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Commons Chamber

Volume 720: debated on Tuesday 11 October 2022

House of Commons

Tuesday 11 October 2022

The House met at half-past Two o’clock

Prayers

[Mr Speaker in the Chair]

Business before Questions

Committee of Selection

Ordered,

That Michael Tomlinson and Kelly Tolhurst be discharged from the Committee of Selection and Craig Whittaker and Jo Churchill be added.—(Rebecca Harris.)

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

Support for SMEs

My hon. Friend will know that the growth plan really was a very strong package for business and for small and medium-sized enterprises, and I am sure that many of his constituents will appreciate the strong measures that we introduced.

I refer Members to my entry in the Register of Members’ Financial Interests.

I welcome the Government’s growth agenda, notwithstanding the lack of reassurance to the markets, but will the Chancellor seriously consider lowering taxation on smaller businesses, despite the package that has already been announced? They are the engine room of the economy and employ most people in the private sector, and if cost savings are necessary, High Speed 2 and the streamlining of myriad quangos could be the first option.

I am very pleased to tell my hon. Friend that we are going to introduce the medium-term fiscal plan in three weeks’ time, but let us consider the measures that we have already introduced. National insurance hikes have been reversed, the corporation tax rise has been scrapped and the annual investment allowance remains at £1 million. These are measures that small businesses up and down the land have been very appreciative of.

As my right hon. Friend will be aware, small businesses are the backbone of our local economy—none more than Catling Bakery in Cramlington, which has expanded from running a bakery to running a café and now a dessert bar. Would my right hon. Friend please assure me that this Government will do all they can to help these businesses thrive?

Absolutely right. Of course, we have also supported Catling Bakery which my hon. Friend mentions through an energy package—£60 billion for households and businesses for six months—which we absolutely felt it necessary to do.

Thank you, Mr Speaker; it is like I never went away. I refer Members to my entry in the Register of Members’ Financial Interests.

Supporting businesses will always be a key pillar for growing our economy and, by association, our small and medium-sized businesses, of which there are many in Lincoln and more across our county of Lincolnshire. They should be at the forefront of the Government’s growth agenda. Devolved areas such as Teesside and the West Midlands have continually been successful in delivering for their areas. Greater Lincolnshire stands ready right now for a maximum devolution deal. Therefore, will the Treasury support any such deal for Greater Lincolnshire?

My hon. Friend knows that devolution is at the heart of the Government’s plans to level up and strengthen communities, and in the levelling-up White Paper the Government have fully committed to offering a devolution deal to every area that wants one by 2030.

Can I declare an interest to the Chancellor? I have actually worked in a small or medium-sized business. Unlike many people on these Benches, I have actually worked in manufacturing industry, and the manufacturing SMEs in my constituency are absolutely up against it with the cost of energy. What is he going to do to relieve them right now?

I think the hon. Gentleman makes a very good point and represents his constituency ably. In respect of small businesses, we have introduced a package —an energy price guarantee not only for households but for businesses—to the tune of £30 billion in the first six months. This is something that was absolutely necessary, and I am very proud of the fact that we acted very swiftly to protect businesses such as those in his constituency.

The Government’s failed mini-Budget sent interest rates soaring, which is already causing mortgage pain for millions, but rising borrowing costs are now threatening our high streets too. Small businesses in Richmond Park and across the UK are seeing their loan repayments spiral and their financing options dry up. We have already seen the highest number of company insolvencies since the financial crisis—more than 5,600 businesses closed in the second quarter of this year—and SME debt is now at a staggering £204 billion. Most of those businesses will not see a penny from the cut to corporation tax. What is the Chancellor—

As I have stated a number of times already, the energy support package will help every single one of the businesses in the hon. Member’s constituency. I would be very pleased to see the Lib Dem growth plan. The anti-growth coalition carps from the side lines but it has nothing to say about growth.

The one thing businesses always want is security, and an understanding of what is going to happen for them next year. They are worrying about their borrowing costs for next year, and the Chancellor has already made that more difficult for them. He says he has a package for energy costs, but that lasts for only six months. Yesterday I spoke to a man who owns a leisure company. He said that his bill next year will go from £100,000 to £475,000, and that he will be closing. Why does the Chancellor not bring in a proper measure that will last more than six months?

The hon. Gentleman makes a fair point in respect of energy costs, and that is precisely why we intervened in the way that my right hon. Friend the Prime Minister announced only a couple of weeks ago. The package is £60 billion for households and businesses across the next six months. That is a generous package, and we are listening.

Businesses of all sizes are struggling with Brexit, import costs, material costs, the weak pound against the dollar and the euro and increased wage and energy costs, and they still do not know what will happen when the Chancellor’s temporary reprieve ends in March. The clock is ticking. Calder Millerfield, a food manufacturing business in my constituency, has come back to me with its latest quote, with the relief applied. It is £944,000 per year, up from £160,000 last year. What will the Chancellor do to support manufacturing businesses now, because they will not survive those increases?

As I have stated, the energy price guarantee does help businesses in a large measure. Also, I am not going to take lectures from the SNP about growth. In Scotland, for every year from 2010 to 2019, growth was lower than in the rest of the United Kingdom. I will not take any lessons about supporting business from the hon. Lady.

Mortgage Rates and the Bank of England

3. What recent discussions he has had with the Governor of the Bank of England on rising mortgage rates. (901546)

The Chancellor speaks regularly to the Governor of the Bank of England on a wide range of matters. As my hon. Friend knows, the Bank of England sets monetary policy, including interest rates, independently of Government.

I thank the Minister for that response. Obviously, the world situation is the biggest cause of the rise in interest rates, but that rise is having a detrimental effect on mortgage payers and risks negativising the welcome help that the Government have provided through energy costs and tax cuts. Will the Chancellor and Ministers meet more regularly with the Bank of England to co-ordinate policy a little more closely?

I thank my hon. Friend for his question. He is a passionate advocate in this place for his constituents. The Chancellor and I regularly meet the Bank of England and all the individual lending banks in the UK. My hon. Friend knows that interest rates have increased in every major economy, despite what the Opposition may claim. That is why it is so important that we provide help with energy costs and cutting taxes.

Surely Ministers must now apologise for the chaos that their mini-Budget, with its £45 billion of unfunded spending commitments and tax cuts, caused to the bond markets. Is it not now a fact that there is a Tory premium on every interest rate rise for every borrower in this country? They are not going to forget that when the election comes.

I think we all understand that there is a clear divide in this House. The Government are supporting growth, providing support for energy bills, giving the economy the confidence and certainty that it needs this winter, and bringing forward supply-side measures that will boost the economy, not being on the side of striking workers who are bringing this economy to a halt.

With your permission, Mr Speaker, I wish to send my condolences to the families of all those killed in the tragic accident in Creeslough, County Donegal, last week. My parents came from quite nearby. It is a beautiful place with a close community, and they are very much in our prayers right now.

I welcome the Minister to his place. I am sure that he and the Chancellor’s team wanted their first Budget to be remembered, perhaps even studied in years to come. Well, they have certainly achieved that ambition. Two-year fixed mortgage rates are above 6% for the first time since 2008, and they have risen sharply since the Chancellor’s mini-Budget. Everyone coming off such a rate will face much higher payments over the coming year, possibly hundreds of pounds a month more. Why should people who have worked hard to buy their own home pay the price for the Government’s mistakes?

I add my comments and thoughts to those on the incident in County Donegal last week.

We have already talked about our comprehensive energy support package, which will help not just every household this winter and prevent the uncertainty of energy bills that were forecast potentially to reach £6,500 per home, but help businesses. The Government are on the side of businesses and keen to improve the supply side of our economy, so that we can grow to create the tax revenues for our high-quality public services.

This morning, the Bank of England made a further intervention in the markets, warning of

“a material risk to UK financial stability”.

That risk comes directly from the Chancellor’s mini-Budget two and a half weeks ago. How much more will Government borrowing cost next year as a result of the rising gilt yields since the Chancellor’s statement on 23 September?

