House of Commons
Wednesday 12 October 2022
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Before we start the business of the day, I want to mark a poignant anniversary. On 12 October 2002, exactly 20 years ago today, 202 people, including 28 Britons, were killed in the Bali bombings. These horrific bomb attacks were organised to cause maximum carnage, leaving hundreds of families and friends shocked and grieving. I know that today, 20 years since the Bali bombings, will be difficult for many people. I would like to express heartfelt condolences and best wishes from all of us here in the House of Commons to the survivors, families and friends.
I would also like to remind Members that the ballot for the election of the Chair of the Foreign Affairs Committee is currently taking place in the Aye Lobby. The ballot will be open until 2.30 pm. The side doors between the Chamber and the Aye Lobby will be locked until the ballot has been concluded.
Oral Answers to Questions
The Secretary of State was asked—
Channel 4 Privatisation
I can assure the hon. Gentleman that my Cabinet colleagues and I are committed to ensuring the further success of Channel 4. The Government are determined to support the incredible TV production industry in Scotland, and we believe that in the long run the UK production industry will benefit from a sustainable Channel 4.
Channel 4 is a key commissioner for Scottish independent production companies. It spends about £20 million a year on Scottish productions, supporting about 400 jobs in Scotland. Analysis from Ernst & Young says that privatisation could result in £1 billion being lost from the UK’s nations and regions, so for the sake of Scotland’s creative economy, will the Secretary of State make representations to the Secretary of State for Digital, Culture, Media and Sport to follow the evidence and keep Channel 4 in public hands?
I have had discussions with the Culture Secretary and the previous Culture Secretary. The Government’s position is that we are looking again at the sale of Channel 4, and we will have further details in due course. We want Channel 4 to flourish, and we want independent production companies to flourish and thrive, because we recognise that we live in a challenging and changing media landscape.
I have held a number of discussions with the Levelling Up Secretary and his predecessors on freeports. This Government are committed to delivering two new freeports for Scotland to boost economic growth. The UK and Scottish Governments will be making an announcement shortly.
Five high-quality bids for freeports in Scotland have been received. Only two can be successful in this round. Will my right hon. Friend assure me that he will work with partners in the unsuccessful three so that they can realise their ambitions through other means?
Before I answer the question, I would like to thank my hon. Friend for his diligent and excellent work in the Scotland Office. He made a huge impact, and I absolutely thank him from the bottom of my heart.
In answering my hon. Friend’s question, the Government are committed to boosting economic growth in all areas of Scotland. We will use all the levers at our disposal to do so, and we will do that in partnership with the Scottish Government, as we are doing with freeports. Hopefully, that will also include investment zones—discussions are ongoing between officials—and I hope that those who are unsuccessful in their freeport bids can apply for investment zone status, which will help them to increase their economic activity, so the answer is yes. Funnily enough, I do not exclude the freeport winners from going for investment zone status, as that is not identical, and there are advantages in their becoming investment zones as well.
Of all the five excellent bids, I know that my right hon. Friend agrees that, given the focus on a North sea revival, the importance of the North sea transition deal to our future energy security, the dynamic and pioneering spirit of business and industry in the north-east of Scotland, and the fact that we will create 30,000 new jobs in my constituency and around the north-east of Scotland, the Aberdeen and north-east freeport bid will be one that he announces as successful.
I admire my hon. Friend’s enthusiasm for the north-east bid. He is right to be enthusiastic, as he represents that part of Scotland. It is a process, and we are following the metrics, as was done with the English freeports. It is important that we do not make a political decision, and that we make the right decision based on the bids before us. As I say, for those that are unsuccessful, hopefully investment zones will be another route. I have not shown any preference for any bid, and it is right that we do not and do it properly according to the metrics that we set out, because we cannot leave this open to judicial review, which would lead to further delay.
I am glad to hear the right hon. Member say that the Government intend to consider repurposing Scottish green freeports into investment zones. What discussions have been about environmental protection concerns and the removal of EU environmental standards?
There is a full prospectus explaining all that, which we agreed with the Scottish Government. We have put it out to bid. We have five bids, from Orkney down to the Forth and the Clyde, and they all understand the environmental impacts. A lot of it is about reclaiming brownfield land, which is part and parcel of the levelling-up agenda, and I think everyone understands what has to be done environmentally to reclaim brownfield sites.
We have invested £172 million in Scotland in round 1 of the levelling-up fund, which is around 10% of the total UK funding. In March, we published a monitoring and evaluation strategy for the levelling-up fund. Further updates on the strategy will be published in due course, and results of round 2 will be announced later this year.
That is wonderful to hear. In my beautiful constituency of Eastbourne, we are busy working to ensure that £20 million of Government levelling-up funding is energising and growing the visitor economy. [Hon. Members: “Scotland!”] My question is: how is the levelling-up fund doing the same in Scotland—the land of my forefathers—to ensure that all parts of the United Kingdom can capitalise on and consolidate the staycation market so much born out of the pandemic years?
My hon. Friend makes an excellent point. Levelling-up measures are all about delivering local priorities and pride in place, which go hand in hand towards creating a sustainable tourist economy. The £150 million community ownership fund is allowing us to put cultural and heritage assets back in the hands of local people across the whole United Kingdom.
What would the impact have been on levelling-up projects if the Scottish Government had followed the advice of the Scottish Conservatives to give these unfunded and catastrophic tax cuts to the wealthiest in our society? Will the Secretary of State now apologise to the Scottish Government for insisting that they follow this disastrous and reckless course of action?
The hon. Member is conflating two issues. The reality is that the levelling-up funds, of which there are £200 million in the current round, are being well received across Scotland. That is real devolution in practice. All local authorities are engaging with the UK Government—and guess what? They are enthusiastic when it comes to applying for money to help local projects.
The Scottish Parliament is one of the most powerful devolved Parliaments in the world and we believe that the devolution settlement strikes the right balance. We continue to work collaboratively with the Scottish Government to implement the Scotland Act 2016. This includes passing secondary legislation to deliver the extensive welfare and tax powers granted by the Act.
The vast majority of people in Scotland support the continued existence of the Scottish Government. Despite the settled will of the Scottish people for greater autonomy and self-rule, some senior Conservatives—there are Secretaries of State among them—are becoming even louder in their calls for the UK Government to claw back powers from the devolved Assemblies. Will the Secretary of State today commit before the House that the UK Government will not under any circumstances attempt to revoke powers devolved to the Scottish Government?
Absolutely. In fact, since we left the European Union, we have given more powers to the Scottish Parliament. Actually, whenever asked, not a single Member of the Scottish National party has come up with one power that has been taken away. It is quite the contrary. We have given more powers and will continue to do that, because, let us be clear, we are the party that is strengthening devolution and the SNP wants to destroy devolution.
I believe that the EU forecasts that the Irish economy will grow by more than 5% in 2022, showing the real potential for growth that exists for smaller nations that are part of the EU. Meanwhile, on the back of the UK Government’s disastrous fiscal statement, mortgage payments for many Scots are rising dramatically and people will struggle to keep a roof over their heads, let alone to feed and keep themselves warm.
Today, the Office for National Statistics tells us that there was a slump of 0.3% in GDP in August in the UK, before that disastrous event. Why will the Secretary of State and his Cabinet colleagues not accept that their fiddling with devolution while the UK economy burns will never be enough to protect the Scottish people he supposedly represents and accept that an independence referendum has to happen so that the Scottish people can protect themselves?
You will not be surprised to hear, Mr Speaker, that I think that that is absolute nonsense. This is not the time. A vast majority of Scots do not believe that now is the time for an independence referendum and that is very clear. The constitution is reserved to Westminster—that is in the process of going through the Supreme Court to be determined now. To me it is very clear that the people of Scotland want this Government to get on. The support we gave during covid, with 900,000 jobs furloughed, the support we have given to households and businesses for their energy costs and our helping to grow the Scottish economy through freeports and investment zones: that is what the people of Scotland want.
Devolution is about Scotland’s two Governments working together and we have seen the success of that with city and region growth deals and with the progress towards freeports. Does the Secretary of State agree with me that language is also really important? When the First Minister said that she “detests the Tories”, she was insulting—[Interruption.] Cheers are coming from the SNP. She is insulting hundreds of thousands of Scottish Conservative voters when she should be representing the whole of Scotland as First Minister.
