Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available to them from the Vote Office in the Members Lobby at the end of the Chancellor’s statement, and of course online. It might also be helpful for some people who are following our proceedings to know that British Sign Language interpretation of the statement, which will continue until the end of the speech of the spokesman for the Scottish National party, is available to watch on parliamentlive.tv—advert. Live subtitling will also be available for the Chancellor’s speech and the remainder of today’s debate.

I need hardly remind hon. Members—but I will do, for good measure—that they may not make interventions during the Chancellor’s statement, or indeed during the reply of the Leader of the Opposition, or even the reply of the spokesman for the Scottish National party. I call the Chancellor of the Exchequer.

Madam Deputy Speaker, in the face of enormous challenges, I report today on a British economy which is proving the doubters wrong. In the autumn, we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The International Monetary Fund says our approach means the UK economy is on the right track, but we remain vigilant and will not hesitate to take whatever steps are necessary for economic stability.

Today, the Office for Budget Responsibility forecasts that, because of changing international factors and the measures I take, the UK will not now enter a technical recession this year. It forecasts we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that is not all we have done. In the face of a cost of living crisis, we have demonstrated our values by protecting struggling families with a £2,500 energy price guarantee, one-off support and the uprating of benefits with inflation. Taken together, these measures are worth £94 billion over this year and next—one of the largest support packages in Europe. That averages over £3,300 of cost of living help for every household in the country.

Today, we deliver the next part of our plan: a Budget for growth. Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people and provides a safety net for older people, all while making our country one of the most prosperous in the world—prosperity with a purpose. That is why growth is one of the Prime Minister’s five priorities for our country. I deliver that today by removing obstacles that stop businesses investing, by tackling labour shortages that stop them recruiting, by breaking down barriers that stop people working and by harnessing British ingenuity to make us a science and technology superpower.

I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility, whom I thank for their diligent work. They have looked in detail at the Prime Minister’s economic priorities. The first of those is to halve inflation. Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife. This Government remain steadfast in our support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target. Despite continuing global instability, the OBR reports today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. That is more than halving inflation. High inflation is the root cause of the strikes we have seen in recent months. We will continue to work hard to settle those disputes, but only in a way that does not fuel inflation. Part of the fall in inflation predicted by the OBR happens because of additional measures I take today.

First, I recognise that even though wholesale energy prices have been falling, there is still enormous pressure on family finances. Some people remain in real distress and we should always stand ready to help where we can. So after listening to representations from Martin Lewis and other experts, I today confirm that the energy price guarantee will remain at £2,500 for the next three months. This means the £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July. This measure will save the average family a further £160 on top of the energy support measures already announced.

The second measure concerns over 4 million households on prepayment meters. They are often the poorest households, but they currently pay more than comparable customers on direct debit. Ofgem has already agreed with suppliers a temporary suspension of forced installations of prepayment meters, but today I go further and confirm that we will bring their charges in line with comparable direct debit charges. Under a Conservative Government, the energy premium paid by our poorest households is coming to an end.

Next, I have listened to representations from my hon. Friends the Members for East Devon (Simon Jupp), for North Cornwall (Scott Mann), for Colne Valley (Jason McCartney) and for Central Suffolk and North Ipswich (Dr Poulter) about the risk to community facilities, especially swimming pools, caused by high costs. When times are tough, such facilities matter even more. [Interruption.] Today, I am—[Interruption.]

Order. We want to hear what the Chancellor of the Exchequer is actually saying. Enough.

Today I am providing a £63 million fund to keep our public leisure centres and pools afloat. I have also heard from the charities Minister, my right hon. Friend the Member for Pudsey (Stuart Andrew), and his Secretary of State, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), about the brilliant work that third sector organisations are doing to help people struggling in tough times. They can often reach people in need that central or local government cannot, so I will give his Department £100 million to support thousands of local charities and community organisations to do their fantastic work.

I also note the personal courage of one of my predecessors, my right hon. Friend the Member for Bromsgrove (Sajid Javid), in talking about the tragedy of suicide and the importance of preventing it. We already invest a lot in this area, but I will assign an extra £10 million over the next two years—nearly a million pounds for every year that he has been in Parliament—to help the voluntary sector play an even bigger role in stopping more families experiencing that intolerable heartache.

My penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub. In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way. But today I will do something that was not possible when we were in the EU and significantly increase the generosity of draught relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets. It is a differential a Conservative Government will maintain as part of a new Brexit pubs guarantee. [Hon. Members: “More.”] British ale is warm, but the duty on a pint is frozen. And even better, thanks to the Windsor framework negotiated by my right hon. Friend the Prime Minister, that change will now apply to every pub in Northern Ireland.

Finally, I have heard the representations from my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis), my right hon. Friend the Member for Witham (Priti Patel), my hon. Friend the Member for South Thanet (Craig Mackinlay) and The Sun newspaper about the impact on motorists of the planned 11p rise in fuel duty. I notice the party opposite called for a freeze on this duty. Somehow they forgot to tell the British people they have voted against every single fuel duty freeze for the last 12 years. Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty, so here is what I am going to do: for a further 12 months I am going to maintain the 5p cut and I am going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.

Our energy price guarantee, fuel duty and duty on a pint, all frozen in today’s Budget. That does not just help families: it helps the economy too, because their combined impact reduces CPI inflation by nearly three quarters of a per cent. this year, lowering inflation when it is particularly high.

I now turn to the Prime Minister’s second priority, which is to reduce debt. Here too our plan is on track. Underlying debt is forecast to be 92.4% of GDP next year, then 97.3%, 94.6%, 94.8%, before falling to 94.6% in 2027-28. We are meeting the debt priority. And with a buffer of £6.5 billion, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.

As a proportion of GDP, our debt remains lower than the USA, Canada, France, Italy and Japan and, because of the decisions I take today and the improved outlook for public finances, underlying debt in five years’ time is now forecast to be nearly 3 percentage points of GDP lower than it was in the autumn. That means more money for our public services and a lower burden for future generations—deeply held Conservative values which we put into practice today.

At the autumn statement, I also announced that public sector net borrowing must be below 3% of GDP over the same period. The OBR confirmed today that we are meeting that rule, with a buffer of £39.2 billion. In fact our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in ’23-24, to 3.2%, to 2.8%, to 2.2% and 1.7% in ’27-28.

Even better, in the final two years of the forecast, our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending. Day-to-day departmental spending will grow at 1% a year on average in real terms after ’24-25 until the end of the forecast period. Capital plans are maintained at the same level set at the autumn statement. We will uprate tobacco duty and we will freeze the gross gaming duty yield bands. We are also maintaining the starting rate for savings and ISA subscription limits, and we will bring forward a range of measures to tackle promoters of tax avoidance schemes. Taken together, today’s measures lead to a slightly lower overall tax burden for the rest of the Parliament compared with the OBR’s autumn forecast. Other parties run out of money, but a Conservative Government are reducing borrowing and improving our public finances. By doing so, we are on track to halve inflation, get debt falling and grow our economy, which I turn to next.

Growth is the Prime Minister’s third priority and the focus of today’s Budget. Thirteen years ago, we inherited an economy that had crashed—[Interruption.] Opposition Members might want to listen to this, because since 2010, we have grown more than major countries like France, Italy or Japan, and about the same as Europe’s largest economy, Germany. We have halved unemployment, we have cut inequality and we have reduced the number of workless households by 1 million.

For the first time ever, because of rises in tax thresholds made by successive Conservative Chancellors, people in our country can earn £1,000 a month without paying a penny of tax or national insurance. The Labour party opposed those tax reductions, but they have helped lift 2 million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children. That averages 80 pensioners and 100 children lifted out of poverty for every single day we have been in office.

Today, we face the future with extraordinary potential. The World Bank said that of all big European countries, we are the best place to do business. Global chief executives say that apart from America and China, we are the best country to invest in. We became the second country in the world to have a stock of foreign direct investment worth $2 trillion, and London has just pipped New York and 53 other global cities to be the best place in the world for female entrepreneurs.

Declinists are wrong about our country for another reason, which is our strength in new industries that will shape this century. Over the last 13 years, under Conservative leadership, we have become the world’s third trillion-dollar tech economy after the US and China. We have built the largest life sciences sector in Europe, producing a covid vaccine that saved 6 million lives and a treatment that saved 1 million more.