As I have already observed, we are seeing interest rates rising in every major western economy. When Opposition Front Benchers are finished with their British exceptionalism, perhaps they will lift their eyes and notice that. What is more important is that we are protecting consumers and households through the difficult winter months ahead, and cutting taxes. Those are measures that Government Members support and Opposition Members oppose.

Today, the International Monetary Fund observed that the Chancellor’s unfunded tax cuts have complicated the fight against inflation. As a result, the Bank of England is expected to increase the base rate to levels not seen since 2008. Families have already struggled with increasing energy prices, Kantar says that grocery inflation stands at 13.9%, and Santander is preparing for increased mortgage defaults. What is the Minister and his Treasury team doing to tackle the absolute chaos that they have created?

I understand that the nationalist party likes to talk the country down at every opportunity, but the reality is that we are taking the action that we need, tackling the supply side, tackling the strikes that are grinding down the economy and building the energy supply that we need to help strengthen our economy and our currency. The hon. Member’s party opposes nuclear and opposes more oil and gas exploration.

Investment in Infrastructure

A critical part of the Government’s growth plan is road, rail and energy infrastructure. We will be introducing legislation shortly to ensure that the delivery of that critical infrastructure is massively sped up.

I am grateful for the investment in physical infrastructure, but those on the Treasury Front Bench will know that we need the skills for the future to deliver the jobs for the future to make that infrastructure investment sustainable. Will the Minister meet me to discuss the idea of MKU: a brand-new university in Milton Keynes? Every single Minister and Secretary of State I have spoken to about it thinks that it is a good idea. Will my right hon. Friend meet me to get it off paper and get boots on the ground?

I thank my hon. Friend, who is a tireless champion for the great city of Milton Keynes. I would be delighted to meet him to discuss the idea along with colleagues from, perhaps, the Department for Education. I note that Milton Keynes has already received £23 million through the towns fund, but I am happy to meet him to discuss the idea.

Growing the economy is about improving people’s lives as well as improving the success of places such as Carlisle. To achieve that, we need both public and private investment, and, in the case of public investment, it is infrastructure that will make the real difference. Given the rise in the cost of infrastructure projects, will the Minister confirm that where such projects have a shortfall in funding but are ready to go, the Government will step in and give additional funding to support them?

It is very much our intention to speed up projects where they are ready to go. The growth plan announced a few weeks ago made clear our commitment to doing that. The last spending review provided, I think, about £100 billion of funding towards critical economic infrastructure. Where we can speed up projects, we will certainly be doing that. One project that we have in mind for exactly that is the A66 northern trans-Pennine route, which I believe goes not far from my hon. Friend’s constituency.

In 2017, former Conservative energy Minister Charles Hendry conducted a review of the Swansea Bay tidal lagoon. He gave it the thumbs up, but since then successive Governments have not pursued it. Given the energy crisis we are in, will the Minister consider reopening the business case? It could be a fantastic source of green energy for our country.

The Government are extremely interested in all forms of new energy generation. We are determined to make sure that the United Kingdom is electricity-independent. We are looking at all kinds of projects, including of course marine projects. I understand that when the Swansea scheme was investigated there were questions about value for money, but I am sure that we would be very happy to take a careful look at any proposition that is put forward, if the hon. Gentleman wants to do so.

When it comes to the delivery of projects, I cannot help but admire the speed at which the Government managed to transform Downing Street from a nightclub into a casino. I have one ask that is not a gamble. When are the Government going to deliver the Acorn project in the north-east of Scotland?

My right hon. Friend the Chancellor says that that is something we are examining carefully. The hon. Gentleman’s characterisation of the growth plan is extremely unfair. The real risk is in not having a growth plan. The real risk is in having taxes that are too high. The real risk is not investing in infrastructure. It is clear that this Government have a growth plan and the Opposition have no plan.

Of course it is always right to look for efficiencies and try to get better value for money for the taxpayer. As we look for spending cuts, could my right hon. Friend confirm that they will not come at the expense of reductions in vital infrastructure spending in our regions, not least in the north of England?

I am pleased to say, as my right hon. Friend the Chancellor said when he introduced the growth plan, that expediting critical infrastructure was an important part of that plan. Without critical infrastructure, we are not going to see the growth in jobs or wages and the prosperity that we all want. The Government will do everything that they can to speed up the delivery of those projects.

We do not know much yet about the Government’s new investment zones, but in order to achieve success for the primary investment in them, will the Government have specifically targeted funds for infrastructure projects in those zones? If so, will this be a further unfunded expenditure commitment?

I think the Chancellor set out the investment zone concept very clearly. There will be, by agreement with local authorities, planning freedoms and very significant tax cuts. Infrastructure investments are being handled separately to that, but it would be reasonable to expect a degree of co-ordination between the Department for Levelling Up, Housing and Communities and the Department for Transport, as they consider the way investment zones interact with transport projects.

Bankers’ Bonuses

5. What assessment he has made of the potential effect of removing the cap on banker’s bonuses on the distribution of wealth. (901548)

Reforming the EU’s directive on the bonus cap is not about paying people more. All it ever did was increase base pay, regardless of performance. It was never a cap on total remuneration, and no one should pretend that it was.

That was total nonsense. As some families in Battersea struggle to keep up with the rising cost of living, the Government have chosen to help bankers by removing the cap on their bonuses, while maintaining the cap on household social security. Despite soaring bills and growing inflation, the cap has remained stagnant since 2016, plunging hundreds of thousands of families into deep poverty. The cap on social security is cruel. How can the Chancellor seriously justify removing the cap on bankers’ bonuses but not the social security cap? Will the Minister have a word with his colleagues at the Department for Work and Pensions and change that?

The hon. Lady has fully booked her place as a member of the anti-growth coalition. The Government are not afraid to be on the side of the people who create the wealth that funds our public services. In 1979 the top 1% of earners paid about 10% of income tax; they now pay 29.1%. That is three times as much.

Does my hon. Friend agree that scrapping the cap on bankers’ bonuses will increase not only competitiveness, but tax receipts?

At a time when my constituents are struggling to make ends meet, struggling to put food on the table and struggling to put the heating on, the Government have decided that the way to increase growth in the economy is to lift the cap on bankers’ bonuses. Not a single person or a single bank that I spoke to in the City as shadow City Minister said that this was the right policy to drive growth in the economy. Does the Minister really think that the policy will drive growth in the economy, or will we see yet another U-turn from his Government?

I can assure the hon. Lady that this Government are going to grow the economy. We will grow the economy by releasing the burden, or the yoke, of taxation, whether that is on ordinary people by cutting the basic rate of tax from 20p to 19p, or by today reversing the increase in national insurance, or by cutting the taxes on the businesses that she has been meeting—I welcome that—by reversing the increase in corporation tax next year.

First-time Buyers: Mortgages

6. If he will take steps to help ensure mortgage products are available for first-time buyers in the context of the reduction in stamp duty announced in the growth plan 2022. (901549)

This Government will back first-time buyers by increasing the level at which they start paying stamp duty. A young couple can now purchase a property for up to £425,000 without paying tax.

A core tenet of our belief is to help everyone on to the housing ladder, so what assessment has the Minister made since the growth plan about helping people and areas to build houses for those who need and want them?

My right hon. Friend the Secretary of State for Levelling Up, Housing and Communities will make a statement to the House in the coming weeks.

A constituent wrote to me and said, “What world do the Tories live in? I guess one where you protect the rich and wealthy. The suggestion that the Treasury thinks that a person on £30k a year can buy a home in London is frankly laughable and salt in the wound.” How does the Minister expect my constituents in Vauxhall who are already struggling to pay their rent to save to buy a new home on a salary of £30k?

I will be very happy to write to the hon. Lady and to talk to her constituents about the unprecedented intervention that we have made to protect them this winter from their energy bills, putting valuable certainty and confidence not just into every household, but into every business and the economy. That is why the International Monetary Fund has today increased its growth forecast for the United Kingdom.

Growth Plan: OBR Assessment

7. If he will publish an assessment by the Office for Budget Responsibility of the growth plan 2022 before 23 November 2022. (901550)

The hon. Gentleman will have seen that I have brought forward the publication of the medium-term fiscal plan to 31 October.