Of course I agree with my hon. Friend. Language is terribly important in politics. We saw the desperate death of David Amess and others before him, and people cannot incite people using words such as “detest”, which, as can be seen in the dictionary, is another word for hate. The irony is that the Scottish Government are bringing forward a hate Bill yet we have language such as “detest”. My hon. Friend is absolutely right to call it out.
Cost of Living
The Government fully recognise that families, households and businesses are worried about rising costs. That is why we have taken decisive action to get families and businesses through this winter and next, and we are focused on growing the economy to raise living standards for everyone.
According to Citizens Advice Scotland, the cost of living crisis is the “perfect storm” that risks sweeping tens of thousands of households across Scotland into poverty, problem debt, and destitution, and nothing could be closer to the truth. Scottish Labour has a plan and is calling for an emergency cost of living Act. Will the Minister raise with Scottish Ministers what both Governments could urgently do, using all the levers at their disposal, to help individuals and families in Scotland through this terrible crisis?
The UK, like Europe and other countries around the world, has been forced to respond decisively to the challenges posed by high energy prices resulting from, among other things, Russia’s weaponisation of energy markets. Because of action taken by this Government, the most vulnerable households will get at least £1,200—some much more—of cost of living support this year on top of the benefit of the energy price guarantee. Of course, the hon. Lady is absolutely right that this Government and the devolved Administrations must work together to make sure that the most vulnerable get the most support.
According to the Joseph Rowntree Foundation, if the Government do not uprate benefits in line with inflation, then claimants, many of whom are working, will experience the biggest ever real-terms cut to benefits in a single year. Is it not the case that the Minister’s Government are prioritising growing the wealth of the richest while not doing enough for the vulnerable, including the elderly, in our communities in Scotland?
Again, it will come as no surprise that I do not totally agree with everything that an hon. Member said. The hon. Lady asked about raising benefits in line with inflation. The Secretary of State for Work and Pensions is looking at that—as she would do on an annual basis in any case—and will announce in due course the decision on benefits uprating.
According to Joseph Rowntree Foundation figures, 15,378 people in Glasgow Central receive means-tested benefits such as universal credit, and many of them will be working in low-paid jobs. The Scottish Government have done their bit by introducing the leading Scottish child payment, but what representations has the Minister made to his colleague, the Secretary of State for Work and Pensions, to support the uprating of benefits? He has not been clear about what representations he has made for the people of Scotland.
The hon. Lady makes excellent points. On making representations to my ministerial colleagues, having been in this post for a very short time, I have not quite got there yet, but these discussions are happening. Under the agreed fiscal framework, the Scottish Government, through the levers that they have, will receive an estimated £340 million of additional funding as a result of just the basic rate tax cut. It is for the Scottish Government to use that additional funding as they want to, including on increased spending or tax cuts.
In the policy decisions chapter of the so-called “Growth Plan”, line 9 on page 26 shows that reversing the corporation tax increase will cost £68 billion over the next five years. Given the cost of living crisis, did the Minister and his Secretary of State argue for or against a £68 billion subsidy to the biggest, wealthiest companies in the UK?
The hon. Gentleman is probably aware that the Government have committed to reversing the planned corporation tax increase from 19%, so it is staying at 19%, which will attract businesses to Scotland and across the rest of the United Kingdom. It is often missed that the Government have delivered on top of the recently announced energy price guarantee. It means that typical households receiving means-tested benefits will receive £1,200 of support; those on disability benefits on top of that will receive £1,350; low-income pensioner households will receive £1,500 of support; and low-income pensioner households who are receiving disability benefits will receive £1,650 of support. As well as that, the energy price guarantee will mean that a typical household will pay no more than £2,500 on their energy bills.
The shadow Secretary of State for Scotland, my hon. Friend the Member for Edinburgh South (Ian Murray), has a long-standing family commitment, which is why the privilege of asking questions falls to me today.
The UK Government’s so-called mini-Budget has created a financial crisis—made in Downing Street but paid for by working people all over this country, including in Scotland. Has the Minister’s Department made an assessment of how much worse off Scottish households will be as a result of the Chancellor’s disastrous actions?
I welcome the hon. Gentleman to his place instead of the shadow Secretary of State, the hon. Member for Edinburgh South (Ian Murray). As I said, the energy support put in place means that a typical household will not pay more than £2,500. That is on top of the additional benefits that were announced earlier this year and more recently and which will make sure that many households, including those on the lowest incomes, will actually be better off than they would have been.
The only long-term solution to this crisis is a more sustainable energy policy, which the Government have failed to deliver for 12 years. In 2017, Nicola Sturgeon announced a national energy company for Scotland. Five years on, we are in an energy crisis and that plan has been ditched, so does the Minister agree that the right way forward is through Labour’s plan for Great British Energy, a home-grown, publicly owned company run for and by the people of this country and for the interests of people in this country?
The hon. Member is absolutely correct to point out the Scottish Government’s commitment, made back in 2017, to have created a nationalised energy company in Scotland by now. That has not happened, and quite frankly I do not think that it should. I do not think that Labour’s plans should be implemented either.
The first mini-Budget from this Government required two Bank of England interventions just to stabilise the economy. It tanked the pound and it massively worsened the already brutal cost of living crisis that our constituents are facing. Will the Minister and the Secretary of State, as Scotland’s representative in Cabinet, confirm that any future fiscal event from this Government will neither make further cuts to the Scottish budget nor introduce further cuts to our already crippled public services?
On top of the already record increased block grant of £41 billion that the Scottish Government have already received, measures announced in the Chancellor’s recent fiscal statement mean hundreds of millions in extra money going to the Scottish Government. As I said to the hon. Member for Glasgow Central (Alison Thewliss), it is for the Scottish Government to decide whether to spend that on tax cuts or to increase spending.
After 12 years of austerity, which has caused in excess of 300,000 deaths in the UK, this Tory Government have cost the public billions. They have given dodgy covid contracts to their pals. They are scrapping the bankers’ bonus cap. They have forced a hard Brexit on Scotland against its will. They are now helping the richest people in the country, on the backs of millions of people who are choosing between heating and eating. I ask the Minister: is it genuinely a surprise to him and his colleagues to discover why most people in Scotland detest the Tory party and its values?
I must say that I am disappointed that the hon. Member chooses to double down on the hate-filled language of her party leader. I repeat that the Scottish Government have received a record amount of block grant funding—£41 billion—since devolution began, and all the other measures from which people and businesses across Scotland will benefit. Those in the most vulnerable households and on the lowest incomes will particularly benefit from the measures that this Government have taken.
Domestic Energy Costs
The Government’s recently announced energy price guarantee will support households with their energy bills across the whole United Kingdom, including in Scotland. This decisive action will save the typical household at least £1,000 a year for the next two years.
May I follow up on the question that my hon. Friend the Member for Hove (Peter Kyle) asked about the Scottish Government’s decision to abandon their plans? Will the Minister confirm what discussions he has had with his Scottish counterparts about ensuring that Scotland’s renewable potential directly benefits the people of Scotland and the people of the United Kingdom, given that the cost to the consumer of renewable energy is so much lower?
As I have said, Ministers in the Scotland Office discuss such matters regularly with our colleagues in other Departments. Energy policy is reserved, as I am sure the hon. Member will understand, but we endeavour to work constructively with the Scottish Government on everything that can have an impact on the livelihoods of people and communities in Scotland, as well as businesses.
One of the most critical ways of reducing domestic energy costs in Scotland is by supporting renewable energy generation and carbon reduction efforts. I have raised before at the Dispatch Box the fact that the UK Government chose to sideline the Acorn carbon capture and storage project in the north-east of Scotland. The Scottish Government have refused to provide financing either.
The Secretary of State may be interested to hear that Labour has put forward a fully costed plan to invest in Britain’s infrastructure, which includes providing the funding for the Acorn project. Will the Secretary of State encourage his Cabinet colleagues—[Interruption.]
I believe the Secretary of State and the Minister may have heard the first part of the question, so I will conclude by asking the Secretary of State to encourage his Cabinet colleagues to look again at how the carbon capture and storage project can be supported to enable it to get under way as a matter of urgency.
As the hon. Lady may be aware, the Acorn cluster looms large in my own constituency, so I have nothing but the greatest support for that project. I can also assure her, and the rest of the House, that this Government have stood firmly behind it: we have invested £41 million in the project directly, and it is also the reserve cluster in the Track-1 sequence. Track-2 sequencing for carbon capture and storage across the United Kingdom is coming soon, I am told, and I look forward to that announcement with great interest.