Our film and TV industry has become Europe’s largest, with our creative industries growing at twice the rate of the economy; our advanced manufacturing industries produce around half the world’s large civil aircraft wings; and thanks to a clean energy miracle, we have become a world leader in offshore wind. Other parties talk about a green energy revolution, so I gently remind them that nearly 90% of our solar power was installed in the last 13 years—showing it is the Conservatives who fix the roof when the sun is shining.

Let us turn now to what the OBR says about our growth prospects. In November, it expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future. But today, the OBR forecasts we will not enter a recession at all this year, with a contraction of just 0.2%. After this year, the UK economy will grow in every single year of the forecast period, by 1.8% in 2024, then 2.5%, 2.1%, and 1.9% in 2027. It also expects the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared with its autumn forecast.

That return to growth has direct consequences for our role on the global stage. I am proud that we are giving the brave people of Ukraine more military support than anyone else in Europe. On Monday, we were able to go even further, with my right hon. Friend the Prime Minister announcing a £5 billion package of funding for the Ministry of Defence—an additional £2 billion next year and £3 billion the year after. Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 billion to our defence budget over the next five years, and it will be nearly 2.25% of GDP by 2025.We were the first large European country to commit to 2% of GDP for defence, and we will now raise that to 2.5% as soon as fiscal and economic circumstances allow.

Following representations from the equally persuasive Minister for Veterans’ Affairs, I am today also increasing support for our brave ex-servicemen and women. We will provide a package worth over £30 million to increase the capacity of the Office for Veterans’ Affairs, support veterans with injuries returning from their service and increase the availability of veteran housing.

But to be Europe’s biggest defender of democracy, we must build Europe’s most dynamic economy. That means tackling our long-standing productivity issues, including two in particular which I address today: lower business investment and higher economic inactivity than other countries. Too often companies struggle to recruit, and even when they do, output per employee is lower. So today I set out the four pillars of our industrial strategy to address these issues. As colleagues will know from my Bloomberg speech, they all conveniently start with the letter E: enterprise, employment, education and everywhere. I start with everywhere—[Interruption.] Well, Opposition Members may not want to level up growth across the United Kingdom, but we do.

This Government were elected on a mandate to level up. We have already allocated nearly £4 billion to over 200 projects across the country through the first two rounds of the levelling-up fund. A third round will follow. Since we started focusing on levelling up, 70% of the growth in salaried jobs has come from outside London and the south-east, and today we take further steps. Canary Wharf and the Liverpool docks were two outstanding regeneration projects that happened under a previous Conservative Government. I pay tribute to Lord Heseltine for making them happen, because they transformed the lives of thousands of people. They showed what is possible when entrepreneurs, Government and local communities come together.

So today I announce that we will deliver 12 new investment zones—12 potential Canary Wharfs. In England, we have identified the following areas as having the potential to host one: west midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, east midlands, Teesside and, once again, Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland. To be chosen, each area must identify a location where it can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters. If the application is successful, it will have access to £80 million of support for a range of interventions, including skills, infrastructure, tax reliefs and business rates retention.

Working together with our formidable Levelling Up Secretary, I also want to give some further support to levelling up areas under the E of everywhere. First, I will invest over £200 million in high-quality local regeneration projects across England, including the regeneration of Tipton town centre and the Marsden New Mills redevelopment scheme. I am also announcing a further £161 million for regeneration projects in mayoral combined authorities and the Greater London Authority, and I will make over £400 million available for new levelling-up partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, south Tyneside and Bassetlaw.

Having listened to the case for better local transport infrastructure from many hon. Members, I can announce a second round of the city region sustainable transport settlements, allocating £8.8 billion over the next five-year funding period. Following a wet then cold winter, I have also received particularly strong representations from my hon. Friends the Members for North Devon (Selaine Saxby), for South West Devon (Sir Gary Streeter) and for Newton Abbot (Anne Marie Morris), as well as Councillor Peter Martin from my own constituency, about the curse of potholes. The spending review allocated £500 million every year to the potholes fund, but today I have decided to increase that fund by a further £200 million next year to help local communities tackle this problem.

