House of Commons
Wednesday 23 March 2022
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Among a range of measures, the Chancellor recently announced a £200 energy bill discount for households across the whole of the UK, including Wales, as well as £180 million to the Welsh Government in recognition of the council tax energy rebate in England.
About 1.5 million households across the UK depend on heating oil for their domestic energy needs. Last September, households could have expected to pay about £250 for a 500-litre delivery. Last week, those prices had risen to anywhere between £600 and £900 for a delivery of the same volume. What discussions has the Secretary of State had with his Cabinet colleagues, particularly the Chancellor of the Exchequer, about how that burden could be mitigated for households at the mercy of that unregulated section of the energy market?
I am glad the hon. Gentleman has raised this question. I am in that particular bracket myself, so I know exactly what he is talking about. There have been some interventions already. As far as conversations with the Chancellor and his team are concerned, they have been numerous up to and including this morning, but I think the hon. Gentleman will forgive me if I ask him if he can possibly wait till roughly 12.30 this afternoon, when the Chancellor will spell out exactly what his own proposals are.
With rising inflation and a cost of living crisis, a recent YouGov survey of Welsh voters found that 71% felt that their personal financial situation is set to worsen over the next 12 months and 27% said that they will struggle to pay their next energy bill. Does the Secretary of State agree that the Chancellor should turn his energy loan into a grant and reverse the £20 universal credit cut?
Again, I can only say that it would be unhelpful and inappropriate for me to predict and prejudge what the Chancellor will be saying in the Chamber in a matter of minutes. All I can say is that these are conversations—[Hon. Members: “Go on!”] I would like to, but I am not going to. These conversations have been a regular part of—have dominated—the Wales Office’s connection with the Treasury in the last few days and weeks. As I say, the hon. Member has not got long to wait, and I hope he can bear with me.
The boss of oil giant BP said last month that it had more money than it knows what to do with, which is completely the opposite situation to that of households right across Wales that cannot cope with record inflation and astronomical energy bills under the watch of the right hon. Gentleman’s Government, so why will he and the Chancellor not agree to a one-off windfall tax on oil and gas producers?
There are two points I would like to make. The first one I have already made, which is not to prejudge what the Chancellor is going to say in his statement in a few minutes’ time, which will address this and I hope numerous other issues that are occupying the minds of Members across the House, in fact. As far as the second point is concerned, I am afraid a slightly well-trodden path of the Opposition is to confront every possible problem by finding somebody and taxing them. We do not believe that is necessarily the answer, because we want energy companies to be part of the solution and also to be part of future and ongoing investment in energy infrastructure, and they will not do that—and will not be able to do that—if all the Government’s responses are simply, as I say, to identify them and tax them. It may be a populist gesture, but it is not actually going to solve the problem that we both wish to try to resolve.
I am afraid the Secretary of State is completely out of touch with public opinion on this. Polling this week, published by 38 Degrees, shows that 69% of the Welsh public say that the Government’s energy bill loan package is not enough to help those struggling with their energy bills, and 67% support Labour’s windfall tax because it would mean £200 off energy bills now and £600 off energy bills for the hardest-hit households in Wales. This would be a tax on the unexpected profits of oil and gas companies, so why is he on the side of those oil and gas companies, not on the side of the Welsh public?
I think that just defaulting to a 38 Degrees petition as if that is some kind of solution to a very complex and long-standing problem is a cheap and populist way out of this. We are taking a more responsible view, as I hope she will hear from the Chancellor later. There have already been numerous interventions—for example, we have provided an additional £180 million to the Welsh Government in this particular context—so I urge the hon. Member not just to press the petition button and think that that is all the Opposition have to do. We have to do a lot more than that if we are serious about addressing the long-term challenges that face us all. None of us is without this: we all have constituents with these problems and we all know exactly the challenges she refers to.
The east midlands freeport will see nearly £9 billion of new investment, and tens of thousands of new jobs created in our region. Does my right hon. Friend agree that if the Welsh Government really cared about the people of Ynys Môn, they would support the efforts of our colleagues to deliver a freeport, and bring more jobs and investment to the island?
If nothing else, I think the Wales Office Parliamentary Private Secretary has won a bet in getting her constituency up in lights again on the question of freeports. My hon. Friend makes an interesting point about something we have been campaigning on for some time, and this fantastic scheme will create long-lasting sustainable jobs across the whole UK. I hope he will forgive me, however, for not trying to prejudge what that process may conclude regarding the actual venues. We are expecting a number of very enthusiastic bids into the scheme once it is launched. I think we can describe that announcement as “imminent”, so my hon. Friend, and the residents of Ynys Môn, do not have long to wait.
The flow of goods through free trade is a critical priority for prosperity, whether in the village of Wales in Rother Valley, or in the great nation of Wales. What role does my right hon. Friend see for freeports in that, and how might a freeport in north Wales—for example in Anglesey—help to improve the problems associated with a central corridor and the working of the Northern Ireland protocol?
Thank you, Mr Speaker. The concept of freeports is indisputably positive, and others who have gone down that route with the launch of English freeports are already able to report inward investment, and good sustainable jobs that will contribute to our economic recovery as well as our net-zero ambitions. As I said, in Wales there will be a number of very high quality bids. We have committed in the manifesto to at least one freeport in Wales, and hopefully we may be able to expand on that over time. The long wait for a decision, and the many months of wrestling with the Welsh Government to reach a conclusion that we can all live with, are nearly at an end.
A freeport in Wales, especially in Anglesey, sounds like a great idea, just like in Teesside, where the UK’s largest and first post-Brexit freeport has already led to the announcement of thousands of future jobs in new green technologies. Does the Minister agree it is vital that we all get behind our freeport policy, which will help to level up and deliver the change we need in our areas?
My hon. Friend makes a good point, which gives me the opportunity to highlight that freeports are already a resounding success in his area. We do not need to go any further than that, because the work that he and the Mayor, Ben Houchen, have done in that area is fantastic. Anyone who had any doubts about what freeports can bring to a region need only look at my hon. Friend’s area to see that they make a serious and positive contribution to future economic prosperity.
The Secretary of State extols the virtues of a freeport in Wales, but will he assure the House that he will not allow DP World, which is responsible for the shameful sacking of 800 P&O workers, anywhere near the construction or operation of any freeport in the United Kingdom?
The hon. Lady raises a timely point, and I hope that the comments made by the Transport Secretary, and others, will reassure her that we are deeply disturbed by the way that action was taken. As she knows, it has been referred to the Insolvency Service, and if there are demonstrable transgressions in that process, that could lead to criminal prosecutions. I can give the hon. Lady the assurance she needs as far as freeports in Wales are concerned.
In the ongoing work and discussions on freeports with the Welsh Government, does the Secretary of State agree with the Welsh Government’s three basic and rather easy requests: parity over decision making; fair funding between freeports across the nation so that Welsh Government funds do not have to be diverted away from vital projects in Wales; and that the ethical standards of the Welsh Government—which are certainly higher than those of the UK Government—will be met if any freeport is delivered in Wales?
I hope I can assure the hon. Gentleman. The fact that we are, I hope, imminently to make an announcement that involves the UK and the Welsh Governments, means that both parties in this long-running negotiation are satisfied. As I said, I do not want to prejudge the announcement or what the bidding process may conclude, but we can absolutely agree that there are a number of important issues. We have taken more than two years to reach this point, and I hope the Welsh Government, and everybody else involved in the process, will be satisfied by the outcome.
The Secretary of State has said that freeports in Wales will create 15,000 jobs, but where is his evidence that any of the economic benefits that flow from that will reach ordinary Welsh workers rather than the usual fat cats, such as DP World?
The answer to that question, if the hon. Gentleman does not want to believe me, comes from port authorities, local authorities, stakeholders and others around Wales—people, including in his constituency, are looking at the evidence for freeports and the kind of upsides that my hon. Friend the Member for Redcar (Jacob Young) mentioned for Teesside a few moments ago. It might be a step too far for the hon. Gentleman to believe me, but he should believe his constituents and his community who believe this to be long overdue and are very anxious that we conclude it as soon as possible.
From welcoming Ukrainian refugees to safeguarding seafarers’ rights, the Government consistently disappoint. The Welsh Conservatives have now joined Welsh Labour and Plaid Cymru to call for an expedited visa process to ensure simple, fast, safe and legal routes to sanctuary in the UK and to remove the requirement for Ukrainians to provide biometric evidence prior to leaving Ukraine. The Secretary of State is Wales’s man in the Cabinet: what is he doing to ensure that those jointly agreed Welsh humanitarian aims are achieved?
I hope I can reassure the hon. Gentleman. Numerous conversations have been ongoing between the UK Government and the Welsh Government about the Ukraine refugee position. I stress that this is not a competition. We are working together to try to get the best outcome in a severe humanitarian crisis, and that means that we are putting our political differences to one side, and I hope that he can join us in that endeavour. We are incredibly grateful to local authorities, charities, the public in Wales and, of course, the Welsh Government for making this happen at the pace that it has. I spoke to the Ukrainian ambassador only last week, and he is also incredibly grateful for the way in which Wales, in all its different forms, has stepped up to the mark to try to resolve the problem. I welcome the hon. Gentleman’s support in our attempt to achieve those ambitions.
Most of the focus on the freeport opportunity has understandably been on maritime ports. Can I draw my right hon. Friend’s attention to the merits of Barry port? In addition, can I ask him to pay particular attention to Cardiff airport, which is closely associated with Barry port, and assure me that it will be central to his thinking?
I am grateful to my right hon. Friend for raising that. He is right to point out that freeports are not necessarily confined to coastal areas: some of the best examples of freeports in the UK are inland freeports. They are also not all identical, and there is not a one-size-fits-all solution for the whole of the UK. We are trying to be as flexible as we can in looking at all the different dynamics, including Cardiff airport, to make sure that when the bids come in we are not too prescriptive and we look at all the issues with the most open mind that we can.
On levels of crime, Office for National Statistics data for the year ending September 2021 show that crime levels per capita in Wales are below the national average across England and Wales. As for funding, this Conservative Government will always be the party of law and order, and that is why I am pleased to be able to say that we are putting £820 million into policing next year, an increase of £40 million.
In the nearly 13 years the Government have been in power, police staffing has fallen by 25,000. Across the UK, there are 7,000 fewer police community support officers on the streets than there were in 2010. In Wales, the Welsh Labour Government, which does not have jurisdiction over policing, have stepped in and funded 500 PCSOs and will fund a further 100. Does that not show that the Tories are happy to see rising crime and an increase in victims, and it is only Labour which is taking action to keep our communities safe?
What it shows is that the Welsh Government will have had a record increase in spend of around £2.5 billion over the next couple of financial years. What I can also tell the hon. Lady is that 603 additional police officers are being allocated for Wales, 479 have taken that opportunity and there are still 100 vacancies. As somebody who spent nine years as a special constable, I recommend to anyone who wants to serve their community that they should consider joining a police force in Wales.
English police forces are fully reimbursed by the Government for the cost of training police officers. In Wales, the Home Office has reimbursed only half the cost, leaving Welsh police forces with a shortfall of over £2 million. Will the Minister and the Secretary of State persuade their Cabinet colleagues to meet the historical funding shortfall in full, so that Welsh police forces are no longer penalised and are in future treated equally with English ones?
This is actually a quite complex problem, and far more complex perhaps than we have time for in this forum. The real problem is that the Welsh Government are failing to discuss with the Home Office how the apprenticeship scheme works. I urge the hon. Gentleman to talk to his colleagues in the Welsh Labour Government, get them to recognise the apprenticeships schemes and ensure that police officers are properly trained and police forces fully refunded.
As the hon. Gentleman knows, I discuss regularly with Cabinet members and members of the Welsh Government a range of transport matters. It was a pleasure to meet the hon. Gentleman last week to discuss cross-border connectivity in north Wales. The Union connectivity review recognised the importance of the north Wales transport corridor and the Government are carefully considering the recommendations before reporting back.
I thank the Minister for meeting me last week. He will understand that if north Wales is to get the full benefits of HS2, the line from Crewe to Chester and on to north Wales will need to be upgraded, including work at Chester station. Will he get on to his Transport Department colleagues and get them to get a move on with making a decision on that upgrade work?
