conception to the age of two is the big win in today’s Budget in my opinion. That will be transformational for many millions of babies across England. The next steps will be the implementation—it is not done until it is done—and I want to thank many colleagues and professionals in the early years sectors, as well as many Ministers current and past, for the extraordinary coming-together of views that meant that today is the biggest win for families.
I might not be as gushing as the right hon. Member for South Northamptonshire (Dame Andrea Leadsom), but nevertheless this Budget has been delivered in a very difficult economic circumstance. A plethora of figures and initiatives have been thrown at us today, and on the first day of a Budget debate we always comment on measures with some trepidation because of course once we start looking at the detail of the Budget and the implications of its measures we often feel a bit embarrassed at having embraced some of them with enthusiasm. Indeed, sometimes even Chancellors have had to retreat quickly from measures they earlier announced with great euphoria.
Nevertheless, I am encouraged by the general thrust of the Budget and the path the Chancellor has outlined. First, he believes we must get the high levels of debt down to leave us less vulnerable to interest rate changes in the future; that is good. Secondly, he believes that has to be done in the context of returning to making fewer demands on people through taxes. Again, that is good; my party believes people and businesses are far better placed to decide how to spend their money than Government. Thirdly, although we are spending vast amounts on public services, and the Chancellor will have to continue doing so in the future, he believes that must be spent wisely. He therefore must not be afraid to tackle the question of whether money is being wasted and to stop spending it and change direction if it is.
I am also pleased that the Chancellor wants to reward people who are in work. The national living wage increase is welcome, as is the reduction in the universal credit taper to encourage people to move from not working to working or from working in low-paid jobs to working in higher-paid jobs, but we must not forget that there is still a marginal rate of 55% on people in that position, so there is still that disincentive.
However, I still worry that those in low-paid or even medium-paid jobs will face a bleak period in the near future, whether through the tax rises already declared or the fact that we are already facing huge energy price increases. While Members have condemned that in this House, we must not forget that part of the reason for it is the climate hysteria that seems to have overtaken Members and the Government themselves. One reason for higher energy bills is the fact that we are turning our back on cheaper fuels and expecting people to heat their homes in more expensive ways.
The Chancellor has of course said that he has already written to the Bank of England about the current inflation rate. There is only one reason why he would write to the Bank. He cannot instruct it to increase interest rates, but if he is raising concerns about the current level of inflation the implication is that the Bank may well look at introducing higher interest rates, which of course will hit homeowners. So while I welcome some of the incentives to get people into work, we must not ignore that there are challenges ahead, especially for those in low-paid industries.
Turning to specific matters, the Chancellor made a big issue of the additional money going to the devolved Administrations. An extra £1.6 billion per year will go to Northern Ireland, which is a real increase, but there is to be a real increase in expenditure in Northern Ireland of 1.3% each year on average over the period. That is half the increase that will go to Scotland, about one and a half times less than is going to Wales and about a third of the general increase in Government spending. While spending in Northern Ireland is going up in real terms, which I welcome, relatively speaking it will go down, and that at a time when the Government are talking about levelling up and when there are additional pressures on the Northern Ireland economy because of the Northern Ireland protocol and its impact on industry. There has to be an explanation why, relatively speaking, expenditure in Northern Ireland will be lower over this spending period than it is currently.
Let us look at some of the initiatives that have been undertaken under the levelling-up agenda. I welcome the fact that £300,000 will be spent on a digital hub in Cushendall in my constituency. I already know from speaking to those involved in it how that will create jobs—good jobs—in a relatively poor rural area. The extra money for Dundonald Ice Bowl will be welcomed by my hon. Friend the Member for Belfast East (Gavin Robinson), and of course the money that is going into the city region deal will benefit massively some capital projects in my constituency. I welcome all that.
The hospitality industry has taken a hammering. The Chancellor has said that there will be a 50% discount on rates for the industry. I take it that there will be a Barnett consequential of that for Northern Ireland, and I hope that it is replicated by the Finance Minister in Northern Ireland.