The Prime Minister was asked—
This Saturday marks the first anniversary of the senseless murder of our friend Sir David Amess. David was a superb parliamentarian, who brought colleagues across the House together on a huge range of issues. He represented the best of Parliament as a devoted champion of his constituency. Our thoughts are with his wife Julia and his five children, as well as with the people of Southend, which now stands tall as a city in testament to David’s tireless work.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
I knew Sir David, and I share the Prime Minister’s sentiments completely.
Spooking the markets, increasing the cost of borrowing and mortgages, was almost certainly an act of gross incompetence rather than malevolence, but going back on the commitment to end no-fault evictions is an act of extreme callousness. Can the Prime Minister reassure the 11 million private renters in this country that she will fulfil that commitment?
I am very sorry to hear about the situation of young people at York Hospital, but I am pleased to say that this is an issue on which my right hon. Friend the Health Secretary has focused in her plan for patients. We are making sure that people can access treatment as soon as possible: we are delivering record staff numbers and record levels of funding.
May I join the Prime Minister in her comments about Sir David? She spoke for the whole House when she made those comments. I know how deeply his loss was felt on the Government Benches, and we extend our best wishes across the House at this important time.
I also want to send my heartfelt condolences to the families of all those who tragically lost their lives in Creeslough last week. Donegal is a special place for my family and me, and across the House. The people there are in all our thoughts.
This morning the Business Secretary toured the television studios arguing that the turmoil in the markets had nothing to do with the Prime Minister’s Budget. Does the Prime Minister agree with him?
We have taken decisive action to make sure that people are not facing energy bills of £6,000 for two years. We remember that the Opposition are only talking about six months. We have also taken decisive action to make sure that we are not facing the highest taxes for 70 years in the face of a global economic slowdown. We are making sure that we protect our economy at this very difficult time internationally. As a result of our action—this has been independently corroborated—we will see higher growth and lower inflation.
Avoiding the question, ducking responsibility, lost in denial—it is no wonder investors have no confidence in her Government. This is why it matters: a few weeks ago, Zach and Rebecca from Wolverhampton were all set to buy their first home. Then the Government’s borrowing spree sent interest rates spiralling and their mortgage offer was withdrawn. I met them last week. They are back to square one: unable to buy, devastated and sick to their back teeth with excuses and blame shifting. Does the Prime Minister understand why Zach and Rebecca are completely furious with her?
The fact is that when I came into office, people were facing energy bills of up to £6,000 per year—[Interruption.] Well, I am sorry; Labour Members are shouting, but the right hon. and learned Gentleman is opposing the very package that we brought in with the energy price guarantee. That was the major part of the mini-Budget that we announced. He has refused to confirm whether he backs our energy price guarantee for two years, which protects families not just this winter but next winter. We are seeing interest rates rising globally—[Interruption.] They are rising globally in the face of Putin’s appalling war in Ukraine. What we are doing is helping people with lower stamp duty, helping people with their energy costs, reducing inflation with our energy package and keeping taxes low. I notice that the right hon. and learned Gentleman had a Damascene conversion last night when he backed our cut to national insurance.
The economy is in turmoil. People are really worried. This is really not the time to descend into nonsense attacks about last night. There is no point in trying to hide it; everyone can see what has happened. The Tories went on a borrowing spree, sending mortgage rates through the roof—they are skyrocketing by £500 a month—and for nearly 2 million homeowners, their fixed-rate deals are coming to an end next year. They are worried sick, and everybody in this House knows it. They will not forgive; they will not forget; and nor should they. When will the Prime Minister stop ducking responsibility, do the right thing and reverse her kamikaze Budget, which is causing so much pain?
I am genuinely unclear as to what the Labour party’s policy is on our energy price guarantee. It was the biggest part of our mini-Budget. Are the Opposition saying that they want to reverse it and that they want to see people facing energy bills of £6,000? Is that what the right hon. and learned Gentleman is saying?
The Prime Minister knows very well that, on this side, we voted against the national insurance rise in the first place. She voted for it, so who is doing the U-turn? Honestly.
Last week, the Prime Minister was forced to U-turn on her unfunded tax cut for the super-wealthy. This week, she is beginning to realise that she needs to extend the windfall tax, one step behind the CEO of Shell, but she is still going ahead with £18 billion of tax cuts for the richest businesses, and they did not even ask for it. She has still gift-wrapped a stamp duty cut for landlords, just as renters feel the pinch, and she is still holding out tax cuts for those who live off stocks and shares. Why does she expect working people to pick up the bill for her unfunded tax cuts for those at the top?
I notice the Leader of the Opposition is still not saying whether he supports our energy price guarantee. This is very relevant, because it is the biggest part of our mini-Budget. The fact is that all the Opposition have said is that people should be supported for six months. Does he think that, in March, pensioners should be facing very high energy bills? That is what will happen if he does not support our energy price guarantee.
The Prime Minister is not even attempting to answer the questions now. I gently remind her that the idea of freezing energy bills was a Labour idea that she took on. During her leadership contest the Prime Minister said, and I quote her exactly:
“I’m very clear I’m not planning public spending reductions.”
Is she going to stick to that?
Absolutely. [Interruption.] Look, we have almost £1 trillion of public spending, and we were spending £700 billion back in 2010. We will make sure that, over the medium term, the debt is falling, and we will do that not by cutting public spending but by making sure we spend public money well. The right hon. and learned Gentleman talks about our spending on the energy price guarantee, which he does not seem to support, but the reality is that he cannot criticise us, on the one hand, for spending money while, on the other hand, claiming we are cutting public expenditure. [Interruption.]
Conservative Members can cheer. I hope they listened very carefully to that last answer, because other people will have listened very carefully. Who voted for this? Not homeowners paying an extra £500 on their mortgage. Who voted for this? Not working people paying for tax cuts for the largest companies. Who voted for this? Not even most of the MPs sitting behind her, who know they cannot pay for tax cuts on the never-never. Does she think the public will ever forgive the Conservative party if it keeps on defending this madness and goes ahead with its kamikaze Budget?
What our Budget has delivered is security for families for the next two winters. It has made sure we will see higher economic growth, lower inflation and more opportunities. The way we are going to get our country growing is through more jobs, more growth and more opportunities, not through higher taxes, higher spending and his friends in the unions stopping hard-working people getting to work.
I want to see more jobs, more opportunities and more homes for local people in Cornwall, which I know my hon. Friend is working towards with her colleagues. I am delighted that we are bringing forward these investment zones, which will give those opportunities to local people.
May I associate myself with the Prime Minister’s remarks about the murder of David Amess a year ago? Our thoughts and prayers are very much with Julia and his family. Of course, we also think very much of those in Creeslough, who have been caught up in the terrible tragedy there.
I would have hoped that if the Prime Minister were making public spending commitments today, she would have said that those who rely on social security benefits will get their benefits uprated in line with inflation.
When the Prime Minister last stood at the Dispatch Box, the average two-year fixed-rate mortgage stood at 4.5%. It is now at 6.5% and rising, hitting average families with an extra £450 in mortgage payments every single month, over and above what they were paying. Thirty-seven days into the job, this is literally the cost of the Prime Minister’s incompetence. It is the price households are paying, and all because of the Chancellor she chose. Will she now give up on her desperate plan to save her Chancellor’s skin by scapegoating the Governor of the Bank of England?
The action we have taken has meant that families in Scotland and across the UK are not facing gargantuan energy bills. What the right hon. Gentleman and his friends in Scotland could do to help us out is build the nuclear power stations that are going to help our energy security and help us get more gas out of the North sea, to help deliver on a more secure energy future for all of our people.
If the Prime Minister wants to ask us questions, we can swap places. The reality is that she is ignoring the damage of the chaos of the mini-Budget. She is worrying about saving the Chancellor’s job, but many families are now worried about not just heating their homes, but keeping their homes. The scale of this Tory crisis is frightening: 100,000 households a month are up for mortgage renewals; people cannot afford to pay an extra £4,500 a year in interest, and plenty are already falling behind. The Prime Minister and her Chancellor have completely lost control. The only things growing under this Government are mortgages, rents and bills. Is that what she really meant when she declared herself a “pro-growth” Prime Minister?