Yes. I thought the hon. Gentleman made a very powerful case last week about the importance of improvements in Chester. I think he would agree that improvements to the rail service in some parts of England will benefit passengers in Wales and vice versa. I fully agree with him about HS2. It will have an enormous impact and deliver improvements not just for passengers in England, but for passengers in Wales and especially north Wales.
Levelling up is all about places like Aberconwy. From our investment in a new tourism and innovation hub in Llandudno to improving digital connectivity for over 60 public buildings across Aberconwy, we will give everyone in Wales the opportunity to flourish and ensure that no place is left behind.
I thank the Minister on behalf of residents for his answer and for the UK Government’s interest. The UK Government have funded a book for every schoolchild in the UK to commemorate the platinum jubilee. A bilingual version has been printed for schoolchildren in Wales. What steps is the Minister taking to ensure that schoolchildren in Wales and Aberconwy—and even in Ynys Môn—will receive a copy of that book?
My hon. Friend is correct. The UK Government wanted to celebrate the enormous achievement and the enormous commitment to public service that has been made by our monarch, and have produced the book bilingually to ensure that schoolchildren across Wales are able to read bilingually about the contribution made by Her Majesty the Queen. I am sure they all look forward eagerly to receiving their copy. The UK Government are working with the Welsh Government to ensure that that can happen imminently.
The Wales Office has regular discussions with the Welsh Government on cross-border connectivity. I am afraid that Labour’s plans are more of a roadblock than a road review. I urge the Welsh Government to focus more on investment and on delivering their 2016 manifesto commitments to sort out the M4 relief road and various other vital links.
Five years ago, the A55-A494 network resilience study, commissioned by the Welsh Government, recognised the strategic importance of the route and the fact that it is often above capacity and vulnerable to disruption. How does my right hon. Friend believe the roads review may impact on plans for UKNET, a high-performing strategic transport network for the whole of the United Kingdom?
I know both the roads that my hon. Friend refers to—I travel on them regularly—and I am well aware of their importance to his constituency and the region’s economic future. The UK Government’s contribution to the road infrastructure is second to none. Some liaison is clearly necessary with the Welsh Government about certain aspects of that. We hope that they will publish their strategy soon and look again at their road strategy, because a simple moratorium on road improvements and new roads is not the way to restore economic prosperity in his area or anywhere else.
The UK Government recognise the importance of the steel industry in Wales and the UK. The £30 million loan secured for Celsa is a demonstration of our commitment to the steel sector. Our response during the pandemic helped to secure more than 1,000 steel jobs in Wales.
While he was campaigning for Brexit in 2016, the Prime Minister told steelworkers in Wales that it was:
“Mad that we can’t cut steel energy costs because of EU rules”.
Now that we have left the EU, is it not madder that the Government have still done little to cut sky-high energy bills, which are a massive burden on our steel producers in Wales?
I thank the hon. Lady, who has been an unbelievably effective campaigner for the steel industry in her area and in Wales more widely. The Business Secretary and I met the steel sector the other day at the Steel Council. The issue she has raised was an important part of that and the Business Secretary was able to offer some reassurance. I do not want to prejudge today’s statement from the Chancellor, but as we have the opportunity, I hope that the hon. Lady will join me in thanking the International Trade Secretary for her overnight success in lifting steel tariffs between the US and the UK. That will make a significant difference to everybody involved in the steel industry in the UK.
I am glad to have been able to help some families leaving Ukraine and I congratulate the many people and communities in Clwyd South who have been fundraising and giving practical help in the Ukraine crisis. Will the Secretary of State give further details on the Homes for Ukraine scheme, with the 10,000 registrations from Clwyd South and across Wales, and on how that is helping the situation at present?
I congratulate my hon. Friend on the way in which he has been campaigning on this issue; it is a great example of what Members across the House have been able to do. I repeat my earlier answer about meeting the Ukrainian ambassador last week and expressing his gratitude, as well as mine, to local authorities, charities, the public in Wales and, in particular, the Welsh Government. This has been a joint effort—a superb all-round effort, involving all the stakeholders I have mentioned and more. As I stressed earlier, this is not a competition, but a collaborative effort, in which the early uptake has been superb. I think that we will be able to offer help to the necessary number of people on the timescale that we need because of that level of co-operation. [Interruption.]
I hope that the House will want to listen to this question. Liana, my constituent, is from Ukraine and is in Cardiff on a global talent visa. Liana’s mother-in-law is depending on the kindness of strangers in Dublin for her accommodation, but the Home Office is not letting her in from Dublin even though there is a home waiting for her in Cardiff. I notice that the Home Secretary has joined Members on the Front Bench. Will the right hon. Gentleman have a word with the Home Secretary and ask her to look into why someone who is here on a global talent visa for science cannot bring their mother-in-law to stay with them in Cardiff?
I thank the hon. Gentleman for his question. I suspect that many Members have similar examples of people who, sadly, have slipped through the net or are in a difficult position. I absolutely give him an assurance, as I know the Home Secretary will, that we will look at each and every one of those individual cases and, hopefully, we will deliver to him the answer that he needs.
The UK Government are committed to supporting the development of the floating offshore wind industry in Wales, with £160 million of funding available for floating offshore wind ports and factories across the UK. That funding will ensure that Wales capitalises on the huge opportunities that floating offshore wind in the Celtic sea presents.
As chair of the all-party parliamentary group for the Celtic sea, may I ask my hon. Friend to detail what steps are being taken to progress floating offshore wind so that the supply-chain benefits are felt all the way around the Celtic sea’s shores, from Pembrokeshire across to North Devon and Cornwall?
I commend my hon. Friend’s commitment to championing this opportunity through her role as chair of the Celtic sea APPG. Under this Conservative Government, with this Prime Minister, we will continue to see huge increases in the renewable energy that we produce and supply-chain benefits that will be felt across the UK.
The Prime Minister was asked—
The degrading strip-search of Child Q two years ago, in a school that should have been a safe place, at the hands of police officers she should have been able to trust, has caused anger and distress across the country. On Monday, the Minister for Crime and Policing failed to answer four separate questions in this Chamber about when he first knew about Child Q and what urgent action he took in response, so I ask the Prime Minister: when did he first hear about the strip-search of Child Q in her school? Does he believe that the characteristic dither and delay of his Government in responding to this appalling case is remotely acceptable when it comes to the safety of children?
I think that that is a completely ridiculous characterisation of the response of the Government, because of course the reports of the incident are deeply distressing and deeply concerning—everybody shares the hon. Lady’s feelings about that—but the Metropolitan police have rightly apologised and the Independent Office for Police Conduct is investigating. For that reason, it would not be right to comment further.
I thank my right hon. and learned Friend and all those involved in the two big schemes that we have now for welcoming people from Ukraine. The Homes for Ukraine scheme is now open; I think that about 40,000 have already applied and 150,000 families across the country have said that they want to welcome Ukrainians. That is a fantastic thing, and I thank Baldock and District for helping to lead the way.
We condemn the callous behaviour of P&O. I think it is no way to treat hard-working employees, and I can tell the right hon. and learned Gentleman that we will not sit by. It looks to me as though, under section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992, the company concerned has broken the law, and we will therefore be taking action, and encouraging workers themselves to take action under the Employment Rights Act 1996—and both those Acts were passed by Conservative Governments. If the company is found guilty, it will face fines running into millions of pounds. In addition, we will be taking steps to protect all mariners who are working in UK waters and ensure that they are paid the living wage.
When Owen Paterson was on the ropes, the Prime Minister was prepared to rip up the entire rule book to save his jobs. P&O workers want him to show the same fight in relation to them. The Government had advance warning of these mass sackings—a memo was sent to the Transport Secretary and to the Prime Minister’s office—but they did not lift a finger to stop them. Did the Prime Minister not understand the memo, or did he just not bother to read it?
I think what the right hon. and learned Gentleman needs to rip up are his pre-scripted questions, because I just answered that question. The point at issue is whether or not the Government were properly notified. It is not about what happened previously. I knew about it on the Thursday when it became public, but the company concerned has a duty to notify the Government 45 days before taking action of that kind, which is why we are taking the action that we are taking to protect hard-working people. What we are also doing this month, by the way, is lifting the living wage for all workers across our country by a further £1,000, so it is up by £5,000 since 2015.
I think the Prime Minister just said that he knew about it on the day. I take it from that answer that the Prime Minister did not read his WhatsApp briefing. Let us test his rhetoric. Since he came to office, P&O has received more than £38 million-worth of Government contracts, and the parent company, DP World, is lined up for £50 million of taxpayers’ money under the freeport scheme. The Government are apparently reviewing these contracts, but reviews do not save jobs. Can the Prime Minister guarantee that those companies will not get a penny more of taxpayers’ money, or a single tax break, until they reinstate the workforce?
Yes, we are—against the company concerned, under the 1992 and 1996 Acts. That is the right thing to do, because it seems to me that that the company has broken the law. But if the right hon. and learned Gentleman is asking this Government to do what Labour usually wants us to do and actively pitchfork away investment around the country from overseas, that is not what we will do. We will take ’em to court, we will defend the rights of British workers, but what we will not do is launch a wholehearted campaign against overseas investment, as Labour would want, because that is completely wrong—and wrong for those workers.
Those at DP World must be quaking in their boots. The Prime Minister says how disappointed he is in them, while handing them £50 million.
The Prime Minister has referred to the law. Speaking of hollow reviews, as the law stands it is not illegal to pay seafarers less than the national minimum wage, even if they are working out of UK ports and in UK waters. Two years ago, the Prime Minister’s Government admitted that that was unjustifiable, and promised, two years ago—you’ve guessed it—to review it. Two years on, despite what the Prime Minister says today, nothing has been done, which has left the gate wide open for P&O. British workers do not need another empty review; they need action, so when will the Prime Minister fix that gap in the law?
With great humility, I must ask the right hon. and learned Gentleman to listen to the answer that I gave to his first question. That would help him to scrap his third or fourth question and try another one. We are going to address the defects in the National Minimum Wage Act 1998, and ensure that everyone working in the UK exclusive economic zone is paid the living wage as people are in the rest of the country.
The problem is, that is what the Prime Minister said two years ago. It did not happen, and P&O took advantage of the gap left wide open by this Prime Minister. P&O’s behaviour comes off the back of a string of fire and rehire cases, with profitable companies threatening to fire workers unless they accept a pay cut. The Prime Minister keeps telling us just how opposed he is to fire and rehire, but as we saw on Monday, he does not have the backbone to ban it. While he sits on his hands, more and more workers are having their lives turned upside down by this appalling practice. What good to them is a Prime Minister who is all mouth and no trousers?
The most notable practitioner of fire and rehire is, of course, the Labour party itself. The right hon. and learned Gentleman may be interested to know that we will be vindicating the rights of British workers—UK employees—under UK law, but I can tell him that the law that P&O itself is allegedly relying on was introduced as a result of EU directives. Never forget—[Interruption.] He may not like it, but that is the reality. He would have kept us unable to change it and unable to get out of it. He would have made it impossible for us to protect UK employees in the way that we are going to do. What we are doing above all is ensuring that workers in this country have the best protection of all, which is a job. Under this Government, thanks to the steps we have taken and thanks to the stewardship of the economy by my right hon. Friend the Chancellor of the Exchequer, which you will be hearing about a little more, Mr Speaker, we have 600,000 more people in payrolled employment than before the pandemic began.
The Prime Minister can complain all he likes, but on Monday he ordered all of his lot to abstain on a vote to ban fire and rehire. And they all did! Then, to add insult to injury, after the vote his party posted a message saying that, where possible, they will look to find P&O workers new jobs. Pathetic! They do not want new jobs; they want their old jobs back. They do not want a Prime Minister hoisting the white flag; they want him to fight for their livelihoods. There are 82,000 seafarers in this country. I have spoken to dockers, engineers, deckhands and sailors, and they are all worried about what this means for them. This morning, one of them said to me: “If P&O can get away with this, other companies will get rid of us too and replace us with cheap labour from abroad.” Why does the Prime Minister think that they will take a crumb of comfort from his half-arsed bluster and waffle today?