I think the House will agree that the uncertainty over the date has not exactly helped forward planning on benefits. Any real cut in benefits will mean people not having enough money to buy food and clothing for their children, so does the Chancellor agree that increasing benefits in line with inflation is the only fair way forward? Indeed, it would be immoral to do otherwise. As the chief executive of Inverness citizens advice bureau pointed out to me, such benefit money is spent in the local economy and is a boost to what the Chancellor has talked about many times: growing the economy.

I am delighted to see that one member of the anti-growth coalition is focusing on growth. However, on the hon. Gentleman’s specific question, he will understand that the medium-term fiscal plan is coming out on 31 October, and I will not prejudge any measures in it.

Does my right hon. Friend agree that the levelling-up fund is an important part of the plan for growth, and has he seen Harlow Council’s levelling-up fund bid, which I wholeheartedly support? It would transform a derelict area of our town centre into a thriving cultural quarter with jobs and investment, tackling antisocial behaviour. Those abandoned buildings have blighted the heart of our town for far too long.

My right hon. Friend is a redoubtable and highly persuasive representative of his constituents. I would be happy to talk to him about what we can do together to help his great constituency.

The Bank of England has had to intervene not once, not twice, but three times now. The impact on pension funds is very significant, and many of my constituents will be deeply worried. What assessment has the Chancellor made of the impact of potential additional pressures on the economy on public sector pensions and the damage to pension funds for pensioners up and down this country? Is that another reason why he did not want to publish the OBR’s forecast at the time of his mini-Budget?

The OBR will be fully scoring and giving a forecast ahead of the medium-term fiscal plan. I speak very frequently to the Governor of the Bank of England, who is absolutely independent and is very effectively managing what is a global situation.

I very much welcome my right hon. Friend’s decision to bring forward the medium-term plan and the OBR forecast; he has listened, and he is right. However, may I caution him to reach out as much as he can across both sides of the House, to be certain that he can get through this House the measures he puts forward to underpin that forecast? Any failure to do so will unsettle the markets.

My right hon. Friend is absolutely right. He does a brilliant job of chairing his Committee and is full of wise counsel; he is absolutely right that we will and should canvass opinion widely ahead of the publication of the plan.

The OBR was the creation of a Conservative Government and was designed to curtail wishful thinking in economic policy, so does the Chancellor agree that it is unfortunate, to say the least, that we seem to have Cabinet Ministers briefing against the economic expertise of that independent institution?

As far as I am concerned—I speak to investors regularly about this—the OBR is an institution that commands wide respect, not only in the UK but across the world. Its independence, to me, is absolutely sacrosanct.

The energy price guarantee is an outstanding part of the growth plan. It is key, but far too few businesses and households know about it. May I urge the Chancellor to have a nationwide mail-out campaign, coupled with the Government taking the lead on the reduction of energy in all public buildings, as Germany and other countries are doing? That would have the twin benefits of saving consumers money and reducing taxpayer subsidies.

My hon. Friend makes an excellent suggestion. Obviously I am very careful not to make unfunded spending commitments on the Floor of the House, but his suggestion is very well made and we should look into it.

The Chancellor’s refusal to publish OBR forecasts just over two weeks ago played a key role in falling confidence in the pound, rising borrowing costs and market panic. His woeful decision to avoid scrutiny by gagging the OBR helped to increase mortgage costs for working people, who are now paying the price for Conservative failure.

The Chancellor’s behaviour has been described by the former Bank of England Governor Mark Carney as “undercutting” economic institutions. Jonathan Haskel, a member of the Monetary Policy Committee, has made it clear that a

“sidelined OBR generates more uncertainty”.

Does the Chancellor accept that they are right?

As I have repeatedly said today, the OBR will have a fully forecasted and scored response to the medium-term fiscal plan in less than three weeks.

Research and Development

At the 2021 spending review, the Government announced an increase in public expenditure on R&D to £20 billion a year by 2024-25, including funding for association to EU programmes.

I thank the Chancellor and his team for making the Treasury a growth Department. Do they agree that innovation-led growth is particularly important if we want to drive up productivity, competitiveness and inward investment, and that our high-growth sectors such as space, agritech and fusion have a big role to play? Will the Economic Secretary specifically reassure those in the R&D community that he will not be tempted to reduce the allocation for Horizon or for science and research in the comprehensive spending review? That would reassure the markets.

Very few Members can look back on a track record of commitment to R&D as significant as that of my hon. Friend, both as a Minister and as a Back Bencher. I am happy to confirm to him that we will abide by the spending review 2021 decisions, and that that includes funding for core Innovate UK programmes, for association to Horizon Europe and for the Advanced Research and Invention Agency.

The Minister needs to be much more specific about the Horizon Europe programme. Is he aware that the Nobel laureate Sir Andre Geim has said that top academics are leaving the country in despair because the Government are not negotiating on Horizon Europe? When will the Government do something—now?

The right hon. Lady is right about the importance of this issue. The United Kingdom absolutely wishes to move forward, and we would hope that the European Union would move forward apace with us to reach an agreement.

Loan Charge

The loan charge was announced in the 2016 Budget as part of a package of measures to tackle disguised remuneration tax avoidance. In the 2022 spring statement, it was estimated that the package would produce an overall Exchequer yield of £3.4 billion. The changes resulting from the 2019 independent review of the loan charge have reduced the Exchequer yield by an estimated £620 million.

Too many ordinary people are facing huge bills, untold distress and, in some cases, personal harm and indeed suicide because of the loan charge scandal. Can the Minister and the Government now commit themselves to finally commissioning a truly independent review to deal with this mess?

I do not think that any Member who has met constituents who have been affected by the loan charge can have failed to be moved by the emotional and psychological impact that it has had on many of them. It is therefore right for me, as a Minister, to look at the issue carefully, and I can say to the hon. Member that I will engage all interested parties.

Levelling-up Agenda

12. What fiscal steps his Department is taking to fund the Government’s levelling-up agenda in the north of England. (901556)

It is a pleasure to answer my first question at the Dispatch Box, and to reply to the hon. Member for Barnsley Central (Dan Jarvis), who responded to my maiden speech.

The White Paper “Levelling Up the United Kingdom” set out a clear plan to level up every corner of the UK by 2030. We are also driving growth and unlocking housing across the UK with our new investment zones, and we are continuing to invest billions in regional infrastructure. That includes £1.7 billion allocated under the levelling-up fund, of which £500 million went to the north.

It is a pleasure to see the Minister at the Dispatch Box, and I congratulate her on her appointment.

Previous Chancellors have not delivered the level of transformative resource required for levelling up. I know that the present Chancellor understands the huge potential that exists throughout the north of England, but it seems to many of us that the levelling-up agenda is sipping in the last chance saloon. Can the Minister say what will be done differently under this new Chancellor?

We are absolutely committed to the levelling-up agenda. South Yorkshire received £570 million through the regional cities transport scheme, £95 million through the levelling-up fund and £46 million through the shared prosperity fund, and our ambitions for levelling up continue.

Building on Bradford’s city of culture win and in a momentous year for Rugby League, I am supporting the plan for the transformation and regeneration of the home of the Bradford Bulls, the iconic Odsal stadium, to become a world-class sports, music and culture arena. This plan would be an incubator for the ambitions of the entire Bradford district, delivering more than £1 billion of socioeconomic benefits. Following the Bank of England’s repeated interventions, can the Minister confirm that round 2 of the levelling-up fund will still be going ahead in full, and will she and the Chancellor demonstrate that by meeting me, Bradford Council, the Bradford Bulls and the Rugby Football League to discuss our catalyst for growth?

I can confirm that we will be going ahead with the second round of the levelling-up fund. There should be decisions by the end of the year, and I wish the hon. Lady well with her bid. An independent assessment of the bids is going on at the moment, but if that meeting is possible, we will do it. Clearly we would need to decide if that was appropriate. I congratulate her on her success in the first round of the levelling-up bids, where she got £20 million for the Squire Lane leisure centre.

The renewable energy sector is vital to my constituency and the neighbouring area, and it has done a great deal to level up the local economy. Can the Minister give me an assurance that support for the sector will continue?

We are very much committed to the sector, and I would be delighted to sit down with my hon. Friend to discuss this further.