We have taken action on helping families to heat their homes. That has been very important, and I would love to see more support on delivering the energy security we need. Interest rates are rising globally— that is a fact—and interest rates are a decision for the independent Bank of England. But I want to do all I can to help families across Britain. The way we are going to help them is by delivering economic growth, and by making sure we have the jobs and opportunities in Scotland and right across the UK. What independent forecasters have shown is that, following our intervention, economic growth is going to be higher than it would have been if we had not acted. That is vital for jobs, opportunities and livelihoods, and helping to make sure that people are able to put food on the table.
My hon. Friend is absolutely right about our support for cleaner water. [Interruption.] The right hon. Member for Ashton-under-Lyne (Angela Rayner) has asked from a sedentary position what we are doing about it. The Environment Secretary has increased the fines on water companies 100 times should they discharge sewage into waterways in an illegal way. We have acted.
May I associate myself and my colleagues with the remarks made about the tragic events in Creeslough in County Donegal? Our prayers continue to be with that devastated community.
I welcome the renewed negotiations with the European Union about the Northern Ireland protocol. Does the Prime Minister agree with me that the outcome of those negotiations must reflect the objectives outlined by the Government in the Northern Ireland Protocol Bill, and that that is the key to unlocking the door to political stability in Northern Ireland?
I very much agree with the right hon. Gentleman; we need to deliver for the people of Northern Ireland. That means making sure that we have free-flowing trade east-west as well as north-south, it means making sure that the people of Northern Ireland can benefit from the same tax benefits as people in Great Britain, and it means resolving the issues over governance and regulation. I would prefer to achieve that through a negotiated solution with the EU, but if we are not able to do that, we cannot allow the situation to drift; we have to proceed with the Northern Ireland Protocol Bill.
My hon. Friend is absolutely right that this health research is vitally important. I know that my right hon. Friend the Health Secretary is looking at whether and where the scheme can be expanded, and we will be doing further commissioning rounds to look at that issue.
What we have done as a Government is act decisively to deal with the very severe energy crisis we are facing. [Interruption.] We are facing a severe energy crisis. We are also facing a slowdown in economic growth globally due to Putin’s war in Ukraine, and not acting is not an option.
The energy price guarantee is a key part of the growth plan, but too few businesses and households know about it, even if the Labour Party does not support it. Can I urge the Prime Minister to have a nationwide mail-out campaign to communicate what the Government are doing to assess people on reduction of energy and, more particularly, to have a reduction-of-energy campaign for public buildings, so that we do not go down the route of spending too much on consumption?
My hon. Friend is absolutely right, and I know that the Energy Secretary is working on a plan to help companies and individuals use energy more efficiently. We are also working on this across Government. I was delighted to speak to my hon. Friend the Member for Hexham (Guy Opperman) yesterday, and I hope we will be able to start this going in No. 10 straightaway.
First, may I say what a brilliant job our fantastic nurses do across the country? The figures the hon. Gentleman is quoting are simply wrong. The independent pay review body recommended a £1,400 rise on average, and that is what the Government are committed to delivering.
Following the loss of 27 lives last winter in the channel, the UK Government offered joint patrols to the French on the beaches. Can my right hon. Friend the Prime Minister confirm that she renewed that offer to President Macron when they met and, further, that there will be no new money and no fresh agreement with the French unless they agree to joint beach patrols and joint security across the channel to bring an end to the small boats crisis for good?
The Home Secretary is committed to dealing with this very difficult issue of the small boats in the channel. We do need to sort it out. We are committed to legislating and to getting an agreement with the French Government. I did discuss it with President Macron last week, and the Home Secretary is following up.
I completely understand that families are struggling. That is why this Government acted within a week of coming into office to put in place the energy price guarantee so that people are not facing £6,000 bills. That is why we reversed the increase in national insurance and why we are cutting basic rate tax so that families are keeping more of their own money. We are also making sure that the most vulnerable households get an extra £1,200 of support. I hope that the hon. Gentleman will communicate that to his constituents.
I thank the Prime Minister for her warm words about Sir David Amess, who is sorely missed in this place.
Small and medium-sized enterprises are the lifeblood of our economy and I warmly welcome the expansion of the small business threshold. Does my right hon. Friend agree that only the Conservative party is on the side of enterprise in its determination to unleash the full potential of our great country?
We in the Conservative party understand who pays our wages—it is the people who get up every day to go to work and the businesses that are set up. Those are the people driving our economy and we will be unashamedly pro-growth, pro-business and pro-opportunity.
First, let me offer my best wishes to the hon. Lady on her appointment as chair of the Mersey Care NHS Foundation Trust. I can assure her and colleagues around the House that fracking will only go ahead in areas where there is local community support.
Two weeks ago, a bomb in Afghanistan killed 35 girls and young women. They were Hazaras, from the country’s second-largest ethnic minority, who are being massacred under the Taliban. Today, outside Parliament, Hazaras from across the UK, including from my constituency, are gathering to call for international support to stop the slaughter, and we are joined by representatives of the Hazara Committee in UK. Will my right hon. Friend the Prime Minister support the Hazaras in trying to stop the killings and arrange for her Ministers to meet their representatives?
What is taking place in Afghanistan is extremely concerning, I am afraid, with the reversal of women’s rights and women’s opportunities. One of the things we have done is to make sure that we are restoring the aid budget for women and girls, and I am sure that my right hon. Friend the Foreign Secretary will be very happy to meet the group to discuss further.
I want to correct the hon. Lady, because what we are doing is simply not putting up corporation tax. It is not a tax cut; we are just not raising corporation tax. I feel it would be wrong, in a time when we are trying to attract investment into our country and at a time of global economic slowdown, to be raising taxes, because it will bring less revenue in. The way we are going to get the money to fund our national health service and to fund our schools is by having a strong economy, with companies investing and creating jobs.
I fully support this Government’s growth agenda, but would the Prime Minister agree that that can be achieved while also protecting and restoring our precious nature and ecosystems and working with our farmers, so that we meet our legally binding target to restore nature by 2030? I know she understands that; she has precious chalk streams in her own constituency. Will she agree that, if we get this right, there will be more jobs, skills and opportunities, because every nation in the world depends on its natural environment?
My hon. Friend did a fantastic job promoting the natural environment when she was at the Department for Environment, Food and Rural Affairs. We are going to deliver economic growth in an environmentally friendly way. This is about improving the processes and delivering better outcomes for the environment while making sure we have a growing economy as well. Those two things go hand in hand.
We are pulling every lever to improve our energy supply in Britain, whether that is the North sea and opening up more opportunity there, which those on the Opposition Front Bench are against, whether it is fracking, whether it is more renewables, which I am very supportive of, whether it is more solar panels in the right place or whether it is more nuclear power stations, which are opposed by the SNP. We are doing everything we can, because we can never again be in a situation where we are dependent on authoritarian regimes for our energy.
Over the past week, serious safeguarding failures by the children’s charity Mermaids have come to light, with revelations that the charity sent breast-flattening devices to young girls behind their parents’ backs, promoted harmful medical and surgical procedures to children and hired a trustee with links to paedophile organisations and a digital engagement manager who posted pornographic images online, including of himself dressed as a schoolgirl. For years, despite whistleblowers’ raising the alarm, Mermaids has had unfettered access to vulnerable children. Does my right hon. Friend agree that it has taken far too long for these concerns to be taken seriously, and does she also agree that it is high time there was a police investigation into the activities of Mermaids and its staff?
It is very important that under-18s are able to develop their own decision-making capabilities and are not forced into any kind of activity. On the subject of the investigation that my hon. Friend raises, of course, those matters should be raised and looked at properly.
For my Richmond Park constituents and communities across south-west London, from Wimbledon to Elmbridge, any expansion of Heathrow would be disastrous. A third runway would see over 6 million more tonnes of carbon pumped into the atmosphere every year, and 2 million households would be affected by increased noise levels. Last week, the Transport Secretary said that she supported Heathrow expansion. The Prime Minister has previously stated that she would support a fourth runway. Does she stand by her previous comments, or will she rule out Government support for the construction of a third runway at Heathrow?
I absolutely agree with what the Transport Secretary said. We need to make sure that industries such as the air industry become more environmentally friendly. I support the development of low-carbon technology in those sectors. That is the way that we will help to grow the economy but also serve the environment.
I am delighted to hear that the Prime Minister is such a champion for nuclear. When will the mission and plan for Great British Nuclear be announced? The market needs the confidence to invest in new nuclear, such as at Wylfa in my constituency of Ynys Môn, to help us to achieve net zero, for our energy security, and to get thousands of high-quality jobs.