P&O is plainly not going to get away with it any more than any other company that treats its employees in that scandalous way. This is a historic moment for this country, actually, because it is now two years to the day since we went into lockdown. That plunged this country into the biggest, deepest loss of output than we have seen in our lifetimes. Thanks to the Chancellor, who protected the economy, jobs and companies, we have now been able to come out faster and more effectively than any other comparable economy. We have unemployment back down to 3.9%, we have 600,000 more people on the payroll and the best assurance we can give workers around the country is that the economy is now bigger than it was before the pandemic began. We will continue to get the big calls right, as we got the big calls right during the pandemic. Labour got the big calls wrong. They would do absolutely nothing to protect workers, let alone P&O workers, because not only would they have kept us in lockdown, but they would have kept those ships in port, unable to move. That is the reality. There has never been a Labour Government that left office with unemployment lower than when they began. That is the reality and that is their record on jobs.
I thank my hon. Friend very much, and he is absolutely right about smoking; it is the biggest single cause of preventable death in this country. As he will know, Javed Khan OBE is undertaking an independent review of smoking, and I am sure he will want to take my hon. Friend’s suggestions into account.
In a matter of seconds, at 12.16 pm, a Virgin Atlantic aircraft is due to depart Heathrow airport to go to Warsaw to pick up 50 young orphans who have left Ukraine and are coming to spend the next period of their life in Scotland, with the sanctuary we can offer them. I would like to take this opportunity to thank everyone who has helped to make sure that we can offer a new start to these young people, away from the war. I thank the Governments in London and in Edinburgh, and in particular the immigration Minister, the hon. Member for Torbay (Kevin Foster), and the refugee Minister in the House of Lords, Lord Harrington. This is a good day for those 50 young people, but let us hope that it is the beginning of something much more significant for many more young people we can offer sanctuary to.
This morning, we have official confirmation that inflation is at its highest level in 30 years, but families do not need official confirmation to know that the cost of food and energy is now at a price they simply cannot afford. The very people who bore the brunt of the health pandemic are now being hammered by the poverty pandemic. This is not just a cost of living crisis—this is an emergency. That is why, in Scotland, the SNP Government are doubling the Scottish child payment and raising the benefits they control by 6%—that is double the rate the Chancellor has proposed for the benefits that he has control over. So this is a very simple question for the Prime Minister: if he truly understands that this is an emergency, will he match the Scottish Government’s commitment and lift all benefits by 6%?
I thank the right hon. Gentleman very much. We all recognise that global inflation is causing a real cost of living crisis, not just here, but around the world; in the United States, inflation is now running at more than 8%, and we are at the levels in other European countries. We are doing everything we can to help people. The Chancellor has put another £9.1 billion into reducing the costs of energy for families. [Interruption.] I do not know quite what Members are shouting out, but we want to do more. I can tell the right hon. Gentleman that Scotland is in the lead in helping this country to solve its energy problems, not just with more offshore wind, but by abandoning the phobia of our own hydrocarbons, which I think are going to be vital for transition and to avoid our being blackmailed by Putin’s Russia.
On the right hon. Gentleman’s point about the orphans, I am grateful to him for his efforts and I thank him. If I may say, without embarrassing him further, it is another example of the burgeoning co-operation between us.
Of course, we want to make sure we open our doors in Scotland and welcome refugees, and that we have that generosity of spirit—but we will leave that there for now.
I say to the Prime Minister that inflation is at 6% and increasing. We need to make sure that those who are the most vulnerable have that increase in benefits that they need in order to pay for fuel. The Chancellor needs to ditch the official photographer and listen to Martin Lewis. Family finances are at breaking point; they cannot tighten their budgets any more. These families have no room to manoeuvre, but the truth is that the Chancellor does. Lower borrowing and increased taxes mean that he is sitting with £20 billion to spend today. But instead this Chancellor is making a political choice: the choice to push people further into hardship by hiking taxes, cutting universal credit, and giving companies free rein to slash workers’ pay through fire and rehire. So the test for the Prime Minister is this: will the Government use the full £20 billion they are sitting on to scrap the national insurance tax hike and put money into people’s pockets, or will he simply make this Tory poverty pandemic even worse?
My hon. Friend is right that we will see many more people coming here. He is right that the instincts of this country are to be as generous as possible. That is why we have made sure that applications can now be processed online very quickly, so people can come here with their passports. Under the family reunion scheme alone, I think the numbers are now running in excess of 16,000 people coming here.
While Ofgem can cap rising gas and electricity bills, other fuels such as heating oil, liquefied petroleum gas and solid fuel remain unregulated. Many households in rural Scotland depend on such fuels. There are also areas awash with energy, both on and offshore, yet with huge and rising numbers of people in fuel poverty. Will the Prime Minister regulate and cap such fuels, to alleviate hardship and end the perversity of energy-rich Scotland but fuel-poor Scots?
The hon. Gentleman is right that energy-rich Scotland and the hydrocarbons that we have in this country should be used to help the British people. We should not be needlessly reliant on oil and gas from Putin’s Russia. I think that is the policy of Alba but, unfortunately, is not yet the policy of the SNP.
I thank the Ukrainian community in Yorkshire for everything they are doing and, of course, Ukrainian communities up and down the country and the people of this country as a whole. I am proud that we are the biggest bilateral donor, I think, other than the United States, of aid to Ukraine. I am also proud, as I know the whole House is, of the work that is being done continuously to give the Ukrainians the tools they need to defend themselves.
I thank the hon. Gentleman very much. I am not going to comment on the travel arrangements for the particular match—[Interruption.] The deputy Leader of the Labour party shouts for me to secure her a train. I am sure the FA will have heard the message that the hon. Gentleman has given.
What I can say is that I do agree with my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), who has just conducted a review on the matter, that we should indeed have an independent regulator for football.
I agree with my hon. Friend passionately, and I think that it is vital that we undo the damage done by the insane policies of the previous Labour Government, which whacked up the cost of energy for British industry, including steel. I will be bringing forward a British energy security strategy that will address the needs of British steel, British ceramics and the whole of British industry.
I congratulate Bradford on being shortlisted in the way that that wonderful city has been, but I think the hon. Lady is wrong about what the integrated rail plan said, because already it commits to cutting the journey times from Leeds to Bradford from 20 minutes to 12 minutes, if I remember correctly. And we continue to look at ways of making sure that high-speed rail goes direct to Bradford.
The horrifying effects of events in Ukraine must be central to our focus, and we should do all possible to stand together in support. A war in Europe also has challenging domestic outcomes, with higher energy costs, rising food prices and effects on supplies and inflation and across the economy in general. Does the Prime Minister agree that this is a time when we need to come together as a nation common and that anyone seeking to weaponise Putin’s deliberate and calculated consequences of the war will only undermine the unity of our nation at a time when Europe is in crisis?
I thank my right hon. Friend very much for what he has said. One of the most important things that has confounded Vladimir Putin has not only been the heroic resistance of the Ukrainians but the unity of the rest of the world and, I must say, so far, the relative unity—the important unity—of this House.
I thank the hon. Member very much for bringing those facts—new facts—to the attention of the House, and I know that my office has already been in touch with the group concerned to make sure that we have a proper meeting. I hope very much that she will be there, and we will be able to discuss all the issues that she has raised.
May I begin, as chair of the all-party group on surrogacy, by thanking the Government, and the Home Secretary in particular for her work in bringing Ukrainian surrogates to safety here? Sadly, in my role as chair of the all-party group against antisemitism, the news is not so positive. We have recently heard from Jewish students who are suffering record antisemitic attacks on university campuses, including allegations of their work being marked down by their own professors. This is completely outrageous, and one would expect the National Union of Students to be on their side, but instead of helping the students it has been inviting somebody who is engaged in antisemitic conspiracy theories—a rapper—to a conference. Will the Prime Minister do everything in his power to ensure that campuses are a safe place for British Jewish students?
Our universities have, for far too long, been tolerant of casual or indeed systematic antisemitism. I hope that everybody understands the need for change—for rapid and irreversible change—but it is also important that we have an antisemitism taskforce devoted to rooting out antisemitism in education at all levels.
I renew my sympathies with the case of the P&O workers, and I have explained to the House what we are doing, and we will do that. What we are also doing is helping the workforce up and down the country to get the coaching they need. We have doubled the number of work coaches, and what we are seeing is employment climbing and vacancies growing. We are helping this country into work, which is what Conservatives do.
I have a growing number of constituents who are struggling to go about their lives or even get to work because their driving licences are stuck at the Driver and Vehicle Licensing Agency. Will the Prime Minister make it clear at the Dispatch Box that the service from the agency falls significantly below what we expect, and will he ask the Transport Secretary to meet me, and any other Members of this House—we may need a big room—to explain how we can help the agency out of the hole in which it has put itself?
Yes. Like everybody in this House, I have read some surprising things about what has been going on at the DVLA. We need to make sure that it is given every possible encouragement and support to expedite the supply of driving licences to the people of this country.
Wrexham is a town based on brewing, mining and football. It is a town evolving in aspiration, prosperity and creativity while retaining its Welsh identity. Will the Prime Minister congratulate Wrexham on being shortlisted for the city of culture, and on being the first Welsh town to be so?
I remember the hon. Gentleman when he was doing planning at Islington Council, and a complete cock-up he made of that. What I can tell him is that this Government made sure that we got the personal protective equipment and the supplies that were needed in record time. That was absolutely vital, at a time when the Opposition were calling on us to go further and faster. Never forget that under the last Labour Government, there was £23 billion lost in fraud every year.
I welcome the important interim report from Dr Hilary Cass in which she highlights the need for more research into why so many young girls are presenting with gender distress. Will my right hon. Friend agree to meet me and other concerned colleagues to discuss how we can constructively support those young people who are experiencing gender distress?
I would be very happy to meet my hon. Friend. This is one of those issues that the whole House is coming to realise requires extreme sensitivity, tact, love and care. We must recognise that when people want to make a transition in their lives, they should be treated with the maximum possible generosity and respect. We have systems in this country that allow that and have done for a long time, and we should be very proud of that, but I want to say in addition that I think, when it comes to distinguishing between a man and a woman, the basic facts of biology remain overwhelmingly important.
I have one overwhelming interest, which is to protect and preserve the jobs and livelihoods of the British people. That is what we are doing. That is what we will do with the P&O workers, but we will also ensure that we continue to attract overseas investment in the record ways we currently are. The Opposition would drive it away—we will not.
This year marks the 50th anniversary of the expulsion of Asians from Uganda, the country where I was born. Under Ted Heath’s Government, people across the country opened up their homes for many of those Asians, who then settled and became part of the fabric of our great nation. That British generosity is again being seen as people open up their homes for those fleeing Ukraine and coming to our country. May I urge the Prime Minister to pick up those files from 50 years ago, wipe off the dust and take on board those positive lessons, so that we can ensure that the Homes for Ukraine scheme has maximum success?
Yes, I think the whole country can be proud of the way the UK welcomed people fleeing Idi Amin’s Uganda. Several Members of the House, including the Home Secretary herself and her family, were beneficiaries of that scheme and that moment. This country is overwhelmingly generous to people fleeing in fear of their lives and will continue to be so.
Eight hundred British workers were sacked over Zoom by P&O, owned by the Government of Dubai, to be replaced with foreign exploited agency workers on less than two quid an hour. The Prime Minister can pass an instrument now to close the loophole so that the national minimum wage applies on UK international routes. Is he going to stand up for British workers or the oil state dictator Dubai?
I am grateful for the hon. Gentleman’s question. I knew he was going to ask it and he was right to ask it. I anticipated his question earlier on. We are going to make sure that everybody working in the UK exclusive economic zone gets paid the living wage, and we will do it as fast as we possibly can with the Opposition’s assistance.
I welcome the Prime Minister’s commitment to take legal action to hold P&O Ferries and DP World to account. I again call on them to reverse their action and reinstate the workers. Dover and Kent are already badly affected by this business, including on the roads and in the business community. Will he meet me to discuss specific support for our affected area, including the A2 upgrade for national transport links and an east Kent enterprise zone to cover and include the port of Dover?