There is one question that I would like a response to, and it is about the changes in excise duty on alcohol, which will be important for the likes of Diageo in my constituency and the hospitality industry. Since Northern Ireland is part of the EU excise regime due to the Northern Ireland protocol, will those changes apply to taxation on alcohol in Northern Ireland? That is a technical question that I do not know the answer to; it would be interesting if the Chancellor came back to us on that.
The Chancellor has been a steady hand on the tiller in the storms of the past. There are still economic storms for him to take the country through. We wish him all the best with that, but we will also be scrutinising the route that he takes as he seeks to guide the nation economically.
I have declared my business interests in the Register of Members’ Financial Interests.
Growth is the way that we need to proceed. Growth is the way to get us over the damage done by the pandemic policies. Growth is the way to deliver the optimism that the Prime Minister expresses so well about the economy. Growth is needed to level up. Growth is needed to help generate the more and better-paid jobs we require. And growth is needed to remove the supply constraints and shortages that are too obvious in our own economy and many others around the world trying to overcome the pandemic disaster.
We therefore need from the Treasury a more vigorous growth policy even than the one that has been envisaged today, which is largely public sector-led. We need also to engage the private sector, get innovation pulsing and make sure that people can enjoy the rewards of success. Let us look at taxation of small business and the self-employed. It still seems to me that the Government have a bit of a downer on that. We are going to be mightily dependent on the good spirits, good will and enthusiasm of all those who are setting up businesses or have small businesses, or who are taking that step to go and work for themselves. They find a tax regime that is becoming increasingly penal.
We need as well to look at our capacity in many areas where the Government are the great regulator, instigator and provider, where we need to harness more private capital. We are chronically short of energy in this country, yet we are an energy-rich part of the world. If only we would exploit it. Why do we import so much gas and electricity? Why are we making ourselves so dependent on wild and erratic world market prices and sometimes having to pay spot prices, when we could produce much more of our own electricity and gas at home, supply it under sensible average price contracts and give people proper security of supply?
The Transport Secretary is doing great work in, I hope, an early resolution of the heavy goods vehicle driver shortage. There was a Government problem there, in the number of tests, the training and the support. Indeed, the taxation of drivers is another issue, which I think has led to some leaving the profession or not joining it. Again, I ask the Government to please consider where they are engaged, where they are licensing in the wrong way or where they are not providing enough capacity, to allow the private sector to respond and to perform well.
My disagreement with the Chancellor in this Budget—I do have one—is that I think the way we get faster growth is to go for lower tax rates to promote it. Lower tax rates should not be a reward for achieving growth that is much more difficult to achieve if it is done against the background of much higher tax rates. I understand why the Chancellor was persuaded to put in the £12 billion from national insurance, but it is a tax on jobs. I was against it. It is deeply damaging and wish they would remove it. However, would the Chancellor have still put that in if he had known that, in the first six months of this year, he was going to collect £44 billion more in tax revenue than the OBR forecast as short a time ago as March?
The OBR was £44 billion out for the first six months of the financial year. That revenue came in because we were living through a period of lower tax rates—stamp duty surged because the rate had been cut, for example—and because we were recovering from covid on the back of a massive fiscal and monetary stimulus, a stimulus I always supported and for which I pay tribute, as others do, to the Chancellor and the Bank of England for organising. We needed that massive stimulus. We needed to go in behind the Federal Reserve Board, which really saved the advanced world at a time of great crisis and trouble with an even bigger monetary stimulus proportionate to the size of its economy.
Now, however, times are moving on. We have had a very sharp recovery, which the OBR and the Bank of England did not forecast correctly. We have more inflation than they said. They were forecasting inflation below 2% for this year. Now I see in the latest figures that they have upped the forecast to 4% for next year and they have had to up their forecast for this year a bit, although probably not by enough. The Bank of England was caught on the rise, not understanding the power of the economy to recover. I have never seen such big revisions to forecasts in six months. We have here today a very big increase in the growth rate, a big drop in the unemployment rate and a big rise in the inflation rate.