I can tell my hon. Friend that Great British Nuclear will be set up this year, and it will bring forward new nuclear projects. I am delighted about her support for Wylfa and for making sure that we have nuclear power provided in Wales. I would like to see that right across the United Kingdom.
May I welcome the Prime Minister to her place? I am not sure how to measure a good honeymoon, but after five weeks of a crisis conceived in Downing Street—a crash in pensions, interest rates rising, mortgage market turmoil and complete financial chaos—the country has been left wanting divorce. In two recent polls, 60% of those in this country want an immediate general election. The Prime Minister claims that she is listening mode; will she give way to the public?
Thank you, Mr Speaker. They are routine meetings that have been long scheduled, and are certainly not a cause for exuberance or over-excitement from the Opposition.
As we know, the world has faced surging energy prices since Putin’s illegal invasion of Ukraine. We have seen very high inflation across the western world, and we have seen a cycle of increasing interest rates across western economies as well—across many western economies. But let me reassure the House that the fundamentals of the United Kingdom’s economy remain resilient. Unemployment, at 3.5%, is the lowest it has been in my lifetime—and for the record, I was born in 1976. Economic growth last year, the calendar year 2021, was the highest of any G7 country—7.5%. Just yesterday the IMF forecast that economic growth—GDP growth—this current year in the UK would be at 3.6%—once again, for the second consecutive year, the highest of any G7 country. So our economy is in resilient condition.
But I know that many families are worried about the challenges we face, and that is why, just a few weeks ago—two or three weeks ago—we introduced the energy price guarantee. Families were genuinely fearful that they might face this winter energy bills of three, four, five, six or even seven thousand pounds per year, but that energy price guarantee will ensure that the average household sees energy prices no higher than £2,500 on average—not for six months, like the Labour plan, but for two years.
We also introduced a growth plan to get our economy growing, to see wages sustainably rising, to see good jobs created and to create a sustainable tax base to fund our public services. This Government have a growth plan; the Opposition have no plan.
We intend to do this in a way that is fiscally responsible, and that is why—[Interruption.]—and that is why, on 31 October, in less than three weeks’ time, the Chancellor of the Exchequer will set out the medium-term fiscal plan, explaining to the House exactly how he will do that, and how we will continue the UK’s track record of having the highest growth in the G7, not just last year but this year as well.
People are facing insecurity, instability and deep anxiety and they deserve answers. Conservative economic policy has caused mayhem with financial markets, pushed up mortgage costs and put pension funds in peril, and it has wiped £300 billion off the UK’s stock and bond markets—all directly caused by the choices of this Government. The mini-Budget, just 19 days ago, was a bonfire made up of unfunded tax cuts, excessive borrowing and repeated undermining of economic institutions. It was built and then set ablaze by a Conservative party totally out of control—not “disrupters” but pyromaniacs. And that fire has now spread. Yet Government deny all responsibility.
So will the Minister tell the House, what guarantees will the Government give that the currency slide will stop, and that people’s pensions are safe? How do they expect people to pay £500 more a month, on average, on their mortgages? How many more repossessions of family homes will there be if the Government do not change course? How much more are the Government spending on debt interest because of higher borrowing costs?
While Ministers desperately try to blame global conditions, why is it that no other central bank in the world has had to step in three times in less than three weeks to protect financial stability?
The country now faces a very serious situation. Ahead of the ending of the Bank of England’s emergency operations this Friday, what action will the Government take to ensure that their Budget does not have further consequences for financial stability, or for people’s pensions?
This is a Tory crisis made in Downing Street, but it is ordinary working people who are paying the price. It can be resolved only when the Conservatives put aside their pride and reverse this catastrophic mini-Budget, and they must do so now.
The shadow Chancellor calls for a reversal of the growth plan, yet at the first opportunity—last night—the Labour party voted for it. She asks about mortgage rates, so let me point out to her that mortgage rates around the world have been on an upward trajectory all year. In fact, if we compare base rates in the United Kingdom with those in the United States, we see that in both countries, as she will be aware, the base rate started this year at 0.25%. In the UK the base rate is currently 2.25%, and in the US it is 3.25%, a full percentage point higher.
The shadow Chancellor referenced borrowing costs. I am sure she is aware that two-year Government bond yields are about the same in the US as they are in the UK—US bond yields have been going up over the course of this year as well. She referenced the currency: the dollar has shown strength against a basket of currencies throughout this calendar year. If she looks at the dollar strengthening against the euro, she will see that it strengthened about 15% this calendar year, and strengthened about 15% against sterling—very similar figures.
The shadow Chancellor also asked about the cost of living. We are very mindful of that, which is why we have introduced a £37 billion package to help people, disproportionately targeted at those on lower incomes, so that people on the lowest third of incomes receive £1,200. It is why we introduced the energy price guarantee on our second or third day in office, ensuring that people do not pay, on average, more than £2,500, instead of facing bills of £5,000 or £6,000—and not for six months, as the Labour party offered, but for two years. It is why the national minimum wage was increased by a large amount last April. It is why the national insurance threshold was increased to £12,500 in July, so people on lower incomes now pay virtually no national insurance or income tax. That is the package of measures that this Government have introduced, because we stand on the side of working people and have taken the steps needed to support them.
My right hon. Friend the Chancellor was quite right to bring forward the date for the medium-term fiscal plan and the Office for Budget Responsibility forecast. He now has, of course, a huge challenge in landing those plans in order to reassure the markets. He has to get the fiscal rules right and come forward with spending restraint and revenue raisers that are politically deliverable. Given the huge challenges, there are many—myself included—who believe it is quite possible that he will simply have to come forward with a further rowing back on the tax announcements he made on 23 September. Can my right hon. Friend the Chief Secretary confirm that that possibility is still on the table?
I thank my right hon. Friend the Chair of the Select Committee for his counsel, which the Chancellor always listens to very carefully. The Chair of the Select Committee, along with others, suggested publicly that the date for the medium-term fiscal plan should be brought forward, and the Chancellor listened to him and responded by bringing the date forward from 23 November to 31 October.
There are no plans to reverse any of the tax measures announced in the growth plan. There is, I think, a measure of consensus—indeed, the Labour party voted only last night for the reduction in national insurance. We want to ensure that the UK is a competitive jurisdiction that companies and high-potential individuals who are internationally mobile choose to come to, to locate and grow. However, as the Select Committee Chair says, we of course need to do so in a way that is fiscally responsible, to ensure that debt over GDP falls in the medium term. The plan will lay out to the House in detail exactly how that will be achieved, scored by the OBR, on 31 October.
The Minister talks about the IMF, but not about its criticism yesterday or the pathetic growth it has projected for next year of just 0.3%—funny that.
The Treasury Committee took evidence this morning from a range of economists, all of whom echoed the concerns of the public about the chaos that this shambolic UK Tory Government have created. I am not sure whether the Minister considers Deutsche Bank as part of his anti-growth coalition, but its chief economist, Sanjay Raja, was very clear this morning that the UK has particular characteristics that are making this crisis worse. He said, “you’ve got a sidelined fiscal watchdog, you’ve got the lack of a medium-term fiscal plan, one of the largest unfunded tax cuts and package of measures since the early 1970s, and it’s sort of the straw that broke the camel’s back.”
This is chaos that the Minister and his colleagues have deliberately created, and it is impacting people and businesses across these islands, so I ask him: will he bring more money to the devolved institutions to help them tackle the chaos that he and his colleagues have created? Will he commit to uprating benefits by inflation and giving more support to those in the asylum system and those on “no recourse to public funds”? Will he bring certainty to businesses that do not yet know what will happen at the end of the six-month reprieve, because those bills have not gone away?
The Glasgow Centre for Population Health published some research that attributed about 330,000 excess deaths since 2010 to austerity—the Tory austerity by the Minister and his colleagues over the past 12 years—so will he cancel any further cuts, because they cost Scotland and our neighbours far more than we can ever afford? Scotland did not want this, did not vote for this and cannot trust in the financial stability of the UK, never mind this Tory Government.
The Scottish Government are of course receiving record levels of funding, and that will continue. The hon. Member asked about excess deaths. Well, I think the drug death record of the nationalist Government is, frankly, pretty terrible. She asked about the uprating to welfare. There is a statutory process that happens every year—every autumn—and that decision has not been taken. It will happen in the normal way, as it has been done for every year.