My hon. Friend is right in what she says about P&O and about the 800 workers. I will make sure that she gets all the meetings she needs to make sure that we continue with all our fantastic investments in Dover, whether transport, education or otherwise.
As I stand here, men, women and children are huddled in basements across Ukraine seeking protection. Soldiers and citizens alike have taken up arms to defend their land and families. The sorrow we feel for their suffering, and the admiration for their bravery, is only matched by the gratitude we feel for the security in which we live—and what underpins that security is the strength of our economy. It gives us the ability to fund the armed forces we need to maintain our liberty, the resources we need to support our allies, the power to impose sanctions which cause severe economic costs, and the flexibility to support businesses and individuals through crises as they emerge. We should be in no doubt: behind Putin’s invasion is a dangerous calculation that democracies are divided, politically weak and economically insecure, and incapable of making tough long-term decisions to strengthen our economies. This calculation is mistaken. What the authoritarian mind perceives as division we know are the passionate disagreements at the heart of our living, breathing democracy. What they see as chaos we know is the freedom to be dynamic and innovative. What they call the inherent weakness of open societies and free economies we know is the source of our strength.
We will confront this challenge to our values not just in the arms and resources we send to Ukraine, but in strengthening our economy here at home. When I talk about security, yes, I mean responding to the war in Ukraine, but I also mean the security of a faster growing economy, the security of more resilient public finances, and security for working families as we help with the cost of living.
Today’s statement builds a stronger, more secure economy for the United Kingdom. We have a moral responsibility to use our economic strength to support Ukraine and work with international partners to impose severe costs on Putin’s regime. We are: supplying military aid to help Ukraine defend its borders; providing around £400 million in economic and humanitarian aid, as well as up to $0.5 billion in multilateral financial guarantees; launching the new Homes for Ukraine scheme to make sure that those forced to flee have a route to safety here in the UK; and imposing sanctions of unprecedented scale and scope. We have: sanctioned more than 1,000 individuals, entities and subsidiaries; frozen the assets of major Russian banks; imposed punitive tariffs on key products; restricted Russia’s access to sterling clearing, to insurance, to the UK’s capital markets and to SWIFT; and we have targeted the Russian central bank, too.
Be in no doubt, these sanctions, co-ordinated with our allies, are working. The Russian rouble plummeted to record lows. The Moscow stock exchange has been largely suspended for a month, and the Central Bank of Russia has been forced to more than double interest rates to 20%. We warned that an aggressive, unprovoked invasion would be met with severe economic costs, and it has. I am proud to say, as the whole House will say: we stand with Ukraine.
But the actions we have taken to sanction Putin’s regime are not cost free for us at home. The invasion of Ukraine presents a risk to our recovery, as it does to countries around the world. We came into this crisis with our economy growing faster than expected, with the UK having the highest growth in the G7 last year. But the Office for Budget Responsibility has said specifically:
“There is unusually high uncertainty around the outlook”.
It is too early to know the full impact of the Ukraine war on the UK economy, but its initial view, combined with high global inflation and continuing supply chain pressures, means that the OBR now forecasts growth this year of 3.8%. The OBR then expects the economy to grow by 1.8% in 2023, and 2.1%, 1.8% and 1.7% in the following three years. The House will take comfort that the lower growth outlook has not affected our strong jobs performance. Unemployment is now forecast to be lower in every year of the forecast. It is already at 3.9%—back to the low levels we saw before the pandemic.
But the war’s most significant impact domestically is on the cost of living. Covid and global factors meant goods and energy prices were already high. Statistics published this morning show that inflation in February was 6.2%. That is lower than the US and broadly in line with the euro area. Disruptions to global supply chains and energy markets, combined with the economic response to Putin’s aggression, mean that the OBR expects it to rise further, averaging 7.4% this year.
As I said last month, the Government will support the British people as they deal with the rising costs of energy. People should know that we will stand by them, as we have throughout the last two years. That is why we have announced a £9 billion plan to help around 28 million households pay around half the April increase in the energy price cap. People should be reassured that the energy price cap will protect their energy bills between now and the autumn, but I want to help people now, so I am announcing three immediate measures.
First, I am going to help motorists. Today I can announce that for only the second time in 20 years, fuel duty will be cut. Not by 1p, not even by 2p, but by 5p per litre—the biggest cut to all fuel duty rates ever. While some have called for the cut to last until August, I have decided it will be in place until March next year—a full 12 months. Together with the freeze, it is a tax cut this year for hard-working families and businesses worth over £5 billion, and it will take effect from 6 pm tonight.
Secondly, as energy costs rise, we know that energy efficiency will make a big difference to bills, but if homeowners want to install energy-saving materials, at the moment only some items qualify for 5% VAT relief and there are complex rules about who is eligible. The relief used to be more generous but from 2019 the European Court of Justice required us to restrict its eligibility.
Thanks to Brexit, we are no longer constrained by EU law, so I can announce that for the next five years, homeowners having materials such as solar panels, heat pumps and insulation installed will no longer pay 5% VAT; they will pay zero. We will also reverse the EU’s decision to take wind and water turbines out of scope and zero rate them as well—and we will abolish all the red tape imposed on us by the EU. A family having a solar panel set installed will see tax savings worth £1,000 and savings on their energy bill of over £300 per year.
This policy highlights the deficiencies in the Northern Ireland protocol. We will not immediately be able to apply it to Northern Ireland, but we will be raising it with the Commission as a matter of urgency, and I want to reassure Members from Northern Ireland that the Executive will receive a Barnett share of the value of the relief until it can be introduced UK-wide. The Prime Minister will bring forward further measures to reinforce our long-term energy security in the coming weeks.
Finally, I want to do more to help our most vulnerable households with rising costs. They need targeted support, so I am doubling the household support fund to £1 billion with £500 million of new funding. Local authorities are best placed to help those in need in their local areas, and they will receive this funding from April.
We can only afford to provide this extra support because of our stronger economy and the tough but responsible decisions we have taken to rebuild our fiscal resilience. Today’s forecasts confirm that even after the measures I am announcing today, we are meeting all our fiscal rules. Underlying debt is expected to fall steadily from 83.5% of GDP in 2022-23 to 79.8% in 2026-27. Borrowing as a percentage of GDP is 5.4% this year, 3.9% next year, and then 1.9%, 1.3%, 1.2% and 1.1% in the following years.
At a time when the OBR has said that our fiscal headroom could be
“wiped out by relatively small changes to the economic outlook,”
it is right that the central fiscal judgement I am making today is to meet our fiscal rules with a margin of safety. The OBR has not accounted for the full impacts of the war in Ukraine, and we should be prepared for the economy and public finances to worsen, potentially significantly.
The cost of borrowing is continuing to rise. In the next financial year, we are forecast to spend £83 billion on debt interest—the highest on record and almost four times the amount we spent last year. That is why we have already taken difficult decisions with the public finances, and that is why we will continue to weigh carefully calls for additional public spending. More borrowing is not cost or risk free. I said it last autumn, and I say it again today: borrowing down; debt down—only the Conservatives can be trusted with taxpayers’ money.
Our response to the immediate crisis in Ukraine has been unwavering, but we must be equally bold in response to the deeper and more fundamental challenge Putin poses to our values. We must show the world that freedom and democracy remain the best route to peace, prosperity and happiness. We will do so by strengthening our economy here at home. To that end, we are helping families with the cost of living, creating the conditions for accelerated growth and productivity, and making sure that the proceeds of growth are shared fairly. That is not the work of any one statement, but it does begin today, and with one of our most important levers: the tax system.
I told the House last autumn that my overarching ambition was to reduce taxes by the end of this Parliament, and we will do so in a way that is responsible and sustainable. Today, I am publishing a tax plan. We will take a principled approach to cutting taxes: maintaining space against our fiscal rules, as I have done today; continuing to be disciplined, with the first call on any extra resources being lower taxes, not higher spending; and, of course, carefully considering the broader macroeconomic outlook.
With those principles in mind, our new tax plan will build a stronger economy by reducing and reforming taxes over this Parliament, in three ways. First, we will help families with the cost of living; secondly, we will create the conditions for higher growth; and thirdly, we will share the proceeds of growth fairly, ensuring people are left with more of their own money. Let me take each in turn.
There is now a dedicated funding source for the country’s top priority, the NHS and social care, providing funding over the long term as demand grows, with every penny going straight to health and care. If it goes, then so does the funding, and that funding is needed now, especially as my right hon. Friend the Health Secretary’s plans to reform healthcare will ensure every pound of taxpayers’ money is well spent. When I said the Conservatives were the party of public services—the party of the NHS—I did not just mean when it was easy; it is a total commitment.
So it is right that the health and care levy stays, but a long-term funding solution for the NHS and social care is not incompatible with reducing taxes on working families. Over the last decade, it has been a Conservative mission to promote tax cuts for working people and simplify the system. That is why Conservative-led Governments raised the income tax personal allowance from £6,500 in 2010 to the new level of £12,570. But the equivalent thresholds in national insurance, which define how much people can earn NICs-free, are still around £3,000 less.
The Prime Minister pledged in the 2019 election that we would increase those thresholds. We made a big step towards that goal in my first Budget in 2020, increasing the national insurance threshold to £9,500. Today, we take the next step. Our current plan is to increase the NICs threshold this year by £300, but I am not going to do that. I am going to increase it by the full £3,000, delivering our promise to fully equalise the NICs and income tax thresholds—and not incrementally over many years, but in one go this year. From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or national insurance.
That is a £6 billion personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year, the largest increase in a basic rate threshold ever, and the largest single personal tax cut in a decade. The Institute for Fiscal Studies has called it
“the best way to help low and middle earners through the tax system”.
It creates what the Centre for Policy Studies has called a “universal working income”. It is a tax cut that rewards work, and around 70% of all workers will have their taxes cut by more than the amount they will pay through the new levy, once again showing that it is this Conservative Government delivering for hard-working families and helping with the cost of living.
The first part of our tax plan for a stronger economy is to support families with the cost of living, but as I set out in last month’s Mais lecture, to lift our growth and productivity, we need the private sector to train more, invest more and innovate more. People, capital, ideas: that is how we will create a new culture of enterprise—the second part of our tax plan. The plan sets out tax-cutting options on business investment and innovation, with final decisions to be announced in the autumn Budget, but these are significant and complex questions, so we will work with businesses over the summer to get the answers right. Let me explain to the House the direction of travel.
First, on people, we lag behind international peers on adult technical skills. Just 18% of 25 to 64-year-olds hold vocational qualifications, which is a third lower than the OECD average, and UK employers spend just half the European average on training their employees. We will consider whether the current tax system, including the operation of the apprenticeship levy, is doing enough to incentivise businesses to invest in the right kinds of training.
Secondly, on ideas, over the last 50 years, innovation drove around half the UK’s productivity growth, but since the financial crisis, the rate of increase has slowed more than in other countries. Our lower rate of innovation explains almost all our productivity gap with the United States. Right now, we know that the amount that businesses spend on research and development as a percentage of GDP is less than half the OECD average, and that is despite us spending more on tax reliefs than almost every other country. Something is not working, so we will reform R&D tax credits so that they are effective and better value for money; we will expand the generosity of the reliefs so that they include data, cloud computing and pure maths; and we will consider, in the autumn, whether to make the R&D expenditure credit more generous.
Thirdly, on capital, weak private sector investment is a long-standing cause of our productivity gap internationally: capital investment by UK businesses is considerably lower than the OECD average of 14%, and it accounts for fully half our productivity gap with France and Germany. Once the super deduction ends next year, our overall tax treatment for capital investment will be far less generous than that of other advanced economies. We are going to fix that. In the autumn Budget, we will cut the tax rates on business investment, and I look forward to discussing the best ways to do that with businesses. People, capital, ideas—three priorities for business tax cuts this autumn.