Those of us who were saying that the forecasts were wildly pessimistic in March were, unfortunately from the Government’s point of view, proved right, but the Government should celebrate that. They should also puzzle over how the official forecasts are now much more positive for this year and next year at the very moment the economy is actually slowing for a variety of reasons partly relating to tax policy and the threat of interest rate rises, which the Bank of England now seems to think it needs to administer. I urge the Government to pay less attention to official forecasts, because they are all over the place. I have no great confidence that this latest set will be proved right over four or five years any more than I thought the March lot would be. They point to a very disappointing growth rate in the last three years of the forecast period. That is why I am urging the Treasury to look again at its growth rate policies and to find ways to strengthen them.
My final point, to keep within time, is that of course I welcome more money if it will buy me more operations and treatments, and bring down waiting lists in my local health service. Of course I welcome more money if it finds its way to my local schools, enabling them to have more and better paid teachers, and the equipment they need. But these are very large sums of money. The health increases, which come out on a very regular basis now, are on top of a massive increase in health expenditure which was understandably needed to combat covid. The Treasury must push back on some of those sums. In the case of the health budget, we will not need the massive test and trace budget, with all its set-up costs. We are not going to repeat the experiment of building Nightingale hospitals and then closing them down once we have completed them. We are not going to repeat the need to procure in a hurry a vaccine that does not exist and set up a means of distributing it. We have done all that, so that money, which is still in the base budget, should be reallocated.
Before the Government give additional money to the health service, they should satisfy themselves that the money is being properly distributed and properly spent. Above all, we need a productivity revolution. I want to see much higher pay in this country and in the public sector, but that requires increasing productivity and there is no easy way of doing that. Ministers must galvanise the senior managers of the NHS to deliver it.
As always, it is a pleasure to follow the right hon. Member for Wokingham (John Redwood), who I agreed with for the first time ever yesterday. That is something I enjoyed, however fleetingly.
After listening to the Chancellor today, I think arrogance is up, complacency is up and delusion is up. Certainly, in my constituency of Wallasey and in the country as a whole, the cost of living is up, taxes are up, poverty is up and hardship is up. That is the background against which the Chancellor delivered his speech.
The combined Budget and spending review comes at a pivotal time for the country. That is partially a result of grim circumstance, which is beyond the control of any Government, as we have heard today—the pandemic and the challenge of the transition to net zero—but it is also the result of the Government’s serious mistakes and self-inflicted wounds. The botched Brexit deal has caused chaos at the borders, soaring prices and shortages, and the Government’s deadly complacency about the virus has resulted in one of the biggest economic hits and one of the largest per capita death tolls in the developed world—failure piled upon failure.
The most vulnerable have been hit the hardest, whether they are the young having their opportunities destroyed by school disruption, the old sacrificed in their tens of thousands in our neglected and underfunded social care system or the millions flung into poverty by the Government’s cruel universal credit cut—not compensated for by changes to the taper announced today, which will help only one in three and leave us with the circumstance whereby millionaires pay a marginal tax rate of 45p while those on poor wages who qualify for universal credit and are able to work pay 55%.
Two brief points. First, it is worth saying that the legacy benefits system that we inherited, before we implemented universal credit, had withdrawal rates for benefits sometimes close to, and sometimes exceeding, 100%. Whatever the hon. Lady says, this is a massive improvement.
Secondly, there is a qualitative moral difference between taking from people money that they have earned and withdrawing benefits that people are given, paid for by other taxpayers. Those are different things, and the hon. Lady should not pretend that they are the same.
While I agree with the right hon. Gentleman that benefit tapers have been a long-running problem for many Governments to solve, we know that the 63% fall in the Department for Work and Pensions’ costs has come about not because everybody is in work, but because benefits are some of the lowest in the developed world, causing huge hardship and poverty. The right hon. Gentleman needs to recognise that as well.