The hon. Member referenced the IMF’s growth forecast for next year. I have already pointed out that last year we had the highest growth in the G7 and this year we have the highest growth in the G7. If we take the three years together—last year, this year and next year—we will find that the UK, at 11.7% over those three years, still has the highest growth of any G7 country.
The hon. Member asked about institutions. The Chancellor and the Prime Minister have the highest regard for the OBR and the Bank of England. They are meeting both of those institutions regularly. She referenced the growth plan. Having a competitive tax system, supply-side reforms to unleash the productive potential of our economy and making our energy market function properly once again are essential prerequisites for growth, and I am proud that it is this Government who are promoting them.
I am disappointed at the shadow Chancellor, who is a very good economist. She is accusing the Government of causing problems for people’s mortgage rates, but my right hon. Friend will agree with me, I am sure, that one of the worst things that can hit any economy is a wage-price spiral as a result of huge inflation. Can he confirm to the House that the action the Government have taken to provide support to the economy and to provide this huge input in relation to energy prices will bring down headline inflation, and specifically make mortgage rates better than they would have been otherwise, which is totally the opposite of what the shadow Chancellor is saying?
My right hon. Friend, who of course has a very distinguished professional track record in financial services, is absolutely right. A range of independent forecasters have confirmed that the energy price guarantee will not only protect our constituents from high prices, but lower inflation by about 5% compared with where it would otherwise have been—a vital intervention. While we are on the subject of inflation, it is worth keeping in mind that inflation in many countries in continental Europe is considerably higher than it is in the United Kingdom. For example, in Germany it is 10.9% and in Holland it is 14%.
The Minister has made great play of supporting people with their energy bills, but businesses only get support until March. The Government also make great play of creating growth. Many of the businesses in my constituency, particularly hospitality businesses, with a guarantee on their energy bills only until March, are making decisions in the coming weeks about whether they will be able to stay open and continue to be employers. How does that help growth, and will he give them some guarantee from March onwards?
The hon. Lady raises questions about timeframes. Of course, the Labour proposal was only for six months for consumers and businesses, and I did not hear her criticising that. The consumer offer is for 24 months—for two years. In relation to businesses, she is quite that the business scheme is for six months, but the Government made a commitment back in September that within three months of September—so within two months of now—further plans would be brought forward to explain to businesses, charities and, indeed, the public sector how they will be handled after March next year. My right hon. Friend the Business Secretary will announce that to the House in the coming weeks.
Growing our tax revenues in a way that is sustainable in every sense of that word is clearly massively important to pay for all the things we deeply care about, but will my right hon. Friend reassure us that he does get the significance of Government borrowing costs and that he will make sure that His Majesty’s Government do nothing that pushes those up unnecessarily high compared with the United States and Germany?
Yes, my hon. Friend is making a very important and very reasonable point. I have said this already, but he mentions comparisons with other countries, and our two-year bond yield is about the same as that of the United States at the moment. However, we are mindful of the need to ensure reasonable borrowing costs, which of course means financial responsibility. Our debt-to-GDP ratio today is the second lowest in the G7. My right hon. Friend the Chancellor will be setting out in under three weeks’ time—on 31 October—precisely how he will be delivering fiscal stability and fiscal responsibility in the years ahead, and I am sure that my hon. Friend, when he hears that statement, will be reassured and comforted by it.
Earlier today, the Treasury Committee was given evidence that was incredibly sobering. All five of the economic specialists agreed that the UK’s Budget has contributed—
As I was saying, earlier today we on the Treasury Committee heard evidence in which all five economists agreed that the UK’s Budget has contributed to the current economic turmoil. With the Prime Minister earlier stating that there were going to be no budget cuts, and further to the point from the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), does the Minister agree with Mohamed El-Erian, the chief economic adviser to Allianz, who said yesterday:
“I see no alternative but the government saying we will not cut taxes now”?
I thank the hon. Lady for her question. I have already set out how there have been global trends over the past six or nine months, with higher energy prices, higher inflation and a cycle of increasing interest rates around the globe. In particular, I set out how the monetary tightening in the United States, at 300 basis points over the past nine or 10 months, is one and a half times higher than the fiscal tightening in the United Kingdom, which has been 200 basis points over the same period.
In relation to the hon. Lady’s questions about balancing the books over the medium term, the medium-term fiscal plan will set that out. We do intend to control public spending—[Hon. Members: “Ah!”] Well, just listen to the answer—for example, to stick within the spending review 2021 spending limits. I would point out to the House that those SR21 spending limits do see real-terms increases over the three years, but we are going to be sticking with iron discipline to those spending limits, not increasing them, and we will also show spending restraint in the years ahead. However, showing spending restraint is different from real-terms cuts.
It is very welcome that, a few minutes ago, the Chief Secretary said that the effect of the statement on 31 October will be to show that the Chancellor is 100% committed to fiscal responsibility. That is very welcome to colleagues on all sides, I think, but can he confirm that that means all the previous unfunded tax cuts will now be funded in that statement?
Can I just offer the Chief Secretary to the Treasury some gentle advice? If he refuses to accept that the fiscal event on 23 September has had any effect on what has happened in the markets since, that will not be reassuring for the markets. He needs to stop being in denial and admit that serious mistakes were made.
The Prime Minister said at Prime Minister’s questions that there would be no public spending cuts, yet we know that, as a result of the fiscal event and the unfunded tax cuts, there is a £60 billion gap between expenditure and the money coming in. If there are no public spending cuts, that leaves only the reversal of the tax cuts to balance the books, does it not?
I have explained in response to an earlier question that spending restraint is not the same as real-terms cuts. We do not plan real-terms cuts, but we do plan iron discipline when it comes to spending restraint. The answers to the hon. Lady’s questions will be set out in full at the fiscal statement, which will be accompanied by a full Office for Budget Responsibility scoring and a set of OBR forecasts. That is when all those questions will be answered very clearly.
The intervention of the Bank of England in both the gilt market and the corporate bond market has alarmed many in recent days. I would be interested in the view of the Chief Secretary to the Treasury on the Treasury’s assessment of the cost to the Treasury and the fiscal position following the interventions by the Bank of England in those markets.
I thank my hon. Friend for his question. It obviously depends on the prices at which the Bank and England buys and sells bonds or gilts in the market. It is worth observing that so far it has purchased considerably less by value of gilts than the limits that were set out originally. The volume of gilts that it has on its balance sheet is much less than the limits. On his question about fiscal cost, if there is any fiscal cost, that will depend entirely on market prices.
Two days before the Budget, a young constituent of mine hoped to buy her home through shared ownership. She was offered a mortgage at 4.28% interest by the Halifax. A day after the statement, the offer was withdrawn and a two-year fixed-rate deal has rocketed to 6.9%—that is £150 a month more overnight because of the Government’s unfunded giveaways to people on over 150 grand a year. What is the Minister’s advice to my constituent? Should she take the deal, or does he agree with the panel of experts at the Treasury Committee this morning that she should not go near it, because house prices are about to plummet?
I am obviously not going to offer individual financial advice to constituents. What I would say is that there are about 2,300 mortgage products currently on the market. We are keen as a Government to help first-time buyers, particularly younger ones in their 20s and 30s, which is why stamp duty is being cut for cheaper purchases. The stamp duty threshold for first-buyers has been raised, from memory, to £425,000, which particularly helps with putting together a deposit, which cannot be mortgage-funded. In addition, we want to help people with the broader cost of living pressures, which makes it easier to find money to fund mortgages. That is what the energy price guarantee is designed to do, and it is what lower tax rates in general are designed to do, including the tax reductions that the Labour party voted for yesterday. It is what the cost of living package is designed to do—the £37 billion. By helping with the cost of living in general, we are obviously making mortgage costs a little easier to meet.
Yesterday, the International Monetary Fund underlined the position of the UK economy as the fastest growing in the G7. Despite the noises off, it further stated that the recent fiscal changes would add further to growth projections. That is in addition to the record low unemployment data that has been highlighted this week. Does my right hon. Friend agree that further changes need to be made in terms of supply-side reforms, which will continue the momentum of a growing economy, resulting in real jobs in my constituency and across the country?