But I want to help smaller businesses right now, so let me remind the House of our plan. Our business rates discount will take effect in April for retail, hospitality and leisure businesses. They will get a 50% discount on their business rates bill, up to £110,000. A typical pub will save £5,000. That is a tax cut for hundreds of thousands of small businesses, worth £1.7 billion, taking effect in just a week’s time. Our Help to Grow Management scheme offers businesses mini-MBAs, 90% funded by Government—a benefit worth several thousand pounds—and Help to Grow Digital gives businesses a 50% discount on buying new software, up to £5,000. We have also increased the annual investment allowance to £1 million, so that small and medium-sized businesses will feel the benefit of full expensing.
I want to respond to the specific calls from small businesses with one further announcement today. The employment allowance cuts small businesses’ tax bills, making it cheaper to employ workers. In my first Budget two years ago, I increased that allowance. Today, I am going further. From April, the employment allowance will increase to £5,000. That is a new tax cut worth up to £1,000 for half a million small businesses, starting in just two weeks’ time. Future tax cuts on business investment and innovation; a business rates discount worth £1.7 billion; Help to Grow schemes worth thousands of pounds per business; an annual investment allowance worth up to £1 million; and a new tax cut on the costs of employment, worth £1,000 per company—once again, it is this Conservative Government delivering for British business.
The tax plan I have announced today will help people and businesses to deal with rising costs, and will help raise the future growth rate of this country, but we want the proceeds of growth shared fairly—the third objective of our tax plan. The knowledge that people can keep more of what they earn is a powerful incentive for people to work hard. It means greater economic security, and we know that individuals spend their money better than Governments do. We have already announced today the equalisation of personal tax thresholds, giving over 30 million workers a tax cut worth over £330, and over time I want to go further; but tax cuts must be paid for, must be prioritised, and must fit the economic circumstances of the time. A clear goal for Conservative Chancellors, and even some Labour ones, has been to cut income tax. The fact that this has happened only twice in 20 years tells us how hard it is to do. Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament. I am sure that all Members of the House recognise and understand those challenges. It would clearly be irresponsible to meet that ambition this year, yet I refuse to let it wither and drift.
By 2024, the Office for Budget Responsibility currently expects inflation to be back under control, debt to be falling sustainably, and the economy to be growing. Our fiscal rules are met with a clear margin of safety, so my final announcement today is this: I can confirm that before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20p to 19p in the pound—a tax cut for workers, for pensioners, and for savers, and a £5 billion tax cut for 30 million people. Let me be clear with the House: it is fully costed and fully paid for in the plans announced today. Last year, I told the House that I would cut taxes for hard-working families, but I would do so in a responsible and sustainable way, and today I am delivering on that promise.
Cutting taxes is not easy. it requires hard work, prioritisation, and willingness to make difficult and often unpopular arguments elsewhere. It is only because this Government have been prepared to make difficult but responsible choices in order to fix our public finances that I can stand here and tell this House not only that taxes are being cut, but that debt is also falling while public spending is increasing. That does not happen by accident. We can deliver for the British people today and into the future because, unlike the Labour party, we have a plan—a plan that reforms and improves public services, a plan to grow our economy, a plan to level up across the United Kingdom, a plan that helps families with the cost of living and, yes, a tax plan that cuts taxes for working families by over £330. It cuts taxes on fuel by 5p per litre. It cuts taxes on business and, yes, for the for the first time in a long time, it cuts income tax. Let me end by simply saying this: my tax plan delivers the biggest net cut to personal taxes in over a quarter of a century, and I commend it to the House.
Thank you, Mr Speaker. Today was the day that the Chancellor could have put a windfall tax on oil and gas producers to provide real help for families, but he did not. Today was the day he could have set out a proper plan to support businesses and create good jobs, but he did not. Today was the day that he could properly have scrapped his national insurance hike, but he did not. Labour said it was the wrong tax at the wrong time, and the wrong choice; and today the Chancellor has finally admitted that he got that one wrong. Inflation is at its highest level for 30 years, and rising. Energy prices are at record highs, and people are worried sick. For all his words, it is clear that the Chancellor does not understand the scale of the challenge. He talks about providing security for working families, but his choices are making the cost of living crisis worse, not better.
The situation following Putin’s criminal assault on Ukraine remains gravely serious. Just one month after the invasion, so much has changed, and there will be repercussions for years to come. The Chancellor has today failed to explain why he chose to sign off on a reduction in our country’s armed forces last October. Will he confirm whether the Government’s target Army size is still being reduced by 10,000 troops? I say this to the Chancellor: Labour will support whatever is needed on defence and security, in order to keep our country safe.
The tremors following Putin’s aggression will impact Britain, including economically, but the cost of living crisis predates Putin’s attack on Ukraine. In October, inflation was already forecast to be double the Bank of England’s target, yet the Prime Minister said that fears of inflation were unfounded. Today we learn that inflation has reached 6.2%, and it is expected to go higher in the coming months. People are rightly looking to their Government to help them weather this storm. Labour will support sensible measures to ease the pressure, but what the Chancellor has announced today says everything we need to know about his priorities.
The cost of living crisis is hitting people particularly hard because incomes have been squeezed during the past 12 years of Conservative Governments. Ordinary families, disabled people, and pensioners are facing difficult choices. Mums are skipping meals so that their children do not. Families are struggling to buy new school shoes and uniforms for their children. Older people are hesitating to put the heating on, because they are worried about the cost.
At the weekend, the Chancellor was asked about fuel poverty, and he did not even know the numbers. That is shameful, because when Martin Lewis predicts that 10 million people could be pushed into fuel poverty, the Chancellor should sit up and listen. We know that pensions and social security will not keep up with inflation, and pensioners and those on social security will be getting a real-terms cut to their income. What analysis has the Chancellor done on the impact of benefits being uprated by less than inflation? How many more children and pensioners will drift into poverty because of the choices of this Government?
Who does the Chancellor prioritise? He continues to defend the record profits of oil and gas producers, who themselves admit that they have more money than they know what to do with. BP describes this crisis as a “cash machine” for it, but it is British people who are paying out. It is deeply regrettable that the SNP has joined the Tories in wanting to shield oil and gas producers from Labour’s progressive measures. When I set out Labour’s plans for a windfall tax in January, we estimated that it would have raised £1.2 billion. Because of the continued rise in global oil and gas prices, it would today raise more than £3 billion. That money could be used to help families, pensioners and businesses, with a cut to VAT being a real Brexit dividend that would help working families and pensioners across our country. A targeted warm home discount would see families and pensioners on the lowest and modest incomes supported by £600.
Today the Chancellor comes along, after 12 years of failure on energy efficiency, and announces a VAT cut on building materials. That is wholly inadequate. A proper energy efficient scheme, such as that set out by Labour, could cut bills by £400 for people from next year. The silence from the Chancellor about our energy intensive manufacturing industries is appalling. At this time of national crisis, people and businesses need a Government who are on their side.
The Chancellor spoke of difficult choices, and I agree. There are always choices to be made, such as who to tax and who to shield. Despite his reluctant measures, he is still taking money out of people’s purses and wallets with an increase in national insurance contributions. The changes he is making today prompt a question about why he embarked on them in the first place, despite warnings from the Labour party and from many, many others. It is one thing for the Prime Minister and Chancellor to disagree with each other, but the centrepiece of the Chancellor’s statement today is based on a disagreement with himself. For all his tax rises for millions in the middle, where is the increased tax contribution from the wealthiest in society? A landlord with a large number of properties will not pay a penny more in taxes, but their tenants will. Someone with significant income from buying and selling stocks and shares will not be paying any more in tax, but those people powering our economy will be. The Chancellor has made the wrong choices.
The Chancellor says that we cannot help everyone, which is absolutely true. But who has he been helping out? Those who have been swindling the taxpayer. The Chancellor left open the vaults for widespread waste, crony contracts, and a frenzy of fraud. It was, as his former Tory Treasury Minister put it,
“happy days if you were a crook.”
Seven billion items of personal protective equipment—not usable—are now being burned. Taxpayers’ money is literally going up in smoke, and £3.5 billion worth of contracts were awarded to friends, donors and pub landlords. And it gets worse. The Chancellor has been signing cheques to fraudsters, including organised criminals and drug dealers. Let us put the Chancellor’s fraud failure in context. He has lost a staggering £11.8 billion of public money to fraud. That is twice the amount that a previous Conservative Government lost on Black Wednesday. As a result of—let us face it—that jaw-dropping incompetence, the Conservatives have been funding crime instead of fighting it. Now the Chancellor has the audacity to come to British taxpayers to ask them to pay more to fill his black hole. There can be no cover-up to hide political embarrassments, so let us call in the National Crime Agency to investigate. We need answers and people to be held to account, because—let us be clear—taxpayers want their money back.
The truth is that people can no longer afford the Conservatives. Working families cannot, pensioners cannot and businesses cannot. The weak growth forecasts we have seen today should be flashing red on the Chancellor’s desk. The Chancellor said, in his statement, that the work starts today. Is he serious? The Conservatives have been in government for 12 years, not 12 hours. What has taken them so long? Since his party entered government, the UK has experienced the biggest downgrade in growth of any major economy. Under the last Labour Government, economic growth was 2.1% a year. In the last 12 years under the Conservatives, it has averaged 1.5%. Now we know that growth has been downgraded this year too. Growth is essential for funding our public services, keeping taxes under control and keeping a handle on public finances too. That is why Labour has announced a tough set of fiscal rules to get our debt and our deficit down. The truth is that, because of the Government’s failure to get the economy growing, the Chancellor has had to put up taxes on families and businesses a staggering 15 times.
The Chancellor has raised taxes more in the last two years than any previous Chancellor in the last 50. He says it is all down to the pandemic, but the truth is that the Conservatives have become the party of high taxation because they are the party of low growth. I understand that the Chancellor has a portrait of Nigel Lawson above his desk. Well, today we have an energy price crisis, record prices at the pumps and inflation is back. The truth is that he is not Nigel Lawson: he is Ted Heath with an Instagram account.
Labour would get the economy firing on all cylinders, ensuring that we buy, make and sell more in Britain, scrapping business rates and replacing them with a fairer system fit for the 21st century, something that small and high street businesses are crying out for, and the Chancellor mentioned not at all in his statement today. Labour would make a climate investment pledge to decarbonise the economy, create good jobs in every part of Britain and strengthen our energy security too. Businesses are seeing unprecedented increases in their costs right now, but all we hear from the Chancellor today is the promise of jam tomorrow, not the support that is needed now. Today’s statement lacks the long-term plan for productivity, skills and growth. Where is it?
I cannot help but feel that in both the Chancellor’s recent Mais lecture and his statement today we are presented with increasingly incredible claims. Perhaps the Chancellor has been taking inspiration from the characters in Alice in Wonderland or should I say, Alice in Sunakland? Because nothing there is quite as it seems. It is the sort of place where a Chancellor celebrates giving people £200 to help them with their spiralling energy bills, before explaining that he needs it all back. In Sunakland, the Chancellor proclaims, “I believe in lower taxes”, at the same time as hiking Alice’s national insurance contributions. So Alice asks the Chancellor, “When did lower taxes mean higher taxes? Has down become the new up?” The Chancellor follows Humpty Dumpty’s advice and says,
“When I use a word…it means just what I choose it to mean—neither more nor less.”
Alice knows that under the Conservatives taxes are at their highest level in decades, as a result of the policies of this very same Chancellor. In fact, he was the only G7 finance Minister to raise taxes on working people during this crucial year of recovery. Curiouser and curiouser. As Alice climbs out of the rabbit hole to leave Sunakland, she recalls the words of the White Rabbit and concludes that perhaps the Chancellor’s reality is just different from hers.
The actual reality is that the Chancellor’s failure to back a windfall tax, and his stubborn desire to pursue a national insurance tax rise, are the wrong choices. In eight days’ time, people’s energy bills will rise by 54%. Two weeks today, the Chancellor’s latest tax hike will start hitting working people and their employers. His national insurance tax rise was a bad idea last September, and he has admitted that it is an even worse one today. The Chancellor is making an historic mistake. Today was the day to scrap the tax rise on jobs. Today was the day to bring forward a windfall tax. Today was the day for the Chancellor to set out a plan to support British businesses. But on the basis of the statement today and the misguided choices of the Chancellor, families and businesses will endure significant hardship. The Chancellor has failed to appreciate the scale of the challenge that we face and, yet again, he is making the wrong choices for our country.