This is a Government who love power but are bored with the hard work of governing. They disdained to anticipate the problems their ideological obsession with a hard Brexit has created, choosing to believe their own propaganda instead, but the red book shows that, as a result, trade with the EU is sharply down and projected to reduce living standards by 4%, which is twice the OBR estimate of the cost of the covid pandemic. Underlying some of our difficulties are the problems of Brexit and the fact that the Government did not prepare for the trade disruption caused by their hard Brexit deal, which threw fishing, farming and peace in Northern Ireland to the wolves in pursuit of their own peculiar obsessions. They did not prepare for the supply chain problems caused by the shortage of HGV drivers, the vacancies in social care and the staff shortages in the NHS.
This is a Government who have been unwilling to offer short-term temporary relief to those who are suffering the growing cost-of-living crisis, as energy prices have rocketed and as inflation soars towards 5% this winter. Fuel and food prices are rising fast, and people are feeling the pinch. An end to the public sector pay freeze will not compensate unless it offers real increases in wages, which, taking inflation into account, have only just returned to their 2009 level. Let’s face it: whatever it says in the Chancellor’s latest propaganda press release, any pay increase below inflation is actually a pay cut on top of years of hardship, so we will have to await the detail.
A fair recovery would start with a Chancellor who had the humility to be honest about why these blunders have been made. Unfortunately, we do not have such a Chancellor; we have a Jekyll and Hyde Chancellor, with his eyes firmly on his own advancement and with a slick PR operation to match his vaunting ambition—a Chancellor whose persona depends a bit on his audience.
To the country at large, he is that nice Dr Jekyll, brandishing his public spending largesse in a blizzard of pre-Budget leaks, increasing the national living wage and announcing the end of the public sector pay freeze—he is hoping that we will not notice that it was he who froze pay last year, on top of a decade of previous Tory pay freezes that have seen real living standards fall more than at any time since the Napoleonic wars.
But when he is burnishing his leadership credentials with Tory MPs, he becomes the sadistic Mr Hyde, posing as a true low-tax, small-state Thatcherite, waxing lyrical about his
“sacred responsibility to…balance the books”,
because to do otherwise would be “immoral”—he is hoping that they will not notice that he has presided over the largest increase in the size of the state in peacetime and the biggest tax rises in 25 years. That comes the year after he borrowed an eye-watering £350 billion in a single year to pay for his covid response. The fraud, the waste and the graft to Tory donors have been an ever-present feature of the bonanza of state mis-spending that he has presided over. In fact, it has been the very definition of “immoral”.
Does this Budget meet the formidable long-term structural challenges before us? In the short term, does it tackle the cost-of-living crisis now looming for millions this winter? No, it does not. Projections of 1.3% growth by the end of this Parliament are nothing particular to be proud of.
The Treasury-inspired blizzard of media propaganda announcing £30 billion of apparent spending commitments means that the Budget is really an afterthought. Closer inspection reveals many reheated announcements of previous Government press releases with one thing in common: despite being announced over and over again, few of them have ever actually been delivered.
There are some modest funding allocations that seek credit for restoring a minority of the huge cuts that have been inflicted in the past 11 years of this Tory Government —indeed, the Chancellor has openly boasted, over and over again, about taking spending back to 2010 levels. Having destroyed 1,000 of Labour’s Sure Start centres, this Government now expect credit for creating a pale imitation of them in just 75 places, 11 years later. Having cut skills funding by 50% since 2010, this Government now expect credit for restoring 42% of it, 11 years later. Having underfunded education for years, this Government now expect credit for restoring funding to levels that they inherited from Labour in 2010.
This is a cynical Budget of smoke and mirrors, aimed more at burnishing the Chancellor’s leadership credentials than at fixing the country’s growing challenges. As the challenges pile up like leaked Government announcements, it is becoming plainer by the day that this Chancellor is not going to be the one who meets them—and Britain will be the poorer for it.