For Scotland, Wales and Northern Ireland, this Budget delivers not only a new investment zone but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials. On top of that, in Scotland I can announce up to £8.6 million of targeted funding for the Edinburgh festivals as well as £1.5 million funding to repair the Cloddach bridge. I will provide £20 million of funding for the Welsh Government to restore the Holyhead breakwater, and in Northern Ireland I am allocating up to £3 million to extend the tackling paramilitarism programme and up to £40 million to extend further and higher education participation.

But for levelling up to truly succeed, we need to unleash the civic entrepreneurship that is only possible when elected local leaders are able to fund and deliver solutions to their own challenges. That means giving them responsibility for local economic growth and the benefit from the upside when it happens. So this Government will consult on transferring responsibilities for local economic development from local enterprise partnerships to local authorities from April 2024.

I will also boost Mayors’ financial autonomy by agreeing multi-year single settlements for the west midlands and the Greater Manchester Combined Authority in the next spending review, something I intend to roll out for all mayoral areas over time. I have also agreed a new long-term commitment so that they can retain 100% of their business rates, something I also hope to expand to other areas. Investment zones, regeneration projects, levelling-up partnerships, local transport infrastructure and business rates retention—more control for local communities over their economic destiny, so we will level up wealth and opportunity everywhere.

Today’s priority is the Prime Minister’s promise to grow the economy. We have talked about making that growth happen everywhere, so I now move on to my second E—enterprise. We need to be—[Interruption.] Well, this has never been something of interest to the Labour party, but the Conservatives will not rest until we are Europe’s most dynamic enterprise economy, and under a Conservative Government that is exactly what has been happening. Since 2010, we have 1 million more businesses in the UK—a bigger increase than Germany, France or Italy—but I want another million and another million after that. So today I bring forward enterprise measures in these three areas: to lower business taxes, to reduce energy costs and to support our growth industries.

Let us start with business taxation. Conservatives know the importance of a competitive tax regime. We already have lower levels of business taxation than France, Germany, Italy or Japan, but I want us to have the most pro-business, pro-enterprise tax regime anywhere. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7—lower than any period under the last Labour Government. Only 10% of companies will pay the full 25% rate, but even at 19% our corporation tax did not incentivise investment as effectively as countries with higher headline rates. The result is less capital investment and lower productivity than countries like France and Germany.

We have already taken measures to address this. For larger businesses, we had the super deduction, introduced by my right hon. Friend the Prime Minister, which ends this month. For smaller businesses, we increased the annual investment allowance to £1 million, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits. If the super deduction was allowed to end without a replacement, we would have fallen down the international league tables on tax competitiveness and damaged growth. As a Conservative, I could not allow that to happen.

Today, I can announce that we will introduce a new policy of full capital expensing for the next three years, with an intention to make it permanent as soon as we can responsibly do so. That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It is a corporation tax cut worth an average of £9 billion a year for every year that it is in place, and its impact on the economy will be huge. The OBR says that it will increase business investment by 3% for every year that it is in place. This decision makes us the only major European country with full expensing and gives us the joint most generous capital allowance regime of any advanced economy.

I understand that the Labour party is reviewing business taxes. Let me save it the bother. It puts them up, and we cut them.

I also want to make our taxes more competitive in our life science and creative industry sectors. In the autumn, I said I would return with a more robust research and development tax credit scheme for smaller research-intensive companies. Today, I am introducing an enhanced credit which means that if a qualifying small or medium-sized business spends 40% or more of its total expenditure on R&D, it will be able to claim a credit worth £27 for every £100 that it spends. That means an eligible cancer drug company spending £2 million on R&D will receive over £500,000 to help it to develop breakthrough treatments. That is a £1.8 billion package of support helping 20,000 cutting-edge companies who, day by day, are turning Britain into a science superpower.

The Government’s audio-visual tax reliefs have helped to make our film and TV industry the biggest in Europe. Only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK. To give even more momentum to this critical sector, I will introduce an expenditure credit with a rate of 34% for film, high-end television and video games, and 39% for the animation and children’s TV sectors. I will maintain the qualifying threshold for high-end television at £1 million. Because our theatres, orchestras and museums do such a brilliant job at attracting tourists to London and the UK, I will extend for another two years their current 45% and 50% reliefs.