A key part of levelling up is the creation of investment zones, and the Chancellor will be aware of the proposals for a gigafactory at Coventry airport to support UK automotive manufacturing. Does the Minister agree that the joint application by the Labour Coventry City Council and the Conservative Warwickshire County Council for an investment zone at Coventry airport should be encouraged?

We are encouraging all higher and local authorities to look at the investment zones and to apply. I think they are a great tool for development, so I would absolutely encourage that application.

“Never has so much chaos been inflicted on so many by so few” will be the motto that will reverberate down the eons from this Government. Do they actually still believe in this fairy tale of levelling up? Is it not now just a matter of how far they are going to level us all down?

Everything we are doing is being driven by a growth agenda so that we can level up all the way across the United Kingdom.

The Eden Project North is, as far as I am aware, the only project in the second phase of the levelling-up round that has planning permission and land allocated. I would like to know when the decisions will be made so that we can get this shovel-ready scheme going. Eden has £50 million to put on the table, and we are asking for £50 million as match funding, in effect.

Decisions on the second phase of the levelling-up round will be made by the end of the year, and I wish my hon. Friend well.

Inflation

13. What recent discussions he has had with the Secretary of State for Work and Pensions on the potential effect of inflation on that Department’s budget. (901557)

I have regular discussions with my right hon. Friend the Secretary of State for Work and Pensions. If the hon. Member’s question relates to the operating budget of the DWP, we expect Departments to live within their existing CSR21 allocations. If his question relates to the level of benefits more generally, a statutory process is undertaken every year and no decisions have yet been made. They will be made in due course in the normal way.

I thank the Minister for his answer, if not for his recent tweets. Has he had any representations from the Secretary of State for Work and Pensions to increase social security payments in line with inflation? Far too often, this Government talk about their agenda for growth, but failure to increase in line with inflation will result only in a growth in food banks in Easterhouse, in fuel poverty in Carmyle and in child poverty in Baillieston. When is the Minister going to do the right thing and commit to raising social security in line with inflation and not with earnings?

I am obviously not going to offer any kind of running commentary on the ongoing internal discussions. I have said that the normal ordinary statutory process is ongoing, but the Government are mindful of the cost of living pressures that people are facing. I would draw the hon. Member’s attention to the large increase in the national minimum wage—I think about 7%—that took place last April or May, and there are now more vacancies in the economy than there are people on unemployment benefits.

Can the Minister confirm that the Government will not balance the forthcoming tax cuts on the backs of the poorest people in our country?

The Government’s first objective is to ensure that the economy is growing. That will help to lift wages and to create new jobs and a sustainable tax base for our public services, but as we make the decisions that my right hon. Friend refers to, we are going to balance considerations of fairness and the cost of living pressures that people suffer with the interests of the taxpayers who are working hard to pay tax.

The Minister talks about vacancies in the job market. There are vacancies, of course, but many of my constituents earn under £12,000 a year. They will not benefit from the tax cut, so they rely on universal credit to make up the gap. They cannot afford to work because of the high cost of childcare. They are already on the poverty line. What is his advice to them? Will he give us some comfort that the Government will make the right decision on uprating benefits?

I have already explained that the normal statutory process is under way. When it comes to helping people on lower incomes, I mentioned the very significant increase in the minimum wage just a few months ago. We made an unprecedented intervention this year, amounting to £37 billion, which is disproportionately directed towards people on lower incomes. The one third of households on lower incomes are receiving an extra £1,200 this year.

The hon. Lady also referred to the fact that people earning £12,570 or less pay not a penny of national insurance and not a penny of income tax, which is thanks to the action of this Conservative Government.

Business Innovation

The Government are encouraging business innovation in many ways, of which I will enumerate four. As I mentioned to my hon. Friend the Member for Mid Norfolk (George Freeman), there is a significant uplift in R&D expenditure, with £150 million of innovation loans over the spending period, research and development tax relief, long-term investment in technology and science—a competition is providing up to £500 million in Government support—and the British Business Bank is supporting innovative businesses, including through the future fund.

Owners and entrepreneurs behind small businesses such as Code Ninjas in Bridge Street in my constituency are a key part of the Government’s growth agenda. What steps does my hon. Friend have in mind to enable such small and medium-sized enterprises to create further jobs and growth?

Oh, right. Perhaps I can visit my hon. Friend’s constituency to learn what the company does.

More generally, the growth plan focuses on important measures to support small businesses that wish to grow, including by making the £1 million annual investment allowance permanent, by looking to expand the amount of money that can be given through the seed enterprise investment scheme to help small businesses to grow and, most importantly, through the Government’s energy price support this winter.

Topical Questions

This Government are relentlessly focused on growing the economy. Putin’s barbaric war in Ukraine continues to put pressure on gas prices so, with predictions of typical bills reaching between £4,000 and £6,500 a year, people needed immediate support to get them through this winter.

Last month we set out the growth plan, which will focus on breaking out of the high-tax, low-growth cycle in which we are currently trapped. This will put more money into people’s pockets and raise living standards for all our people. This week I wrote to my right hon. Friend the Member for Central Devon (Mel Stride) to inform him that I will set out the medium-term fiscal plan on 31 October, and I wish to remind the House that it will be accompanied by a full economic and fiscal forecast published by the Office for Budget Responsibility.

The Chancellor sat in a Cabinet that committed to increasing social security payments in line with inflation. Why will he not honour that promise?

As my right hon. Friend the Chief Secretary to the Treasury and I have repeatedly said, no decisions have been made. The usual statutory process is being undertaken, and we will have more detail at the time of the medium-term fiscal plan.

The Chancellor will know that Essex is a pro-growth county and a hub of economic growth. To support job creation and more economic growth, will he commit to funding the dualling of the A120 between Braintree and Marks Tey and, importantly, along the route that the county council, businesses and the local community have specified?

I pay tribute to my right hon. Friend for her role in the Cabinet and the Government. She is a fantastic colleague. I wish to confirm that the A120 between Braintree and the A12 remains under active consideration, alongside the rest of the third road investment strategy pipeline.

Since the Chancellor’s disastrous mini-Budget just 18 days ago, we have seen wild swings in the value of the pound, gilt yields up 100 basis points in a single day and the Bank of England stepping in because of, in its words,

“a material risk to UK financial stability”.

The International Monetary Fund has now said that UK growth is to slow further next year. This is a British crisis, made in Downing Street; no Government are sabotaging their own country’s economic credibility as this Government are. Are the Chancellor and the Prime Minister the last people left on Earth who think their plan is working?

To pick up on a point, the IMF said today that the plan—the mini-Budget—has increased the forecast for growth. That is precisely the opposite of what the hon. Lady has said. It is very clear where we stand on this. We have pro-growth, pro-enterprise, pro-business Conservatives on one side and the anti-growth coalition on the other—they want to tax more and commit us to low growth.

The Chancellor is in a dangerous state of denial, but the costs of these mistakes are all too real for everyone else: borrowing costs up; growth down; and mortgage payments set to increase by £500 a month. Now the Government scrabble around looking for cuts, hitting the most vulnerable and our public services. It does not need to be this way. Will the Chancellor put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the Budget?

Which of the tax cuts do the Opposition want to stop? Do they want to stop the cut in the basic rate? Are they committed to having a high tax economy? The other thing I suggest is that the hon. Lady should get her facts right; the IMF today has said that our growth is going up, not down.

T4. Early results from my local business survey strongly suggest that a lower VAT rate would increase investment, which would boost recovery and growth in the hospitality sector in my beautiful constituency. Will my right hon. Friend be reviewing the case for a lower rate, to bring us back into line with some of our international competitors? (901572)

Eastbourne is indeed beautiful, as are North East Bedfordshire and many other parts of the country. My hon. Friend is right to talk about the importance of VAT to the hospitality industry, particularly as we moved through the period of covid recovery. As we now move towards the growth plan, we need to look at the level of taxes on small businesses in general. That is a key part of the work I will be looking at as part of the tax simplification plan.