It is a pleasure to follow the hon. Member for Wallasey (Dame Angela Eagle). Unlike her, having recently left the Cabinet, I am grateful to the Treasury for all the effort that it has made to keep us informed of what will be in the Budget—I have never approached a Budget knowing quite as much in advance. However, I would still like to speak about a couple of elements that I think are quite significant.
One of those elements is the change in the universal credit taper rate, which will help millions of people throughout the country. It underlines a fundamental Conservative objective, which is to make work pay, and I strongly welcome it. I also think it important that we have announced an increase in the national living wage, which, again, will help us to build that higher-wage, higher-productivity economy that is so fundamental to our economic plan.
I also want to put on the record my praise for the Chancellor, which is contrary to some of the remarks we have heard today. I think that his stewardship of the economy over an extraordinary year and a half is enormously to his credit, and I think that that is reflected in the public confidence that he has built up for himself and for the Government over that period. We are seeing the economy bouncing back better—still scarred, but in a significantly better position than many people would have imagined. We are seeing employment in an immeasurably stronger position than we would have imagined just a few months ago, along with a commensurate surge in tax revenues that contrasts with the gloomy forecasts from the Office for Budget Responsibility the last time we heard from the Chancellor. I share the view of my right hon. Friend the Member for Wokingham (John Redwood): we have to question how useful the OBR is when its forecasts are so far out, and have to hope that it can raise its game in the future.
Let me make a few brief points. First, I think the Chancellor was right to continue to highlight the cost of living as a major issue. I do not think we should assume that inflation will be fleeting and transitory; I think it could be with us for a long time, which is why it is important that we take action. The action on the universal credit taper rate will help, as will the national living wage, and the changes in fuel duty and other items will be useful as well, but we must prepare ourselves—steel ourselves—for the likelihood that this year and most of next year will be marked by a significant pressure on people on low and medium incomes.
Secondly, I am very concerned about the current level of public spending, and the size of the state. We must be honest with ourselves, and acknowledge that on top of the £400 billion of unplanned outlay that was required to get us through the covid response, we are now seeing the size of the state increase to the largest that it has been in peacetime. The amount of public expenditure today is higher than it was during the financial crisis; it is about the same as it was under Denis Healey in 1976, when he had to go cap in hand to the International Monetary Fund. The size of the state is large, and we have heard from the Chancellor today that it is going to grow even further, beyond 41% of national income. History suggests that that is not a sensible long-term level for public expenditure, because it starts to crowd out the private sector, and makes it hard to build and sustain the free-market, free-enterprise economy that we all want to see.
That leads me to two points. One is that we have to ensure that this public money is well spent. I think particularly of the NHS, which is soon to account for 40% of total current expenditure. That is a significant amount. Many of us, and our constituents, want to see the NHS properly funded, but a heavy burden of responsibility now falls on the Department of Health and Social Care to ensure that the money is well spent and is accompanied by reform. I remember previous settlements, including the one referred to by my right hon. Friend the Member for Maidenhead (Mrs May). Just a couple of years ago, money was given to the NHS without a proper plan for reform and was not well spent, so I hope that this money will be spent differently.
The second point is the difference between funding for day-to-day purposes and funding that will genuinely increase productivity in the economy. At the end of the day, as many Members have already said, it is all about productivity growth. The forecasts that the Chancellor set out earlier today were for one or two years, if we are to believe the OBR, of very significant growth in the economy, and then a return to low levels of growth— 1% or 1.3%—with perhaps a decade of low growth ahead of us.
We have to improve productivity, and in that respect there was much to commend in the Budget and the spending review: significant increases in infrastructure, particularly the sorts of infrastructure, such as roads, railways and broadband, that will genuinely improve productivity and boost the economy, and the work on skills—in particular lifelong learning, which for too long has been a weakness in our country.