I am grateful to my right hon. Friend for mentioning the international comparisons again. The unemployment figure in the UK is 3.5%—inexplicably, Opposition Members have not asked about that—which is the lowest in my lifetime and compares favourably with that in France, where it is more than double, at 7.3%, and Italy, where it is 7.8%. Even in Canada, it is 5.2%, so our unemployment figures compare favourably internationally. As for the growth figures he asked about, if the three years are taken together, the figure is 11.7%, which heads the G7. That is nearly four times higher than Germany, at 3.9%, over double the figure for Japan, at 5.1%, and higher than the figures for France, Italy, Canada and the USA.
My right hon. Friend asked about supply-side reforms to help his constituents. He will hear a lot more about them in the coming weeks, both directly from Secretaries of State and from the Chancellor in the medium-term fiscal plan, to explain how we will get regulatory burdens off the back of businesses to help them to grow and create the jobs for his constituents that he rightly wants to see.
The mini-Budget fiasco has caused a material risk to the UK’s financial stability, and the Bank of England has said that $1 trillion could have been erased from UK pension fund investments if it had not stepped in after the mini-Budget turmoil. So the Minister needs to heed the advice of the Chairman of the Treasury Committee and others across the House, and junk the tax cuts in the Budget. They are unfunded and they are creating chaos in the markets. We need to restore confidence so that our constituents do not suffer. The Minister needs to stop being arrogant and take heed, listen to the expertise and take action.
Yesterday, I spoke with business leaders in my Crawley constituency. They welcomed both the near record low unemployment levels and the International Monetary Fund outlook of 3.6% growth. Does the Chief Secretary to the Treasury agree that that is a direct consequence of the policies that the Government are enacting?
Today is another day when the Government’s mismanagement of the economy is causing market turmoil, putting thousands of pensioners and mortgage holders at risk. Yesterday, the Governor of the Bank of England told pension funds to “sort it out” after announcing that the Bank’s emergency bond-buying scheme would close in two days. The Government have 48 hours to save pension funds. Will they call the Chancellor back from Washington, hold an emergency Cabinet meeting and deal with the pension crisis?
The Chancellor is in extremely regular contact with the Governor of the Bank of England, which, with its various agencies, has responsibility for systemic financial stability. We are working closely with it, and we have complete confidence in the Bank’s management of this process.
The Conservative party stands for low taxes, but also for fiscal responsibility and sound money. Given that the Prime Minister has just said that there will not be public sector spending cuts, may I ask the Chief Secretary to the Treasury whether the Government are considering deferring any of the tax measures recently announced by the Chancellor?
We do not plan to defer the tax measures, because we think that having an internationally competitive tax system is important, as it will help to encourage businesses and successful individuals to locate here in the United Kingdom, rather than anywhere else. I used to be technology Minister, and tech businesses can choose whether they locate here, in New York, San Francisco, Singapore, South Korea or anywhere else in the world. We want them to choose the United Kingdom, which is why competitive tax rates and the right regulatory environment are important.
Britain has embraced globalisation arguably more than other nations over the past couple of decades. About half of our GDP is subject to international headwinds, but the world is getting more dangerous, not less. The Minister mentioned Ukraine. May I suggest that any future fiscal statement is run by the National Security Council for comment and perhaps recommendations, which might include organising a United Nations safe haven around the port of Odesa, so that the grain ships can get out, helping to reduce the price of food and inflation in this country?
I do not think that Ministers appreciate the gravity or urgency of the situation. We have a Prime Minister who committed to no spending cuts a few minutes ago, a Government still committed to tens of billions of pounds of unfunded tax cuts and the Bank of England withdrawing its special support on Friday. What are the Government doing to avoid a market crash this Friday?
The reason that, on the second day of the new Government’s term in office, we brought forward the energy price guarantee was to protect consumers and in effect lower inflation by 5% compared with where it would otherwise be. We legislated at pace yesterday to alleviate the burden of the national insurance increase, which Opposition Members enthusiastically voted for. In terms of markets, as I said, we are in regular contact with the Bank of England and have complete confidence in its ability to manage systemic financial stability.
The funds made available by the Bank of England to purchase gilts were described by the shadow Chancellor as taxpayers’ money. I find that confusing. My understanding—I am not an economist—is that those funds are not taxpayers’ money and that, in fact, the Bank of England may even make a profit from the actions that it takes on the markets. Different people will have different views about whether the Bank of England’s intervention is appropriate action, but does the Chief Secretary agree that it is completely wrong for the shadow Chancellor to describe those funds as taxpayers’ money?
It is not taxpayers’ money in the sense that the phrase suggests. There is a fiscal indemnity so that any profit or loss will end up flowing back to the Exchequer, but, as I said to my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), whether that is crystallised depends on market prices. I point out that the volume of gilts so far purchased is considerably less than the limits that were set out.
Covid supply-side disruption and the war in Ukraine have obviously added to inflation, as has monetary policy in the United States and our own high levels of borrowing, added to the rate of interest here in the UK. That has put real pressure on households across the United Kingdom. Despite the fact that the Government have responded by putting more money in people’s pockets through tax cuts and help with electricity bills, there is real public concern about the stability of our economy. Does the Chief Secretary accept that that is partly due to poor political decisions such as reducing the top rate of taxation, bad communication of his own strategy, open warfare on his own Benches and some of the careless remarks that we saw yesterday from the Governor of the Bank of England?
I think the Prime Minister said a couple of weeks ago that, with hindsight, some of the pitch rolling or preparation could have been better handled, but I think that the package of measures is in the interests of the country. In addressing the cost of living pressures that the right hon. Gentleman referred to, we are protecting our fellow citizens, our constituents, from what could have been £5,000, £6,000 or even £7,000 annual energy bills. That is important. We are alleviating the burden of taxation at what is a difficult time. We are making sure that the households most in need of assistance get additional assistance, amounting to £1,200 a year for the one third of households on lower incomes. All those are measures designed to protect our constituents and I am sure that he will join me in welcoming them.
Of course, I welcome the energy intervention and help for the lower paid. However, does my right hon. Friend agree that, just as it is important to grow the economy, it is important to grow society and that, if we believe in trickle-down theory, we should also have trickle-up economics? By that, I mean that we need to invest in education and skills. Will he confirm that education spending will increase in real terms and incorporate rises in wages—whatever they may finally be—for the teachers, support staff and many other people working in education?
I thank my right hon. Friend for his question. As Chairman of the Education Committee, he is a tireless campaigner for education and skills. I agree that the purpose of economic growth is to grow all parts of the economy, to help people across the entire income spectrum—rich and poor alike—and to ensure that the burden of taxation on those people is as light as it can be. That is why we have increased the minimum wage by such a large amount—from £5.93 an hour when Labour left office to £9.50 an hour today—and why we have lifted so many people on lower incomes completely out of taxation through increasing the income tax and national insurance thresholds to £12,570. All that disproportionately helps people on lower incomes.
We are seized of the importance of ensuring that education is properly funded. It is an investment in our country’s future and our children’s future, and I assure my right hon. Friend that that is very much at the front of our minds as we think about the fiscal plan.
Like many others, I have listened with disbelief to much of what the Chief Secretary has said. While we have been in the Chamber, the Bank of England has again linked the economic turmoil to the Government’s disastrous mini-Budget. Will he explain to us all and to the public why he is right and the Bank of England is wrong?
As I have explained before, we are in a global cycle of interest rate increases and there has been global dollar strength. We have taken action in the energy intervention and in the growth plan to protect our constituents, get our economy growing and build on our record as the fastest growing G7 economy last year, this year and over the three-year period as a whole.
The whole world is facing a global inflation crisis, and the US, Germany and other countries are facing a worse situation. That is why I believe that the best way to deal with the situation is to get more people into better-quality jobs. I have already hosted two job fairs in Rother Valley and will have another one Friday week at Wales High School. I am pleased to see that 680 more people are in work this year than last year, and 40 more people are in work than were last month. Does my right hon. Friend agree that the most important thing is to get people into good-quality paying jobs and that the Government always stand by working people?
Absolutely. I completely agree with my hon. Friend, whose work on jobs fairs is extremely commendable. The way out of poverty and to create prosperity is to get people into good jobs and see rising wages. That is how we will combat poverty. That is why it is so welcome that unemployment is at a 48-year low.
With the greatest respect, the Chief Secretary to the Treasury does not seem to be inhabiting the same planet as the rest of us. It is clear to anyone that the Government’s half-baked mini-Budget, sidelining of the Office for Budget Responsibility and lack of authority have caused chaos in the markets, and households are already paying the price. Should the Government not just accept that they could do something in the national interest to change that by reversing their disastrous mini-Budget that has sent us into chaos and calling a general election now so that the country can decide how they want to get out of this crisis?