T2. Push payment fraud losses increased by 71% in the first half of 2021, surpassing card fraud losses for the first time. What steps is the Chancellor taking to tackle this huge surge in fraud, and importantly, to ensure that victims, including my constituents, are reimbursed for their losses, instead of being unfairly penalised for falling victim to these increasingly sophisticated scams? (901570)

Push payment fraud is a growing problem, which the Government take very seriously. That is why we will be taking powers in the Financial Services and Markets Bill that will mandate reimbursement to consumers.

T7. It is a massive relief that the nightmare scenario of energy bills of £4,000, £5,000 or even £6,000 has been prevented by the energy price cap. Will the Government explain how they are reducing the cost to taxpayers of that scheme and stabilising the energy market for the future? (901575)

My right hon. Friend was 100% right to notice that the energy intervention was exactly the right thing. We are going to have a commitment to fiscal responsibility, which will stabilise the economic situation and picture, and I am sure that her constituents will fully understand what the growth plan is all about: putting more money into their pockets so that we can have a growing and dynamic economy.

T5. The Scottish Government announced yesterday that they will be doubling the December bridging payment granted to low-income families, to £260. The Child Poverty Action Group noted that this will make “a real difference” to households struggling with the cost of living crisis. What plans do the UK Government have to follow suit and bring in targeted measures for low-income households? (901573)

As my right hon. Friend the Chief Secretary said earlier, most of the measures that constitute the £37 billion intervention were targeted directly at the vulnerable constituents of all of us in this House. The energy price guarantee will also be greatly beneficial to people across our country who are suffering because of the cost of living. The Government are committed to a huge amount of intervention, and our top priority is making sure that everyone gets through challenging times as best they can.

T8. The Chancellor has provided families across Sevenoaks and Swanley with vital support for their energy bills. However, in the past year the price of heating oil has more than doubled for my more rural constituents who are off the mains gas grid. The £100 support is welcome, but will the Chancellor and the Business Secretary review the support in the light of those severe price rises? (901576)

Absolutely. I am in frequent contact with my right hon. Friend the Business Secretary, and we have sequestered and dedicated a pot to help people who are off the gas grid. We are happy to help my hon. Friend and her constituents in this challenging time.

T6. Given that the Bank of England is having to go even further to refinance the UK Government bond market, what discussions has the Chancellor had with the Pensions Regulator about the viability of defined benefit schemes and the devaluation of defined contribution schemes and annuities—or will workers have to pay for this? (901574)

My hon. Friend the Financial Secretary to the Treasury and I are engaged with all the regulators, particularly the Prudential Regulation Authority, and we will be absolutely committed to getting to the bottom of what has happened, particularly in the long-dated gilt market, which has been over-levered in the past few weeks.

T9. The Chancellor has said that he will set out a fully costed plan to get debt falling as a proportion of GDP, and he has confirmed at the Dispatch Box that that will be done in just under three weeks’ time. This morning’s Institute for Fiscal Studies report suggested that in order to do so, there will need to be fiscal tightening of around £62 billion over the next four years. Does the Chancellor agree with that analysis? If, as I suspect is the case, he does not, will he set out why not? (901577)

As I have said repeatedly, I am not going to prejudge what is in the medium-term fiscal plan, which will be fully scrutinised not only by the OBR but, I am sure, by my right hon. Friend. I do not think that it is right for me to prejudge or anticipate those measures today.

Despite the Chancellor’s confident words, the IMF is predicting that inflation will last longer in this country than in other similar economies. In my constituency of Edinburgh West, which has half the national average rate of unemployment and claimants, people are so concerned that more than half of them are talking about cutting their essential budgets, and, according to recent reports, 20% are concerned that they might have to turn to food banks for the first time. When will the Chancellor reassess the potential impact of this growth plan and accept that maybe he has got it wrong?

The IMF specifically said this morning that the 2023 forecast for growth in this country has gone up as a direct consequence of the mini-Budget. In respect of helping constituents up and down the land, we have already committed £37 billion of energy support this year and a further £60 billion to houses and businesses over the next six months, and we are committed to making sure that every one of our constituents gets through this winter as best they can.

Numerous residents such as those at Harwood Bar caravan park have been in touch with me about the £400 energy support scheme. The previous Chancellor confirmed that there was an equivalent scheme for those in caravan parks and park homes. Could the Chancellor please provide an update for my constituents in Hyndburn and Haslingden?

As I said in relation to heating oil, a pot of money is going to be reserved to help people who are off the grid. We have already made announcements about that, but I would be very happy to speak with my hon. Friend and my right hon. Friend the Business Secretary.

The upkeep of the Chester city walls costs about £600,000 a year, but that money has to come out of the local authority’s highways budget. Can the Government set aside a small amount of money to help local authorities with the stewardship of internationally important heritage assets?

The Government continue to support the heritage and cultural sector. There are several sources of funding from Government arm’s length bodies such as the National Lottery Heritage Fund and Historic England’s repair grants, so I encourage the hon. Gentleman to look into those.

Since the 1970s, residents in Eastleigh have long been expecting, and have been promised at times, funding for the Chickenhall Lane bypass, including being allocated funding in the 2015 Red Book. Will the Minister agree to meet me and Hampshire County Council to discuss getting this sorted for people who have simply waited far too long?

My hon. Friend is a tireless advocate for that and other projects in his constituency. I and perhaps colleagues from the Department for Transport would be delighted to meet him and his county council colleagues to discuss that important project.

The Chancellor was warned that unfunded tax cuts would force the Bank of England to increase rates and that is exactly what has happened. The Bank of England has said today that, in effect, the mini-Budget has caused a material risk to Britain’s financial stability. Can the Chancellor explain how people are supposed to pay their mortgages, which have gone up by £500 on average and £900 in London? What is he going to do about it, because it is not acceptable that his incompetence is risking people’s livelihoods?

I have two points to make on that. First, the Bank of England certainly did not say that the mini-Budget increased risk. Secondly, as rates are rising throughout the world, there is exposure. That is precisely why we thought that it was absolutely right to have the energy intervention, which is for two years—let us not forget that the Labour plan was for only six months —and to reduce the burden on people by reducing taxes.

Talking to people working in the housing industry in Winchester, I have found that they are not convinced that the stamp duty reduction will help first-time buyers while inflation and particularly mortgage rates are creeping up. Lenders are coming back with some good rates, and the Chancellor will know that, but when he delivers his statement on 31 October, will he ensure that it has confidence at its heart and that it is—knowing him, it will be—a relentlessly positive statement, so that we can push confidence right the way through the market?

It will be relentlessly upbeat. These are challenging times, but we have to live within our means and there will be an absolute iron commitment to fiscal responsibility.

Will the Minister admit that, if the Government do not increase the guarantee credit component of pension credit in line with inflation this year, they are effectively cutting the incomes of our poorest pensioners when they need help most?

We are absolutely committed to fairness and to helping the most vulnerable in our society—we are always committed to that—and I will not prejudge or anticipate measures in the medium-term fiscal plan this afternoon.

Will my right hon. Friend confirm that the cuts to national insurance will help not only working households, but businesses and the public sector, such as schools?

My hon. Friend and constituency neighbour is absolutely right. The reversal of the planned increase in national insurance will help businesses, individuals and the institutions to which he refers.

There will be more detail about investment zones. My right hon. Friend the Secretary of State for Levelling Up, Housing and Communities will be updating the House on the specifics of the zones.

Thank you, Mr Speaker. The UK has rightly frozen around £30 billion of Russian foreign currency reserves. A number of countries are moving from freezing those assets to seizing them to pay reparations to Ukraine. Will my right hon. Friend look at similar measures from the UK?

Those measures have been discussed in the past; I think my right hon. Friend the Member for Surrey Heath (Michael Gove) talked about that earlier in the year. Those schemes are always being looked at in the light of what is an increasingly bleak and volatile situation in Russia and Ukraine.

Ukraine

(Urgent Question): To ask the Secretary of State for Defence to make a statement on our policy to deter and, if required, respond to the use of nuclear weapons by President Putin.

Russia’s continuing assault on Ukraine is an unprovoked and premeditated attack against a sovereign democratic state and it continues to threaten global security. This week, my right hon. Friend the Secretary of State for Defence is meeting with Defence Ministers in Brussels to discuss further support for Ukraine, and later today my right hon. Friend the Prime Minister will be speaking to members of the G7.