I thank the hon. Member for Leeds West (Rachel Reeves) for her reply. She raised several points that I will come to in due course, but listening to her speech it sounded as though covid, and the huge damage it did to our economy and public finances, had never actually happened. It sounded as though we did not have to introduce furlough, support businesses and provide emergency funding to schools, councils and, yes, the NHS. While her party supported all those policies at the time, it now seems unwilling to pay for them. There is a pattern there. Labour is always happy to spend taxpayers’ money, but not to take care of it.
On some of the hon. Lady’s specific points, it was telling that she opened her statement by yet again calling for a windfall tax. On this side of the House, we want to encourage more investment in the North sea, and we want more domestic energy and more jobs for the UK. A windfall tax would put that off, which is why the Prime Minister will bring forward a comprehensive energy security strategy in the coming weeks to address that.
The hon. Lady talked about business rates and supporting businesses. In just a week’s time, small businesses in the retail, hospitality and leisure sector will get a 50% discount on their business rates bill. It is the biggest cut to business rates outside of coronavirus since the business rate system was created—£1.7 billion. I know that she has said that she would like to abolish business rates. She also says she has some fiscal rules, but I have not quite figured out how she will pay for the £25 billion of tax cuts that that would involve—I look forward to hearing it. She talked about defence spending. It is all very well to talk about the size of the Army. At least Labour now seems to think that we should actually have an Army, which is a welcome conversion. It is because of how seriously we take the nation’s security that in 2020, when we had decided to do short-term spending settlements for most Departments, we singled out one Department for special treatment and gave it a four-year settlement in advance of everyone else—that was the Ministry of Defence. In that settlement it received £24 billion of new cash, the largest uplift to defence spending since the end of the cold war, ensuring that we are not just the second-largest spender in Europe in NATO but the fifth largest in the world, a record of which we on the Conservative Benches are very proud.
The hon. Lady talked about pensions. Again, thanks to the actions of Conservative-led Governments since 2010, we put in place the triple lock—not something the Labour party ever did when it was in power. It means that pensions are now £2,300 higher than they were in 2010 and £700 more than if the triple lock had not been in existence during that time. I am pleased to say that the state pension, relative to earnings, is now at its highest level in over 30 years. This party will always be on the side of pensioners.
Turning briefly to the hon. Lady’s comments on tax—fair enough, it is a short time in which to have to respond, but I am not sure if she fully understood the implications of the tax cut announced today. The increase in the national insurance thresholds to equalise them fully is a £6 billion tax cut for 30 million UK workers. It is the largest increase in thresholds ever, the biggest personal tax cut in a decade, and it is worth £330 for those workers. I do not know whether she realised this, because she talked about the levy and making sure that we direct our policy at those who need our help, but there is a reason the independent Institute for Fiscal Studies called this increase the best way to help low and middle earners through the tax system: 70% of workers will pay less tax, even accounting for the levy. It is more generous than the policy she is advocating. Combined with the other tax cuts we have announced today, this plan represents the biggest net cut to personal taxes in a quarter of a century.
Let me conclude by saying this. The plan we have announced today has only been possible because we have taken tough decisions with the public finances. They have not always necessarily been popular, but they always been responsible and always honest. It is two years to the day that the country first entered lockdown and suffered the biggest economic shock in over 300 years. An unprecedented collective national effort was undertaken and two years later this Government have not only fixed the public finances but people are back in jobs, debt is falling and taxes are now being cut. No Government can get every call right. We learn from our mistakes and we strive to improve. But even if they will not admit it, Labour Members will recognise this day as an achievement that we all can celebrate. I have said it before to the Labour party and I will say it again: there is a fine line between reasonable criticism and political opportunism, and in my experience the British people can always tell the difference.
I think the shadow Chancellor’s remarks will be best remembered for pointing out that the Conservatives won the 2010 election and the 2019 election. It is probably a very good thing for the country that we did.
The Chancellor has met the major obligations on public spending which helps the economy to grow and which allows for more jobs and more Government revenue. As he pointed out just now, the changes to national insurance do the things that Martin Lewis, as well as the institutes, would applaud. Those three sources of support—he has my support, too—are very welcome.
May I ask the Chancellor to remember that pensioners do not just have the state pension? Many have fixed pensions on top and getting inflation down as fast as possible is vital to them. They cannot go for a bigger pay increase if they are not at work.
Finally, some areas of public spending do not make it easy to have efficiencies. If teachers’ salaries make up most of the cost of education, it is very important to ensure that we do not squeeze education and wreck our schools and our pupils’ future.
On cladding, when amendments to the Building Safety Bill come from the other place, can my right hon. Friend please not keep his purse completely shut? If money needs to be advanced so that homes can be safe and saleable, will he please consider that openly?
I thank my hon. Friend for his support and he is right to highlight some of the independent commentators who have supported the policies announced today. I will touch on one of the things he said, which was about education spending. I agree that it is vital for our country’s future that we support our teachers and children. That is why the Prime Minister announced, in total, £5 billion of catch-up funding to help children to recover the learning they lost during the pandemic, why we are raising per pupil cash amounts by £1,500 over the Parliament, and why we are raising teachers’ starting salaries to £30,000, as our manifesto committed to doing.
This tax plan that the Chancellor has announced is very thin. It is lightweight and it is superficial. It is exactly what we have come to expect from this Chancellor. What we heard today from the Chancellor was not enough. It was utterly detached from the needs of our constituents up and down these islands.
This cost of living crisis has been a decade in the making, layer upon layer: austerity, which stripped back public services and punished people through brutal social security cuts; Brexit, which has driven away skilled workers and increased costs for businesses and individuals; covid, where we saw public money splurged in its billions on crony contracts while some people were entirely excluded from support, and now those who got support under the self-employment income support scheme are expected to pay tax on it, just to add insult to injury; and now home energy costs, which were already soaring before the increase in hostilities in Ukraine, are forcing households to the brink. Inflation running at 6.2%, its highest rate in 30 years, is hitting the poorest the hardest. Food prices are rising, especially for the basics, and foodbanks are seeing record numbers of people coming through their doors. The Chancellor says he is going to increase the household support fund, but is that it? Is that it? People are desperate and they need a good deal more help than that.
We know that sanctioning Russia is not cost-free, but the Tories cannot use that as a sleight of hand to distract from the layers of pain that lie beneath the current crisis. Each of those layers has seen political choices and opportunities for change squandered by this UK Tory Government and their predecessors. We see it again today. This Chancellor has increased taxes more in two years than Gordon Brown did in 10, while people are struggling. The Treasury Committee issued a report this morning, which states that the UK Government
“must take further action to support UK households, in particular those on lower incomes to manage the subsequent rise in energy and other costs.”
The Chancellor’s announcement on national insurance contributions is welcome. We have been calling for it for years. It is not something that the Chancellor should have brought today; it is something he should have brought to the House a long time ago. Hiking national insurance is a tax on individuals, but it is also a tax on jobs. Employers are already facing increased costs in energy and materials, and many businesses will not be able to bear such pressure. Small and medium-sized enterprises in particular need more support. Hospitality and tourism have struggled through the pandemic and now the Chancellor is moving VAT from 12.5% back to 20% at a time when consumers have much less money in their pockets. We on the SNP Benches called for the cut before the Chancellor brought it in, and we support UKHospitality’s “VAT’s enough” campaign.
Universal credit has been cut by £20 a week at a time when people need it the most. Carly, a single mum, spoke at the Gingerbread reception on Monday and told us all how important it was that that money was there, because things are tighter than they have ever been. There is no further support for people on legacy benefits and disabled people who often face higher energy costs and have no option on those costs. A taper has been put in place that helps only people who are in work. Benefits are just not going far enough, as they do not keep pace with inflation, and the welfare cap punishes people for their circumstances. There has been an end to the triple lock on pensions and there is nothing for the WASPI women, who are campaigning outside today, who are still losing out on what should have rightfully been theirs.
The Scottish Government, by contrast, are doing what they can within their limited budget, to support people: uprating the eight Scottish social security benefits we control by 6% and increasing the Scottish child payment to £20 a week—a lifeline to families. This UK Government should be doing the same. Taking 5p off fuel is something, but it does not help those who are paying for trains and buses. The Chancellor cut air passenger duty during COP26 but he still offers nothing for the millions of commuters who use public transport every day.
I do not know if the Chancellor has ever had a prepayment meter—I do not think they fit them for swimming pools. However, 4.5 million people—[Interruption.] Hon. Members say it is “pathetic”, but 4.5 million people across these islands experience the stress and despair of watching the money on their prepayment meters run out. Prepayment customers already pay higher bills than those on direct debit and they may struggle even to access the Chancellor’s “heat now, pay later” loan—if it does not automatically go to pay back the debts on that meter. The Fuel Bank Foundation, which provides top-ups to those on prepayment meters who are struggling, has seen a 75% increase in demand already. That was before the prices that we are seeing now.
There was nothing either from the Chancellor for customers using heating oil or LPG, who must fill up by the tank. Those on heating oil have seen their tank costs—for 500 litres in a tank—go from £250 to between £600 and £900. They have no choice about how to get that energy. Where are they in the Chancellor’s priorities today?
Nuclear energy—which the Government touted an awful lot before today and which, interestingly, was missing from the Chancellor’s statement—is not the answer to reducing people’s bills. It is slow and eye-wateringly expensive. We know from the Nuclear Energy (Financing) Bill that the Government’s proposals will add £63 billion to people’s energy bills. They should instead fix the long-standing inequality of grid charging, invest more in onshore and offshore wind, tidal and solar, and bring carbon capture and storage in the north-east of Scotland off their reserve bench. They should make it a real net zero transition worthy of the name.
The Government could invest in a national programme of heat pumps, retrofitting and insulating. I was glad to see the Chancellor’s announcement on home energy efficiency and repairs, because we have called for that for a long time. However, this paltry announcement does not go nearly far enough and does not even meet the significant home energy interventions that Scotland is making.
The Chancellor has choices. He could have looked at a windfall tax on profits. The shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), was right about oil and gas, but why should Amazon, Serco and Netflix not have to pay up for their mega-profits during the pandemic?
The Chancellor has had a windfall of his own. Tax revenues are higher than expected and the deficit is £30 billion lower than planned. If we look at the OBR report that came out today, we see that VAT has gone up by £21.7 billion—that is £21.7 billion extra in the Chancellor’s coffers—and that the amount from self-assessment is up by £5.2 billion more than was forecast late last year. That could have been used to cushion the cost of living crisis and to invest in renewables and wean us off fossil fuel.
MoneySavingExpert’s Martin Lewis was stark in his warning on Sunday morning:
“As the ‘Money Saving Expert’ who has been known for this, I am virtually out of tools to help people now.”
He said, while watching this statement, that his “head …sunk”. There is no help for people on energy.
In conclusion, people face a crisis that the Chancellor could have done more to avert. In so many ways, he has made the choice not to act. There is nothing for Scotland in his announcement today. We on the Scottish National party Benches look forward to the day when Scotland has a Government with the full fiscal powers to make sure that all our people can have a decent standard of living, and that no child goes to bed with an empty tummy in a cold home.
The hon. Lady said that there is nothing for Scotland in this statement, but maybe she missed the part about the UK-wide fuel duty cut, which, together with the freeze, will save a typical driver £100 and a typical van driver £200 this year. Perhaps she missed the part about the largest increase to personal tax thresholds ever. That £6 billion tax cut will help 2.4 million people in Scotland, starting in just a few months’ time. Indeed, 75,000 businesses will benefit from the employment allowance—again, that £1,000 tax cut for Scottish businesses will come in very shortly.
The hon. Lady mentioned that Scotland, as ever, wants more fiscal autonomy. Scotland already has a considerable degree of fiscal autonomy, and I did not hear whether the SNP will deliver the same income tax cut for Scottish taxpayers that the UK Government will deliver—as paid for in these numbers—in 2024. I look forward to hearing from her that the Scottish Government will cut taxes for their taxpayers with the powers and funding that they will get.