An enterprise economy needs low taxes, but it also needs cheap and reliable energy. We have already announced billions of support to help businesses reduce their energy bills through the energy bills relief scheme and the energy bills discount scheme. We have appointed Dame Alison Rose, chief executive of NatWest, to co-chair our national energy efficiency taskforce and help deliver our national ambition to reduce energy use by 15%. To support her efforts, I will extend the climate change agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures. But the long-term solution is not subsidy, but security. That means investing in domestic sources of energy that fall outside Putin’s or any autocrat’s control. We are world leaders in renewable energy, so today I want to develop another plank of our green economy: carbon capture usage and storage. I am allocating up to £20 billion of support for the early development of CCUS, starting with projects from our east coast to Merseyside to north Wales, paving the way for CCUS everywhere across the UK as we approach 2050. That will support up to 50,000 jobs, attract private sector investment and help capture 20 to 30 million tonnes of carbon dioxide per year by 2030.

We have increased the proportion of electricity generated from renewables from under 10% when we came into office to nearly 40%, but because the wind does not always blow and the sun does not always shine—even under the Conservatives—we will need another critical source of cheap and reliable energy, and that is nuclear. There have been no more powerful advocates for this than my hon. Friends the Members for Ynys Môn (Virginia Crosbie), for Copeland (Trudy Harrison), for Hartlepool (Jill Mortimer) and for Workington (Mark Jenkinson). They rightly say that increasing nuclear capacity is vital to meet our net zero obligations. To encourage private sector investment into our nuclear programme, I today confirm that, subject to consultation, nuclear power will be classed as environmentally sustainable in our green taxonomy, giving it access to the same investment incentives as renewable energy.

Alongside that will come more public investment. In the autumn statement, I announced the first state-financed investment in nuclear for a generation, a £700 million investment in Sizewell C. Today, I can announce two further commitments to deliver our nuclear ambitions. First, following representations from our energetic Energy Security Secretary, I am announcing the launch of Great British Nuclear, which will bring down costs and provide opportunities across the nuclear supply chain to help provide one quarter of our electricity by 2050. [Interruption.] It is so good to hear that the Labour party is in favour of nuclear energy. [Interruption.] It is just a shame that it never did any. Secondly, I am launching the first competition for small modular reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.

Finally, under the E of enterprise, I come to our innovation economy: a central area of national competitive advantage for the United Kingdom. Over the weekend, I worked night and day with the Prime Minister and the Governor of the Bank of England to protect the deposits of thousands of our most cutting-edge companies. We successfully secured the sale of the UK arm of Silicon Valley Bank to HSBC, so the future of those companies is now safe in the hands of Europe’s biggest and one of its most creditworthy banks. But those events show that we need to build a larger, more diverse financing system, where the benefits of investment in high-growth firms are available to more investors. I will return in the autumn statement with a plan to deliver that. It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the US Inflation Reduction Act.

When it comes to our innovation industries, however, I want to make progress on two areas today. Nigel Lawson made the City of London one of the world’s top financial centres by competitive deregulation. With our Brexit autonomy, we can do the same for our high-growth sectors. Today, I want to reform the regulations around medicines and medical technologies. We are lucky to have, in the Medicines and Healthcare products Regulatory Agency, one of the most respected drugs regulators in the world—indeed, the very first anywhere to license a covid vaccine. From 2024, it will move to a different model, which will allow rapid, often near-automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the United States, Europe and Japan. At the same time, it will set up a swift new approval process for the most cutting-edge medicines and devices to ensure that the UK becomes a global centre for their development. With an extra £10 million of funding over the next two years, they will put in place the quickest, simplest regulatory approval in the world for companies seeking rapid market access. We are proud of the life science sector, which received more inward investment than any in Europe last year. Today’s change will make the UK an even more exciting place to invest, using our Brexit freedoms and speeding up access for NHS patients to the very newest drugs.