I can assure the House that the UK and our allies remain steadfast and united in our support for Ukraine. As previously set out to the House, Defence is playing a central role in the UK’s response to the Russian invasion, providing £2.3 billion-worth of military support and leading in the international response.

We were the first European country to provide lethal aid to Ukraine. To date, we have sent more than 10,000 anti-tank missiles, multiple-launch rocket systems, more than 200 armoured vehicles, more than 120 logistics vehicles, six Stormer vehicles fitted with Starstreak launchers and hundreds of missiles, as well as maritime Brimstone missiles. In addition, we have supplied almost 100,000 rounds of artillery ammunition, nearly 3 million rounds of small arms ammunition, 2,600 anti-structure munitions and 4.5 tonnes of plastic explosive.

Defence is also providing basic training to Ukrainian soldiers in the UK. To date, we have trained over 6,000 Ukrainian recruits in the UK, and we continually review and adjust the course to meet their requirements. Defence will continue to respond decisively to Ukraine’s requests and the equipment is playing a crucial role in stalling the Russian advance and supporting our Ukrainian friends.

President Putin’s comments on nuclear are irresponsible. No other country is talking about nuclear use. We do not see this as a nuclear crisis.

Thanks to our support and that of allies, Ukrainian forces have done the unthinkable in pushing back Russian force. However, with Putin now on the back foot and the third largest military in the world humiliated, this conflict has entered a darker chapter and we cannot be bystanders. Putin cannot be seen to lose this war and, as his response to the Kerch bridge attack shows, he is stooping to ever more unconventional tactics. The threat of Putin’s turning to tactical low-yield nuclear weapons remains low, but it has increased, posing questions for Britain and the United States that must be addressed before, not after, that line is crossed.

Russian military doctrine allows first use of nuclear weapons in response to conventional attacks on Russian soil. That is why the sham referendums took place in the Donbas region—so that Putin could claim it was part of the motherland. In response, as things stand, our formal position is so-called strategic ambiguity: the promise of a response, but no public clarity on what that might be.

We gained a reputation for blinking when it came to Georgia, on chemical weapons use in Syria and when the Crimea was annexed. I believe we should state now what our conventional response would be to Putin’s either deploying nuclear weapons directly or targeting hazardous infrastructure such as chemical or indeed civil nuclear plants. Such clarity could be the very deterrent that helps to prevent such hostile actions from taking place, rather than the vague position we have now.

Our adversaries—not just Russia—must know and fear the military consequences of daring to resort to using nuclear weapons, even if they are low yield. This is not an operational decision but a political call. We have a duty to do all we can to deter Putin from going nuclear. Let us not leave it to chance. Let us exhibit the robust statecraft and engagement that this unpredictable war now requires.

I am grateful for my right hon. Friend’s comments. I reiterate what I said at the start: President Putin’s comments are irresponsible. No other country is talking about nuclear use, and we do not see this as a nuclear crisis. President Putin should be clear that, for the UK and our allies, any use of nuclear weapons at all would break the taboo on nuclear use that has held since 1945 and lead to severe consequences for Russia.

President Putin has launched an illegal and unprovoked invasion of Ukraine. His forces continue to commit senseless atrocities. The people of Ukraine seek only to restore their sovereignty and territorial integrity, and we will continue to support Ukraine’s right to defend.

My right hon. Friend speaks of tactical nuclear missiles, but nuclear is nuclear. I reiterate what the Secretary-General of NATO said:

“President Putin’s nuclear rhetoric is dangerous. It is reckless. NATO is of course vigilant. We monitor closely what Russia does. Russia must understand that nuclear war can never be won and must never be fought. And it will have severe consequences for Russia if they use nuclear weapons. And this has been very clearly conveyed to Russia. So we will continue to support Ukraine. And we will continue to support them in their efforts to liberate even more territory, because they have the right to do so.”

It is not and never has been tactically smart to outline exactly what the response would be to any potential situation. We will continue on the lines that this Government and, indeed, the Secretary-General have outlined.

I welcome the new Minister to his place. It is because Ukraine is winning that Putin’s behaviour is becoming so volatile. The sham referenda, the irresponsible nuclear sabre-rattling, the missile attacks on civilians—these are the hallmarks of a tyrant on the ropes and a tyrant who is losing.

Labour stands with our friends in Ukraine. With our unshakeable commitment to NATO, the Minister knows that he has our full support for the actions the Government are taking to help Ukraine win. Yesterday’s missile attacks on civilians are a significant escalation. The NATO Secretary-General was right to describe the attacks as “horrific and indiscriminate”.

Ministers have Labour’s full support in countering Putin’s aggression. In that spirit, I ask the Minister when he will set out a long-term strategy of support for Ukraine, so that we can make sure that Putin’s war ends in failure. Can he confirm that the NLAW—next generation light anti-tank weapon—replacement orders have finally been placed? When does he expect to replenish our depleted weapons stockpiles? What assessment has he made of the worrying statements by Lukashenko and the continued presence of Russian troops and armour in Belarus?

I would be grateful if the Minister addressed the concerning media reports of the withdrawal of almost 700 British troops currently deployed to our NATO ally Estonia, without any planned replacement. That risks sending the wrong message at the wrong time, and it has worried our international allies. We cannot walk away until the job is done. With that in mind, will he reassure the House that he will not withdraw any further UK troops from our allies, and that the UK will meet our NATO commitments?

Finally, as more bodies are unearthed at the sites of war crimes, we remember them and we remember those killed yesterday in Putin’s criminal missile strikes. Does the Minister agree that the best justice for those killed is victory for Ukraine, a free and sovereign nation, and war crime tribunals for those responsible?

I am grateful to the hon. Gentleman for his kind comments and I look forward to working across the Dispatch Boxes on these vital issues.

On the hon. Gentleman’s comments about the horrific war crimes we have seen unfold every time there is a Russian retreat, I think that every decent human being is appalled. I am proud that the UK Government are funding the International Criminal Court, and we will do everything we can to support Ukraine in bringing the perpetrators of these horrific crimes to justice.

I hope the hon. Gentleman will forgive me if I come back to him with a written answer on the postures from Lukashenko.

On Estonia, the overall capability of our commitment there is far more important than the number of troops alone. We have committed to strengthening that capability over the forthcoming years. I was in Estonia, and indeed Latvia and Lithuania, in my previous role in the NATO Parliamentary Assembly. I have seen at first hand the work that takes place there. All our NATO allies can be reassured that we are committed to making sure that the NATO frontline is secure. We work with colleagues and there will be variation in how that is done.

With regard to support, the hon. Gentleman will have noticed that my right hon. Friend the Secretary of State for Defence has set up the international support fund. This country contributed £250 million to that, and I believe the total figure is now above €400 million. That is in place to help support Ukraine as this war moves forward and the conflict carries on, so that it can use that money not only in the conflict but to rebuild and, of course, ensure it has the ammunition supplies and things it needs.

With regard to NLAW and our weapons supply, we are working with industrial supply chains and are confident that we will have the ability to defend ourselves and to give support, but we do not comment on operational capability beyond that.

I welcome my right hon. Friend to his position. What has happened over the past few days is a war crime if ever there was a war crime, and I hope that the Government and the whole alliance will now commit to the pursuance of all those responsible for the deliberate targeting of civilian areas. There can be no respite and we should be sanctioning anybody we think has had anything to do with it.

I agree that ambiguity is not the same as no plan. The purpose behind what Putin is doing now is to split the alliance—everything he does is to split the alliance. What he wants is for part of the alliance to get wobbly and worried about the potential use of nuclear weapons and to start calling for negotiations. The critical issue here is that all of the alliance must remain united on the idea that we have a plan, but it is for the Minister to judge whether we would ever use nuclear weapons, not for us to say whether we would, and the alliance would stay together.