The hon. Member calls for a reversal of the growth plan, yet she voted in favour of its largest measure just last night. She talks about sidelining the OBR, yet it will be fully scoring the medium-term fiscal plan on 31 October. The right response is to protect our constituents from rising energy prices, and we did that on our second or third day in office. The right response is to get our economy growing, and that is what the growth plan will do.
Today, the Chief Secretary has made much mention of spending and pay restraint. During the cost of living crisis, the Government have repeatedly told workers that they must accept pay restraint to keep inflation in check while plotting to make further swingeing cuts to public services. Why do the pay restraint and cuts not apply to bankers, too? Is this not the same old Tory ideology of austerity for the oppressed many and luxury for the privileged few?
If I may respectfully say so, that is nonsense. The tax reductions, including those that the hon. Gentleman voted for last night, apply to everybody in work earning more than £12,570 a year. The national insurance cut and the cut to the basic rate of income tax are tax cuts for everybody, rich and poor alike. The increases in the threshold disproportionately benefit people on lower incomes, and the people on the very lowest incomes now do not pay any national insurance or tax at all. Again, the significant increases that we have seen in the national minimum wage from £5.93 an hour under Labour to £9.50 an hour now most benefit people on low incomes. The Government stand on the side of people on lower wages but doing the right thing by working.
I thank the Minister for his attempts to reassure the UK economy, even though they are simply not working. Does the Minister agree with the former chief adviser to the Bank of England, who said that because of this Budget we can “say goodbye to growth”?
The Joseph Rowntree Foundation has commented on reports that the Government plan to increase benefits only in line with earnings instead of CPI September inflation, stating that this would amount to the biggest
“permanent deliberate real-terms cut to the basic rate of benefits”
ever made in a single year. Can the Chief Secretary assure my frightened constituents today that, first, these reports are not true and, secondly, that he will uprate benefits in line with CPI inflation in September?
I have already explained, as I think I said yesterday, that there is a statutory process that happens every single year when these decisions get taken. No decision has been taken on the question yet; indeed, the September CPI figure, which is relevant, has not even been published yet. When the decisions are taken, Ministers will of course have regard to the cost of living pressures and high inflation that we and many other countries are experiencing, although of course the energy intervention will make that inflation lower than it would otherwise be. We also, of course, must pay due regard to hard-working taxpayers who ultimately have to pay the benefit bills, and we will take all of that into account when we make the decisions.
Following the Government’s pretty disastrous mini-Budget, the hedge fund manager and Tory donor Crispin Odey is said to have made millions from shorting the pound. It has also been suggested that the Chancellor met Crispin Odey for lunch in the weeks running up to the mini-Budget. Is that true and, if so, what did they discuss?
I would like to ask the Chief Secretary about unemployment. How can he possibly crow about unemployment when there are fewer people in work than before the pandemic and when rates of inactivity because of long-term sickness are through the roof?
I think having the lowest unemployment in my lifetime and having lower unemployment than comparable countries such as France and Italy is something that we can be proud of as a country. Of course, we are committed to working with people who have long-term sickness, working through the NHS and with work coaches at the Department for Work and Pensions to find ways to enable them to return to the workforce. Of course we are going to work with them, but ultimately having the lowest unemployment rate in my lifetime is something we should be proud of.
Listening to the Minister, I wonder what colour the sky is in his world. He talks about the energy price guarantee protecting families from energy bills of up to £6,000 a year, but as a direct result of the Government’s mini-Budget families in my North Durham constituency now face a mortgage increase of £6,000 a year not just this year but in future years as well. He can blame international markets when it comes to energy, but is he actually going to admit that the mini-Budget has led to those families paying £6,000 a year extra, if not more in some cases, and what is his advice to them?
The right hon. Gentleman can say no and not want to hear it, but I will just tell him again. In the United States, in the last nine months, there has been a 3% increase in the federal reserve base rate. In that same period, the Bank of England base rate increase has been only 2%. It has gone up by one and half times more in the United States compared with the United Kingdom. We do understand that there are cost of living pressures and that is why we have stepped in with the energy price guarantee to protect families in his constituency and mine from the £5,000 or £6,000 bills that they would otherwise have faced. That is why we are alleviating the tax burden on their shoulders and why we will ensure that the economy grows.
A few weeks ago, the Welsh Government warned that they face a shortfall of some £4 billion to their three-year funding settlement as a result of rising inflation. Will the Minister confirm that the Treasury will consider, in the statement at the end of the month, providing additional funding support to help mitigate the impact of inflation on the budget for public services in Wales?
Public expenditure both in Wales and across the United Kingdom stands at record levels. It has never been higher. In relation to extra funding, we are going to have iron discipline when it comes to public spending so the spending plan set out at the comprehensive spending review 2021, covering this current financial year and the next two, contains the limits we are going to stick to with discipline because it is important that we make the numbers add up.
A few minutes ago, in answer to the hon. Member for Hitchin and Harpenden (Bim Afolami), the Chief Secretary said that the costs to the Treasury of the Bank of England’s intervention was not known because it depends on pricing, which I would imagine is fairly blindingly obvious even to him. Does that mean that the Treasury has made no assessment of that cost? If they have, what is it?
It depends on market prices, as I say. Lacking any clairvoyance about where prices may move in the future, it is not possible to make an assessment not knowing where prices will be in a fast-moving market. I repeat that the volume of gilt purchases by the Bank of England have so far been a great deal below the ceiling that was set out.
The Resolution Foundation’s chief exec, Torsten Bell, told the Treasury Committee this morning, “This is what happens when you are not paying attention.” He said that the Government’s proposals would not have been a good idea at any time but, “You definitely shouldn’t be doing it in the current climate.” Our constituents need the Government to pay attention. Where is the plan to stabilise the economy now and stem the ongoing damage the mini-Budget continues to cause?
The growth plan protected the hon. Lady’s constituents and mine from what could have been £6,000 or £7,000 energy bills this winter. Frankly, I think they will welcome that. The growth plan will lay the foundations to continue the G7-leading growth we experienced last year and this.
I would like to dare the Minister to come to Newcastle and explain to my constituents, who are worried about their mortgage payments, their pensions, their benefits payments, their public services, their businesses and the cost of their supermarket shop, that this Government are fiscally responsible. They would laugh in his face, which is what the markets are doing. Why cannot he accept that the only way to address this crisis, made in Downing Street, is to withdrawal the fiscal mini-Budget and put in place something credible, costed and competent?
Once again, the hon. Lady calls for the withdrawal of the growth plan, yet she voted last night for the biggest measure contained in it. I would be quite happy to explain to anyone, whether in Newcastle, in her constituency, or in Croydon, south London, in mine, that we are protecting people from energy price rises, that we have plans to keep our record growth levels going, that we are cutting taxes on working people and that we have a plan to get the economy going. I would be happy to go anywhere in the country and explain that.
Why does the Chief Secretary think that the Nobel prize winner Paul Krugman said that the mini-Budget was “stupid and cruel”? I know that that is how my constituents in Erdington, Kingstanding and Castle Vale think.
I imagine that constituents in the hon. Lady’s constituency, as much as in mine, are pleased that they will not face energy bills of £6,000 or £7,000 this winter, which the growth plan delivered on. I do not agree with the analysis she read out from Mr Krugman, or Dr Krugman—[Interruption.] Professor Krugman; I am happy to stand corrected. This growth plan will ensure that we continue with our G7-leading levels of growth.
The £60 billion of borrowing for the energy guarantee is to paid back by bill payers, not the oil and gas producers who are making record profits on the back of the public’s misery. That is not fair. Will the Minister consider raising not a temporary windfall tax but the basic tax rate for oil and gas producers, which in the UK is the lowest in the entire world? If he raised it even to the global average, he would raise an addition £13.4 billion every single year.
I will make a couple of points. Extraction companies already pay about double the rate of corporation tax that other companies pay. In addition, we have imposed the energy profits levy, through which the rate of taxation on their profits increases to 65%. That is a pretty significant rate of tax, even by Labour party standards, and it will raise about £23 billion over the relevant three-year period. The hon. Member will also have seen the announcement from my right hon. Friend the Business Secretary yesterday on ensuring that renewable companies provide energy to our constituents at reasonable prices. The suggestion that no contribution is being made by the energy sector in the circumstances is, frankly, not accurate.