Today, with our talented Science, Innovation and Technology Secretary, I also take measures to strengthen our position in artificial intelligence, where the UK hosts one third of all European companies. I am accepting all nine of the digital technology recommendations made by Sir Patrick Vallance in the review that I asked him to do in the autumn statement. I can report to the House that we will launch an AI sandbox to trial new, faster approaches to help innovators get cutting-edge products to market. We will work at pace with the Intellectual Property Office to provide clarity on IP rules so that generative AI companies can access the material they need. We will ask Sir Patrick’s successor, Dame Angela McLean, to report before the summer on options around the growth duty for regulators.

Because AI needs computing horsepower, I today commit around £900 million of funding to implement the recommendations of the independent “Future of Compute” review for an exascale computer. The power needed by AI’s complex algorithms can also be provided by quantum computing, so today we publish a quantum strategy, which will set out our vision to be a world-leading quantum-enabled economy by 2033, with a research and innovation programme totalling £2.5 billion.

I also want to encourage the best AI research to happen in the UK, so will award a prize of £1 million every year for the next 10 years to the person or team that does the most groundbreaking British AI research. The world’s first stored-program computer was built at the University of Manchester in 1948, and was known as the Manchester baby. Seventy-five years on, the baby has grown up, so I will call this new national AI award the Manchester prize in its honour. We want the UK to be the best place in Europe for companies to locate, invest and grow, so today’s enterprise measures strengthen our technology and life science sectors, invest in energy security and—for three years, but I hope permanently—cut corporation tax by £9 billion a year, to give us the best investment incentives of any advanced economy.

An enterprise economy can only grow if it can hire the people it needs, which brings me to my third pillar after everywhere and enterprise. [Interruption.] I said it was a growth budget. We are talking about the E of employment. I am going to talk about a difficult topic for the Labour party. Brexit was a decision by the British people to change our economic model. In that historic vote, our country decided to move from a model based on unlimited low-skill migration to one based on high wages and high skills. Today, we show how we will deliver that, with a major set of reforms. The OBR says that it is the biggest positive supply-side intervention that it has ever recognised in its forecast.

We have around 1 million vacancies in the economy but, excluding students, more than 7 million adults of working age are not in work. That is a potential pool of seven people for every vacancy. Conservatives believe that work is a virtue. We agree with the road haulage king Eddie Stobart, who said:

“The only place success comes before work is the dictionary.”

Today, I bring forward reforms to remove the barriers that stop people who want to work from doing so. I start with over 2 million people who are inactive due to a disability or long-term sickness. Thanks to the reforms courageously introduced by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), the number of disabled people in work has risen by 2 million since 2013. But even after that, we could fill half the vacancies in the economy with people who say that they would like to work, despite being inactive due to sickness or disability. With Zoom, Teams and new working models that make it easier to work from home, that is possible now more than ever.

For that reason, the ever-diligent Work and Pensions Secretary today takes the next step in his groundbreaking work on tackling economic inactivity. I thank him for that, and today we publish a White Paper on disability benefits reform. It is the biggest change to our welfare system in a decade. His plans will abolish the work capability assessment in Great Britain and will separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.

Today, I am going further by announcing that, after listening to representations from the Centre for Social Justice and others, in England and Wales we will fund a new programme called universal support. This is a new, voluntary employment scheme for disabled people, where the Government will spend up to £4,000 a person to help them find appropriate jobs and put in place the support that they need. It will fund 50,000 places every single year.

We also want to help those who are forced to leave work because of a health condition such as back pain or a mental health issue. We should give them support before they end up leaving their job, so working with our Health Secretary, I am also announcing a £400-million plan to increase the availability of mental health and musculoskeletal resources, and expand the individual placement and support scheme. Because occupational health provided by employers has a key role to play, I will also bring forward two new consultations on how to improve its availability and double the funding for the small company subsidy pilot.

Another group that deserves particular attention is children in care. They, too, should be given all possible help to make a normal working life possible when they reach adulthood. Often, they depend on foster families, who do a brilliant job, so today I am nearly doubling the qualifying care relief threshold to £18,140 which will give a tax cut to a qualifying carer worth an average of £450 a year. I will also increase the funding that we provide to the Staying Close programme by 50%, to help more care leavers into employment, and I will support young people with special educational needs and disabilities with a £3-million pilot expansion of the Department for Education’s supported internship programme, to help those people to transition from education into the workplace. No civilised society can ignore the contribution that can be made by those with challenging family circumstances, a long-term illness or a disability, so today we remove the barriers that we can, with reforms that strengthen our society as well as our economy.