I always want to make sure that we look after the most vulnerable in our society. The hon. Lady mentioned a single mother she knew. I am pleased with and proud, in fact, of this Government’s actions, because by increasing the national living wage in April by 6.6%, by cutting the UC taper rate and through the increase in personal thresholds today, we have ensured—if we take all tax and welfare changes together—that a single mother of two children working full time on the national living wage will now be £1,600 better off.
The hon. Lady made a point about businesses. We are providing a business rate discount for business, and Scotland has received a Barnett share of that money. A business rate discount will come in here for retail, hospitality and leisure businesses in just a few weeks, and I know that the Scottish Government will have the resources to do the same thing.
Lastly, the hon. Lady made a comment about prepayment meters. I am acutely aware that millions of families rely on prepayment meters. That is why, when we designed the energy support package that we announced in February, we had particular care for those people to ensure that they would receive the same benefit. Indeed, we made sure that 40% of them will automatically get the £200 rebate in October. For the remainder, we are working with BEIS and the industry to ensure that all those people get the same benefit as well. They will receive a voucher, a cheque in the post or something called a “special access message” on their phone, by SMS, so that when they go to one of the retailers that they use to top up their meter, they will also benefit from our actions, because this Conservative Government is on the side of everyone.
I broadly welcome my right hon. Friend’s statement. Of course, the devil will always be in the detail and we look forward to seeing him at the Treasury Committee next week, along with the OBR and various economists, including from the IFS, which he mentioned.
I welcome the cut to fuel duty. That will help motorists and consumers and be important for businesses. The VAT reduction relating to energy efficiency and solar is very important in the context of the sanctions on Russia and energy self-sufficiency, where we can achieve it. The hardship fund will be a very targeted measure, which is important, and small businesses will be delighted to have heard about the increase in the employment allowance to £5,000, which was a key ask of the Federation of Small Businesses.
Along with many others in the House, I would have liked the NI increases for next year to have been scrapped in their entirety. However, the threshold increase that my right hon. Friend announced today has been very significant—far more significant than I imagined it would be.
This is the big question that my right hon. Friend will be asked: in the context of the fiscal targets, which I think we all agree that we need to meet, has he used enough of the headroom now as opposed to having that as a hedge against future uncertainties, to which he alluded and which are very real, in terms of inflation, interest rates and the effect on the cost of Government borrowing? Will he say a bit more about the fiscal headroom—he will have had the advantage of seeing the OBR figures, which I have not—and his assessment of that, particularly around the deficit target?
On growth, my right hon. Friend pointed out the OBR downgrades, which are not surprising in a high inflationary environment, and the dampening effect that they will have on consumer demand. I was very pleased that he referred to his Mais lecture, because it will be essential for us to focus on innovation, people and driving up capital investment.
My right hon. Friend referred, I think, to a consultation on how to improve capital investment, on which we lag behind our G7 competitors. Will he tell us more about the timeline for that consultation and when he expects to be able to provide important certainty for businesses in that respect?
I thank my right hon. Friend for his words of support. Let me briefly address his two substantive questions.
The tax plan published in the spring statement document today has a range of options for cutting taxes on investment. I look forward to having a conversation with my right hon. Friend, with colleagues and with the business community about the right way to achieve the outcomes that we want. The final decisions will be announced in the autumn Budget and will take effect in spring 2023 after the super deduction ends; I will not get into the detail now.
We have about 1% of GDP as headroom against both the stock and the flow rules on debt falling and on borrowing. On the borrowing side, that is approximately in line with previous Chancellors. On the stock rule, it is a bit less: the average over the past decade has been about 1.7%. The headroom includes the tax cut in 2024, which has been fully paid for and costed in these numbers. I believe that we are taking a responsible and pragmatic approach, but my right hon. Friend is right to point out the risks. The OBR has said that relatively small changes in the macroeconomic outlook could wipe out the entire headroom. That is why it is right that we continue to be disciplined on public spending.
At Prime Minister’s questions, the Prime Minister batted away a question about fraud during covid by suggesting that it was just about delivery, but it was the Chancellor who gave the ministerial direction for the bounce back loans to be paid at such speed. With a check that was even 48 hours longer, the Government might have avoided the fraudulent duplicate claims that were not stopped until a month later. The £4.7 billion that was lost to fraud could have mitigated measures such as the national insurance increase. Does the Chancellor now regret that he did not pause for thought and that he was not more cautious about fraud?
I have a lot of respect for the hon. Lady, but on this matter I believe she is wrong. She has incredible hindsight to point out now issues that neither she nor anybody else raised at the time. Quite the opposite, in fact: I was told daily in this Chamber to get money out not in weeks and months, but in hours and days. Putting longer fraud checks in place would have taken weeks, so I stand by the decision that we made.
We have put various safeguards in place. We have blocked £2 billion of bounce back loans—60,000 because of the checks at Companies House. The National Investigation Service and the National Crime Agency are in the process of successfully prosecuting dozens of people. We are striking people off from Companies House and we are investing more today in the NCA, NATIS and the British Business Bank so that they can work on the interventions that we know are doing very well. I think it is wrong for hon. Members to pretend now that they wanted to do something at the time, when they did not.
I congratulate the Chancellor on a tax-cutting, deficit-cutting, tax-simplifying statement that is very much in the tradition of Nigel Lawson. He mentioned research and development tax credits. Are we on track for our target for investment in R&D across the economy to reach 2.4% of GDP by 2027? When will the changes to R&D tax credits come into effect so that further progress can be made?
I thank my right hon. Friend for his support; I know that this is an area of particular interest and concern for him. The 2.4% comprises two things: what the Government spend and what private businesses spend. I can reassure him that we are more than on track for the Government bit of it: we already spend the OECD average on the 2.4%, and that spending will go up by 50% over this Parliament, so the Government are doing our bit. As I said in my statement and in the Mais lecture, the private sector lags significantly internationally in how much it spends.
The changes that we are making to R&D will all come into effect in the spring next year and will be announced finally in the autumn Budget. My right hon. Friend wrote the foreword to a very helpful report on this topic. I look forward to working with him, with his Committee—the Select Committee on Science and Technology—and with others so that we get these changes right and drive up private sector investment in R&D.
May I draw attention to two stories in the Sheffield Star today? Sheffield is still a city of steel. Ben McIvor, president of Forged Solutions Group, which employs 400 skilled workers in the steel industry, is begging for help with the rise in energy costs, because the company simply cannot pass on those costs to its customers. Workers at Liberty Steel are protesting about the Prime Minister’s broken promise that if we left the EU, he would cut energy bills for steel companies. Why has the Chancellor chosen to break the Prime Minister’s promise?
No, we have provided over £2 billion-worth of support for energy-intensive industries over the past several years—including, I believe, over £600 million for the steel industry. That support comes in a variety of ways, including free allowances and compensation for the emissions trading scheme and other carbon price mechanisms. We also announced hundreds of millions of pounds in the spending review to support the industry to make the transition to using cleaner energy.
In the spending review, the Chancellor gave a lifeline to maintained nursery schools by confirming supplementary funding, but not all schools qualify for that funding. May I appeal to him to work with the Secretary of State for Education to identify the modest additional funding needed to put all maintained nursery schools on a stable financial footing for the future?
It would be churlish not to accept that the Chancellor has sought to deal with many of the issues that working families today face, but given the windfall in taxes that he has experienced, I believe that more could have been done to help with fuel costs, energy bills and other cost of living increases. It is significant that the Chancellor could not apply all his tax cuts to Northern Ireland because of the Northern Ireland protocol: that shows that the protocol needs to be dealt with.
At the start of his statement. the Chancellor referred to Ukraine, but surprisingly there was no mention of additional resources for defence—for the defence of this country, the defence of democracy and the defence of values in the face of Putin’s aggression. Why was that absent today?
On fiscal windfalls and headroom, I refer the right hon. Gentleman to my answer to the Chair of the Treasury Committee. Our headrooms are relatively small by historical standards and could be wiped out very easily by small changes in the macroeconomic outlook, so I think that it is wrong to say that there is a huge windfall. Indeed, borrowing for the forthcoming year will be higher than was forecast in October.
On defence, I refer the right hon. Gentleman to my answer to the shadow Chancellor. We increased the defence budget by £24 billion in 2020—the largest increase since the cold war. The Ministry of Defence was the only Department that got a four-year settlement when all the others got just one year. That is how seriously we take the issue.
I congratulate the Chancellor on the statement and particularly on the 5p reduction in fuel duty, which I note is temporary. Will he remind all Members of this House that temporary does not mean permanent, and that as the reduction costs £5 billion, if it becomes permanent we will not be able to reduce income tax, which also costs £5 billion, if we are to meet our tests of fiscal responsibility?
I thank my hon. Friend, as ever, for his support. He is right: the fuel duty cut will benefit all our constituents, particularly those in more rural areas and on lower incomes. He is also right to make the point that we need to remain disciplined on public spending. We have fully accounted for the income tax cut in our plans, but it will require collective discipline to deliver those tax cuts and others that we want to see over the remainder of this Parliament.
The Government have been warned privately and publicly not to make up employment statistics, so alarm bells rang when the Chancellor of the Exchequer glossed over the employment numbers in his statement just now. The small print reveals that unemployment is forecast to rise next year and then plateau, so may I ask him what the Department for Work and Pensions is playing at?
Unemployment is at an almost record low level of 3.9% at the moment. The OBR’s forecasts overall are lower than its October forecasts and are still at very low levels of 4.2%-ish throughout the forecast period. We are very proud of this Government’s track record on jobs, with record numbers of people on payroll. Despite the forecasts of millions of people unemployed, we have managed to successfully get everyone back to work, with a record number of job vacancies, and we will continue to focus on that.
With the world economy facing unparalleled challenges from at least two of the four horsemen of the apocalypse—death from plague and war—and with all the challenges that the Chancellor faces, I wonder whether anybody seriously believes, after a decade of unfunded spending promises, that tax would be any lower under a Labour Government. That is a question that I think the Labour party should answer.
May I ask a question on behalf of people of pensionable age? More and more of them are having to wait a long time—up to two years—for so-called minor operations, which can be very debilitating and very painful. More and more people on middle incomes are dipping into their savings or going into debt to pay for private operations. Will the Chancellor keep an open mind about helping those people with some sort of tax relief—if not on insurance, on the cost of operations that are delayed for up to two years?
I am always happy to take suggestions from my right hon. Friend. He has identified a pressing problem faced by all our constituents who are waiting longer than we would like for elective treatment in particular. Every penny of our new health and care levy will go to the NHS and social care so we can make a start on that backlog. We are backing the NHS to help it to reduce its backlogs, and my right hon. Friend is right to raise this issue.
Households are facing the biggest hit to living standards on record, and they were looking to the Chancellor today to offer them some hope. We know from the OBR forecast that the Treasury will take an additional £13 billion in VAT thanks to inflation. Will the Chancellor tell us why he has not announced the emergency cut that the Liberal Democrats have called for, which would put £600 back into the pockets of the average family? VAT is an unfair tax that puts up prices for every single family in the UK, and makes up half of all the taxes paid by the poorest households compared with less than a fifth of those paid by the richest.
I think it wrong to suggest that there has been a VAT windfall. If the hon. Lady looks at the numbers in the OBR forecast, she will see that its projection for VAT receipts in the forthcoming year is lower than its previous projection in October. We are helping working families, with a £6 billion tax cut which will put £330 into the pockets of 30 million workers across the United Kingdom.
I think that when my right hon. Friend gets back to his office, that portrait of Nigel Lawson will be looking down at him admiringly. This is a Conservative plan that we can all get behind. It rewards work, it gets the deficit down, and it incentivises investment from businesses rather than penalising them with windfall taxes.
As my right hon. Friend knows, energy prices are very volatile, so he is right to stand by the £9 billion package that he introduced previously and wait until the next update on the energy price cap in the late summer. If it does indeed show that energy prices are going to rise substantially, that will have a big impact on the poorest households. Will my right hon. Friend assure us that he will keep this matter under review, and will consider further measures if necessary to protect those households?