I am most grateful to my right hon. Friend for his kind comments. On his point about nuclear rhetoric, we have seen this pattern before. President Putin uses it as a sabre to rattle, to try to deter us and distract our efforts in Ukraine. It simply will not work because, fundamentally, NATO is a nuclear defensive alliance, and it will be for all the time that nuclear weapons exist. It is one that has been successful, and it is one that President Putin should take notice of. What is important at this moment in time, as we talk about the nuclear sabre-rattling, is that we stay calm, analyse the situation as it is and demand that he steps back from this dangerous nuclear rhetoric, so that there cannot be any miscalculation on any side as we move forward.

On war crimes, I fundamentally agree with what my right hon. Friend said. We will do everything to bring to justice those who have perpetuated these horrific crimes, which go against every aspect of the Geneva convention. Every day that this war goes on, more and more war crimes are committed.

I am pleased to welcome the new Minister to his place. These barbaric attacks by Russia on Ukraine’s civilian population and infrastructure, together with its extremely unwelcome nuclear rhetoric, demonstrate the renewed urgency with which Ukraine’s defensive capabilities need to be upgraded, particularly its air defences, such as that which Germany and the United States are sending. What anti-air assets is the UK sending, and how can that be accelerated and increased?

Moreover, is the UK, like Estonia, preparing to send more winter equipment to assist defensive operations in Ukraine throughout its long, harsh winter? Similarly, what further assistance will the world-leading cold weather combat specialists 45 Commando, based in Arbroath, be tasked with to support Ukraine’s defence forces in their winter combat operations? The Minister attempted to justify the halving of numbers in Estonia by saying that this is not a numbers game, but of course force strength is all about the numbers, and I wonder how he thinks they will be viewing that in Estonia and Moscow. Perhaps he can explain to the House what recent behaviour from Russia has indicated a lessening threat to our NATO allies on the eastern flank, from whom the UK appears to be shamelessly walking away.

I thank the hon. Gentleman for his kind comments. On Estonia, we are not talking about the UK walking away from a NATO ally; this is about NATO defence, and NATO operations that vary over time. We work with our allies. I have recently been to these countries, and have seen the exercises taking place and how we play a part in them. We should not focus on just one area and then suggest that we have walked away; we have not.

On the hon. Gentleman’s air defence questions, of course we have Stormer vehicles and Starstreak missiles. We remain committed to delivering what Ukraine needs, when it asks for it, in the light of how, tactically, it can best be used. Operational capabilities are the subject of constant conversation between the Ukrainian and British Governments. On cold weather preparation, we are working exceptionally closely with the Ukrainians to supply them with the equipment and training that they need to get through this winter.

I am delighted to see my right hon. Friend in his position. He talked about the coalition of countries that have been helping Ukraine to defend itself, which includes the United Kingdom—something of which we should be very proud. Will he confirm that Iran has supplied Mohajer-6 and Shahed-series unmanned aerial vehicles to Russia? What other countries are giving logistical support and weaponry to Russia in its war of choice against the Ukrainian people?

I am grateful to my right hon. Friend for his comments. I hope that he will forgive me if I cannot answer that question directly; I will write to him when I have the facts and the answers.

Yesterday, I was talking to Natalia, a Ukrainian teacher who came to my constituency with her seven-year-old twins when the war broke out. She watched in horror over the weekend as bombs rained down on her home city of Kyiv. Her husband and mother are hiding in a bomb shelter. Natalia’s six-month placement under the Homes for Ukraine scheme is at an end, and she is terrified of having to return with her children. What conversations has the Minister had with his colleagues in the Home Office and in the Ministry of Housing, Communities and Local Government to ensure that those who have fled war do not face homelessness as placements come to an end?

The hon. Lady raises an important issue, which was mentioned earlier. If she sends me the exact details, I will talk to colleagues in the Home Office.

Events on the edge of Ukraine have become more and more alarming over the last few days. Clearly there is a major role for NATO in trying to bring back a peaceful situation. What information can the Minister, whom I congratulate on his new position, share with us today on talks that we have had with countries such as China and India, which may have useful leverage with Putin?

Of course, the response to the situation in Ukraine is Government-wide; it involves the Foreign Office as much as the Ministry of Defence. Responsibility for the relationships that my hon. Friend mentions sits in the Foreign Office, and I am sure that my right hon. Friend the Foreign Secretary will have heard his comments.

Do the Government regard the Kerch bridge, which links Russia with Ukrainian territory seized by Russia in 2014, and which was attacked over the weekend, as a legitimate military target? Would the Minister care to contrast that target with the pictures we saw yesterday of a large missile crater in Kyiv, right next to a children’s playground?

Of course, Crimea is Ukrainian territory that has been invaded. Any allegations about what happened at the bridge, and any questions about what is behind the attack, are for the Ukrainians to answer, but what happened at Kyiv is simply a war crime. We will make every effort to hunt down the people responsible and to bring them to justice.

My right hon. Friend is a reassuring presence at the Dispatch Box, and I congratulate him on his recent appointment to his post. Does he agree that all that will deter Putin from the use of nuclear weapons is the thought that: a) they may be ineffective; and b) their use may not result in the west withdrawing its military support for Ukraine, which is what has enabled it to resist successfully so far? Is it not therefore imperative that the west makes it clear that the support will continue? Did he note the remarks of General David Petraeus, who said that western support, in conventional terms, would be redoubled if Putin made any such move?

I am grateful to my right hon. Friend for his kind comments. Indeed, General Petraeus really just outlines the situation overall that NATO is united. It is a defensive force and a nuclear defensive force. I am proud that this country has had a constant at-sea nuclear deterrent for almost 54 years. Statistically, that is deemed to be impossible, but it is something we have achieved and continue to achieve. That acts as a major counterbalance to any leader of a country who may be thinking that nuclear weapons may be something to use. The policy has been shown to work, but we have to calm down and take the air out of the talk about where we are moving with the nuclear rhetoric. It is highly irresponsible of the Kremlin to be upping the rhetoric on nuclear weapons, and I hope that it will draw back from those comments, because the last thing we want to see is any miscalculation and we must make sure that it does everything to take it out. Fundamentally, to answer my right hon. Friend, the NATO alliance is showing just how united it is and that it will stand up to this level of nuclear threat.

I thank the right hon. Member for Bournemouth East (Mr Ellwood) for tabling this urgent question on the enormously important issues that we have been discussing. I must disagree with his suggestion in newspapers today that we reconsider no-fly zones over Ukraine’s cities and critical national infrastructure, and expediting Ukraine’s membership of NATO. Putin is ever weaker at home in Russia, and while this is a failed operation in Ukraine against Ukraine, his popularity could grow significantly in Russia if his attempts to paint this as a NATO-Russia conflict are successful. Can the Minister outline what further steps the Government intend to take to ensure that we and all of our NATO allies are as one in deciding what additional support can be provided to Ukraine?

I am grateful to the hon. Gentleman for his comments, and I think his attitude to no-fly zones and NATO membership is based in reality. What we are seeing is the NATO alliance and other allies around the world determined to give the support that we can give to Ukraine. There is no suggestion of backing down on that support, and we have support from outside the NATO allies. It is an international coalition that is helping to train Ukrainian troops, helping to contribute towards the international funds and, indeed, supplying lethal and non-lethal aid, and that alliance is growing stronger.

I refer to my entry in the Register of Members’ Financial Interests.

During the recess, I had the opportunity to travel to Lviv and Kyiv to see the work of the HALO Trust, which is a charity based in my constituency that focuses on de-mining and attempting to bring areas back to a degree of normality. I was struck by two things in Ukraine. One was the gratitude of the people for the support that this country has given during the conflict, but the other was their efforts to bring about a degree of normality. Does the Minister agree that yesterday’s events were a deliberate attempt by Russia to disrupt the normality that civilians are trying to achieve in these cities and across Ukraine? Does he acknowledge that they are indeed war crimes because they are focused on civilians? Does he also agree with me that, given the resolve that the people of Ukraine have shown to date, they will not succeed?

I am grateful to my right hon. Friend and, yes, I agree with what he has said. Indeed, last Tuesday I visited Ukrainians being trained by our forces in north Yorkshire, and I managed to speak to some who were on day one of their training. What struck me was their determination, no matter their age, to make sure that their country, their sovereign land, their families and their lives will be returned to normal, and they will fight back against this enemy, so I completely agree with what my right hon. Friend said.

I warmly congratulate the Minister. He looks very comfortable at the Dispatch Box, although obviously we do not want him to feel too comfortable there. He is right to say that Putin’s targets yesterday were either deliberate or deliberately indiscriminate, and either way that amounts to a war crime.

May I ask him about Elon Musk, who seems to be playing a double game at the moment, and whose tweet earlier this week was profoundly unhelpful? There are also questions about why there have been outages of the Starlink system, which may have made bigger difficulties for Ukraine. Is there a moment at which we might have to consider sanctioning Elon Musk?

Sanctions remain under review at all times, and everything will be taken into consideration in the round. We must always ensure that we are well aware of all the facts rather than just reacting to social media, and then those things can be looked at, including whether any sanctions would be appropriate.

I warmly welcome the Minister to his post.

Today is Ukraine Day at Cheltenham literature festival, and this morning I had the extraordinary privilege of meeting musicians, poets and writers who have travelled from bombarded cities to come to Cheltenham to perform. Will the Minister join me in thanking the British Council and Cheltenham literature festival for ensuring that our support is not just military, but extends to supporting the culture of that great country?

I am delighted to do that. I know my hon. and learned Friend will have been deeply involved with his constituents and the Ukrainians, and that his office will have given them the warmest welcome possible.

Putin’s murderous actions over the weekend are a surefire sign of his desperation, which comes partly from the host of desertions among the Russian military, including from an army, thought to be his pride, that is in retreat. Should we be making the point that every person in Russian uniform who commits a war crime will be sought, not just those in positions of power, and should we be doing everything we can to increase the scale of Russian desertions and undermine Putin’s campaign that way?

I am grateful to the hon. Gentleman and I completely agree with him. We must not underestimate the scale of the atrocities that are being committed, which are war crimes. Many Members of the House have served in the military, and many have been in the battlefield. They are trained to the laws of the Geneva convention and the laws of the battlefield, as are many people in Russia—certainly the Russian leaders will know those laws. There are consequences to breaking them, and I am proud that we are putting funding, investment and resources into the International Criminal Court to bring those who do so to court. I know that whatever we do will have support across the House. We have to say that it does not matter who someone is, from a squaddie to a general—if they have committed a war crime, we will find them and send them to prison. If they do not believe that, they should remember that we are still sending former SS officers who are almost in their hundreds to prison today.

The Russian doctrine of escalate to de-escalate almost certainly means that when the rats are cornered—and the rat Putin and his rat-like friends are cornered right now—they will lash out. That is almost without question. I hope the Minister is right in thinking that that will not necessarily be a nuclear lash-out—I think that is unlikely, although we must be ready for it—but there are many other ways he could lash out, including with cyber, chemical and biological weapons, or economic weapons. That might involve covert operations beyond Ukraine, not necessarily in Ukraine itself. What preparations has the Ministry of Defence made? I do not want details, which the Minister will quite rightly not tell us, but I hope the MOD is making careful preparations for all sorts of hybrid warfare that may now occur, including in places other than Ukraine.

My hon. Friend raises points that we have spoken about many times in the NATO Parliamentary Assembly, and he will be aware that chemical, biological, hybrid and cyber warfare are certainly in our military planning and strategy, as indeed are nuclear weapons. Huge amounts of resources go into cyber capability and other such areas. Indeed, part of the memorandum that the former Prime Minister signed with Finland and Sweden was to give support in those areas if they were to be attacked. Overall, I assure my hon. Friend that all those issues are discussed in the round. I could not comment on specific operational capabilities, but I hope I can reassure him that those issues are treated just as seriously.

I went to Kyiv recently with a group of other parliamentarians, and there was no conversation that did not include the need for justice and the need to take all war criminals to court. What discussions has the Minister had about not just freezing assets but seizing and repurposing them to rebuild Ukraine? Has he had discussions about a special tribunal to work alongside the ICC to prosecute acts of aggression and bring more perpetrators to justice?

I am grateful to the hon. Lady for the intent of her questions. I have not had those discussions—obviously, I am early in the role—but I will take those comments back to other Ministers. Overall, that question goes to allies and the international community—it is not just about our approach, because it is not just this country seizing assets and sanctioning, and it is not just this country that will be involved in taking things forward with the ICC. I cannot answer her questions specifically, but I am sure that colleagues have heard her and, if she would like to write to me with more details, I would be happy to respond.

As Russia loses on the battlefield, it seems to be engaging in retribution through missile attacks on civilian areas. When the all-party parliamentary group on Ukraine recently went to Kyiv, the Defence Minister said to us that if refugees are to be encouraged to move back to Ukraine and internally displaced persons are to be encouraged to move back to reoccupied areas, defence against missile attack will become essential. Other countries are looking at that seriously and providing anti-missile support. Will we do so as well?

Indeed, and we are already supplying levels of air support. What I said earlier remains relevant: we will continue to work with the Ukrainians to try to deliver what they need to defend their country. We are already supplying air defence systems.

I wish the Minister well as he takes up his new role. He is right to say that we have engaged with and are responding to the requests from Ukraine, but he should know that when we provided Starstreaks and NLAWs, which are made in my constituency, we did so in the face of a request for the imposition of a no-fly zone, and we did not go that far. Even though we are giving surface-to-air missiles and air defence capabilities, Ukraine is, today and yesterday, still asking for more. This morning, the US announced that it would provide new high mobility artillery rocket systems for greater air defence capacity. Will the Minister assure us—if not today on the Floor of the House then in the coming days—that he will engage to ensure that we are responding to the requests that Ukraine is making?

We are indeed responding to as many requests as we can from Ukraine. The Government’s policy on no-fly zones remains the same; it has not changed. However, wars and conflicts develop over time and we are seeing large advances. We will also see a change in the weather as winter sets in. All of those things create a different operational demand from what was taking place three months ago. We therefore work closely with our Ukrainian colleagues to try to deliver to them what they need to carry out operations successfully.

Does my right hon. Friend agree that despite President Putin’s heightened rhetoric and threats to use nuclear weapons irresponsibly in Ukraine, that may just be further maskirovka? His track record shows that, in desperation, he is far more likely to resort to chemical weapons. What should NATO’s response be to that?

I am grateful to my hon. Friend, who characterises the actions of President Putin in desperation quite well. The reality is that NATO treats all weapons of mass destruction with the same seriousness and that, operationally, how to respond to such things is discussed constantly. Again, I may have to disappoint my hon. Friend. It would be foolish to outline exactly what the response would be to any weapon of mass destruction because, if President Putin does not know what the consequences would be, he cannot make calculations about using them in the first place.

I congratulate the Minister on his new role. Further to the question put by my hon. Friend the Member for Lewisham West and Penge (Ellie Reeves), may I ask whether there have been any discussions with the Department for Levelling Up, Housing and Communities, which is responsible for the Homes for Ukraine scheme? Many councils are worried that they will have to deal with homelessness among many of the Ukrainians who are here on that scheme.

I am grateful to the right hon. Lady. That has not come across my desk at this stage, but we will make sure that the Home Office and DLUHC pick up on it.

I welcome the Minister to his new role. Specifically in response to the war in Ukraine, the Prime Minister made a commitment to update the integrated review, and we now know that Professor John Bew is leading a process from Downing Street that aims to report before Christmas. Given the concern expressed by Members across the House about potential loss of capability and personnel, does the Minister think that it would be prudent not to make any cuts to defence until we know what the outcome of that review is going to be?

As the hon. Gentleman knows, it is a commitment of the Government to increase spending on defence—to move to 3% by the end of the 2030s, with 2.5% on the way—but we have already increased defence spending by £24 billion in real terms since 2020, and there are no plans to cut the defence budget at this time.

I welcome the Minister to his place. I had a conversation today with the Local Government Association, which informed me that 1,915 Ukrainian families have presented as homeless—a point that my hon. Friends have raised. Will the Minister have urgent conversations with the Secretary of State for Levelling Up, Housing and Communities and the relevant Home Office Minister? It really is life or death for many, and housing them will help motivate the troops in Ukraine.

My colleagues and I will indeed take up the issues that are being raised on the Floor of the House with the relevant Departments. We will make sure that those conversations are taking place.