I thank my right hon. Friend for his warm words of support, and I can reassure him that we keep everything under review. We have stood by the British people over the past few years, and we will continue to stand by them. It is thanks to the responsible decisions of this Government that we are able to provide the support that is required when the times call for it.
Consumer spending is vital to the growth of our economy in the aftermath of the pandemic, but with inflation at its highest level for 30 years—the Chancellor has seen the data—consumer confidence is declining, hitting our small businesses hard and setting back their recovery from the pandemic. Why on earth is the Chancellor not fully U-turning on his rise in national insurance contributions at this time—a rise that the Government themselves have admitted will increase inflation and decrease spending power?
The hon. Lady may not realise that for 70% of people, this is more generous than doing what she suggests. Those people will pay less tax as a result of this policy as opposed to the one that she advocates, and I believe that it is the right policy. We are on the side of hard-working people, and this will help them at a time when they need that help.
I thank the Chancellor for his statement, which has been warmly welcomed by the people and businesses of Wimbledon, and commend him for his analysis of some of the challenges to the economy. One measure that he could move from temporary to permanent is the super deduction, so will he consider that as part of his consultation? I think it is already evident that this would be the most effective way of changing behaviour and securing greater R&D and capital expenditure.
I thank my hon. Friend for what he has said, and look forward to discussing those topics with him over the coming months. The document outlines a range of options for cutting taxes on investment. Hopefully he will have a chance to digest those, and I look forward to discussing them with him.
The Conservative party introduced universal credit, but instead of uprating it in line with current inflation, the Chancellor has chosen to increase the size of the household support fund. Those who have heard of it have to go to their local councils to receive it. What evidence, if any, does the Chancellor have that the fund is effective in delivering help to the families who need help most?
The feedback that I receive from colleagues suggests that it has been effective, and I trust councils to know who are the people in their areas who most need our help. I used to be a local government Minister, and, as the right hon. Gentleman knows, I have enormous respect and regard for local authorities. However, we did not just do that: in the autumn Budget, we gave a £2 billion cut through the tax rate on universal credit to nearly 2 million people on the lowest incomes.
I thank my right hon. Friend heartily for the cut in fuel duty, and for waiving the national insurance threshold. I hope I can now retire from campaigning on that issue; it would make my life a lot easier! My right hon. Friend has stood up for workers and for people on low incomes, and we should not forget that. As he said, it is this party that is the true workers’ party of the United Kingdom.
When my right hon. Friend considers a reform of the apprenticeship levy, will he ensure that at its heart is a focus on enabling more disadvantaged young people to take up apprenticeships, including degree apprenticeships?
I thank my right hon. Friend for his support, and I can give him that reassurance. Apprenticeships are fantastic and we want to ensure that they are continually supported, but we will look at all aspects of this to ensure that we also provide incentives for the training that we want to see. My right hon. Friend is right to emphasise that this is the party of the workers, and that is in no small part thanks to his campaigning. I congratulate him on making the case so well.
It is clear from the Chancellor’s statement that he wanted the buzzword to be security, but one of the issues that did not appear in the statement was food insecurity. Given that 60% of Glaswegians do not possess a car and many of my constituents do not own their homes to put solar panels on them, what does the Chancellor say to the people whose children will go to bed hungry tonight, and why was there no mention of that in his statement?
We have already created the holiday activity and food programme, which provides both food and enriching activities for children outside term time. There is also the household support fund, and Barnett consequentials will enable the Scottish Government to provide the same support for vulnerable families in their communities.
I warmly welcome the Chancellor’s statement and, in particular, the rise in the national insurance threshold. It will not only help low earners, which is important, but bring a welcome simplicity to the system. I also welcome the reform of the apprenticeship levy, but will the Chancellor look at the amount that can be transferred through the annual levy transfer? It is currently capped for larger organisations, and that restricts the amount that they can give to smaller organisations. A reform would see much better use of the apprenticeship levy, which would help small and medium-sized enterprises, local authorities and others.
I thank my hon. Friend for his support. He is right to point out that the significant increase in personal tax thresholds is particularly well targeted at those on lower and middle incomes, and I look forward to discussing with him, over the coming months, potential reforms in the way in which we tax training and apprenticeships.
I have just received a message from Michael, who is a carer for his disabled wife in Hull. He says:
“So no help for the disabled. I guess I’ll have to put my wife into hospital next winter so she can stay warm”.
What would the Chancellor say to Michael, who does not drive a car and is not planning to install solar panels on his rented home?
Obviously it is hard for me to comment on individual circumstances, but in general I am proud of this Government’s support for those who are disabled. We have spent some £58 billion on disability welfare. When I last checked the figures, the OECD ranked us higher than many other countries, including the United States, Canada, Australia, New Zealand, Germany and Austria, so we are generous and compassionate in our support for those who are disabled.
We are taking a range of measures, not least spending £1 billion to help people with disabilities into work and providing £1.5 billion for the disabled facilities grant to improve the conditions of their homes. Today we announced a small amount of extra funding to improve the provision of Changing Places toilets across the country, an issue about which I care passionately. That funding will increase their number by 40%, so that the quarter of a million people with complex disabilities who need access to such facilities will now find one closer to where they need it.
I thank the Chancellor for what I thought was an excellent spring statement, and look forward to seeing how it will benefit my constituents. I was particularly pleased to hear about the cut in fuel duty. However, I was a bit disappointed not to hear anything specific about an increase in funding for mental health. Is that something that the Chancellor will consider in the future?
I am happy to tell my hon. Friend that we announced a significant increase for the NHS back at the spending review in the autumn, with a record NHS spending settlement including big increases for mental health. The Department of Health and Social Care will be able to provide him with the exact split, but he can rest assured that we are making good progress with dedicated funding for the cause that he rightly champions.
Let us be absolutely clear that benefits and pensions are going to rise by 3.1% while inflation is predicted to be between 7% and 10%. That is a cut for some of the poorest in our society. I want to make this specific appeal to the Chancellor. The people I am desperately worried about in my constituency are those who are forced to live on benefit, largely through disability or ill health, and the poorer pensioners. We know that energy prices are rising rapidly, and that the assistance provided so far will not enable them to cope. When we get to November, those people will be freezing in their own homes and lives will be put at risk. One simple solution is to double the winter fuel allowance. Can I appeal to him to go away, think about that and come back sooner rather than later to give vulnerable people some confidence in the future?
All the people the right hon. Gentleman mentioned will benefit from the proposals we put forward last month, with £9 million to help everybody. The doubling in size of the household support fund is there for his local council and others to use to support those most in need, and he is right to highlight the winter fuel payments, which are payments of up to £300 for those pensioners. Many of those on pension credit will also have access to the warm home discount, which is an extra £150.
As a member of the Treasury Committee and chair of the Conservative Back-Bench Treasury committee, I congratulate the Chancellor on this spring statement’s tax cutting and tax simplifying, with many measures to help hard-working families make ends meet and to promote economic growth. I also very much welcome the publication of the tax plan. Too often, Governments are tactical about their tax policies, leaving great uncertainty for businesses about what will happen next. We now have a strategy for the years ahead. Tax policy must be informed by a strategy; it also needs to be credible and fair. Can my right hon. Friend confirm that, in all the measures the Treasury has introduced since 2019, it is the poorest households that have benefited the most and the wealthiest that have contributed the most?
I congratulate my hon. Friend on his new appointment and look forward to working with him in both his committees over the coming months, particularly to flesh out the business tax options that we want to finalise by the autumn Budget. He is right to say that the distribution analysis published today, which looks at all tax, welfare and spending decisions, shows that this Government have been highly progressive in their actions and that those on the lowest incomes have benefited the most.
Once again, quite incredibly, there is climate-shaped hole at the heart of this statement. Once again, the Chancellor did not even mention the word “climate”. That is all the more unforgivable as the measures we need to tackle the climate crisis and those we need to tackle the cost of living crisis are the same. With 6 million people now facing fuel poverty, where is the home retrofit revolution and the investment that we need to make 19 million homes warmer by 2030, saving families £400 on their bills and creating hundreds of thousands of jobs in the process? How many more people will have to freeze in their homes before he will act?
We already acted in the spending review last autumn to outline billions of pounds to improve the energy efficiency of hundreds of thousands of homes across the country. The hon. Lady is right to say that that saves £300. We have grants available of up to £20,000, depending on the scheme, that will do that over the remainder of this Parliament. Also, the energy company obligation does the same thing for hundreds of thousands of people in fuel poverty through their energy bills. So we already did it; we are getting on with it. And I think she missed the fact we have just cut VAT today on energy-saving materials.
I welcome the statement from the Chancellor today, and in particular the way in which the most support is being provided to those who will need it most. Can I ask specifically about the section on the research and development review? Much of our economy is going digital and we are seeing an increasing focus on the knowledge economy and the creative sectors. Will that be at the core of his investment plans for the future, since that is how we will secure future growth?
My hon. Friend, as ever, makes a thoughtful point. Innovation, broadly defined, along with multi-factor productivity, accounts for about half our productivity growth. The pace has slowed recently and we need to reinvigorate it. I set out a strategy to do that at the Mais lecture, and key to that will be driving up private sector investment in R&D and innovation. The tax cuts and reforms we will put in place in the autumn will help us to achieve that end.
Can the Chancellor confirm that someone in employment who is on universal credit will see an increase in the taper between £9,500 and £12,500—a £1,290 clawback to the Chancellor? What is he doing to address that issue, which will involve the poorest workers in the country facing a £1,290 increase in their taxes?
I think the hon. Gentleman is describing how the taper works. It withdraws benefits as people’s incomes rise. That is how the system is designed. However, I can tell him that, because we took action to cut the universal credit taper rate last autumn, we delivered a tax cut of £2 billion for almost 2 million people. I gave the example earlier of a single mother with two children who is renting and working full time on the national living wage. As a result of all our tax, welfare and wage changes, that person will be £1,600 better off.
I commend my right hon. Friend for his statement, as far as it went. He is right to say that he cannot print more money, borrow more money or spend more money. Can I ask him to bring forward the tax cuts, particularly for the lower earners, because as he rightly says, they spend their money far more wisely than the Government do? That will put more cash in their pockets to meet the increasing bills.
That is exactly what we are doing. The increase in the personal tax threshold in July was brought in far quicker than these things normally are, but we wanted to do it as quickly as possible. This will put £330 in the pockets of 30 million people up and down the country.
This year, the Chancellor is delivering the largest fall in living standards since Office for National Statistics records began in 1956-57. Will he tell us how many more people will fall into poverty as a result of his failure to ensure that increases in social security match inflation?
The hon. Lady is describing the impact of inflation on people’s incomes. Of course that will have an impact; we have been very clear and honest about that. That is not just happening here; it is happening everywhere across the world as we grapple with higher inflation, but the measures we are taking today will make a significant difference to support working families in weathering some of the challenges ahead. Again, for those who are most vulnerable, we started this journey in autumn with a tax cut to universal credit, and we are doubling the household support fund today to £1 billion.
I welcome the Chancellor’s statement today. It will do a lot to help many of my constituents in Rushcliffe. Can he reassure me and my constituents that the tax-cutting measures announced today will continue to be the focus of this Conservative Government and that they are just the start of what is possible if we continue to build a stronger, greener economy?
The Chancellor is of course the Conservative and Unionist Chancellor for all of the United Kingdom, but is it not a fact that because of the deficiencies in the Northern Ireland protocol, none of his flagship programmes will apply to Northern Ireland until he goes cap in hand to the European Community and seeks its permission to apply these VAT differentials to Northern Ireland? If the European Community says no, what is the Conservative and Unionist Chancellor going to do for our part of the United Kingdom?
The hon. Gentleman is right, and I have specifically highlighted the deficiencies of the protocol. I look forward to having those discussions with the Commission. Obviously these are not particularly traded goods, because they are installed, so there ought to be a strong argument that they are included, particularly as we are all now collectively grappling with an energy crisis. However, I do not want to pre-empt the Foreign Secretary’s conversations on the protocol. It is not right to say that the flagship policies do not apply to Northern Ireland. The increase in the personal tax thresholds, the income tax cut and the fuel duty cut will apply to Northern Ireland, and I know that they will benefit his constituents and millions of others across Northern Ireland.