The next set of employment reforms affects those on universal credit without a health condition, who are looking for work or on low earnings. There are more than 2 million jobseekers in this group—more than enough to fill every vacancy in the economy. Independence is always better than dependence. [Interruption.] With some exceptions, Madam Deputy Speaker. That is why a Conservative Government believe that those who can work, should. Sanctions will be applied more rigorously to those who fail to meet strict work search requirements or choose not to take up a reasonable job offer. For those working low hours, we will increase the administrative earnings threshold from the equivalent of 15 hours to 18 hours at national living wage for an individual claimant, meaning that anyone working below that level will receive more work coach support, alongside a more intensive conditionality regime.

The next group of workers I want to support are those aged over 50. My younger officials have termed these people “older” workers, although as a 56-year-old I prefer the term “experienced”. Fully 3.5 million people of pre-retirement age over 50 are not part of the labour force—an increase of 320,000 since before the pandemic. We now have the 23rd highest inactivity rate for over 55s in the OECD. If we matched the rate of Sweden, we would add more than 1 million people to our national labour force.

Madam Deputy Speaker, I say this not to flatter you, but older people are the most skilled and experienced people we have. [Hon. Members: “Oh!”] No country can thrive if it turns its back on such a wealth of talent and ability. But for too many, turning 50 is a moment of anxiety about the cliff edge of retirement rather than a moment of anticipation about another two decades of fulfilment. I know this myself. After I turned 50, I was relegated to the Back Benches and planned for a quiet life, but instead I decided to set an example by embarking on a new career in finance.

How’s it going?

It’s going well, thank you. So today I take three steps to make it easier for those who wish to work longer to do so.

First, we will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the Department for Work and Pensions’ excellent mid-life MOT strategy. It will also increase by fivefold the number of 50-plus universal credit claimants who receive mid-life MOTs from 8,000 to 40,000 a year.

Secondly, with the Secretary of State for Education, my right hon. Friend the Member for Chichester (Gillian Keegan), who has a deep personal commitment to this area, we will introduce a new kind of apprenticeship, targeted at the over 50s who want to return to work. They will be called returnerships and operate alongside skills boot camps and sector-based work academies. They will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.

Finally, I have listened to the concerns of many senior NHS clinicians, who say unpredictable pension tax charges are making them leave the NHS just when they are needed most. The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the autumn statement. But ahead of that, I do not want any doctor to retire early because of the way pension taxes work. It is an issue I have discussed not just with the current Secretary of State for Health and Social Care, my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay), but a former Health Secretary who kindly took a break from WhatsApping his colleagues to consider it.

As Chancellor, I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50%, from £40,000 to £60,000. Some have also asked me to increase the lifetime allowance from its £1 million limit. But I have decided not to do that. Instead I will go further and abolish the lifetime allowance altogether. It is a pension tax reform that will stop over 80% of NHS doctors from receiving a tax charge, incentivise our most experienced and productive workers to stay in work for longer, and simplify our tax system, taking thousands of people out of the complexity of pension tax. [Interruption.]

Order. Just because the Chancellor of the Exchequer is either unpopular or popular, we still need to keep the noise down because we still have to hear what he has to say. He has more to say.

This is a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. That is the E of the employment pillar of today’s growth budget.

Which brings me to the final pillar of our growth plan. After employment, enterprise and everywhere, I turn to the E of education. Over more than a decade, this Conservative Government have driven improvement in our education system. We have risen by nearly 10 places in the international league tables for English and maths since 2015.

In the autumn statement, I built on this progress with an extra £2.3 billion annual investment to our schools. We are reviewing our approach to skills with Sir Michael Barber. We have set out our plans to transform lifelong learning with a new lifelong loan entitlement and my right hon. Friend the Prime Minister announced plans to make maths compulsory until 18. But today I want to address an issue in our education system that is bad for children and damaging for the economy. It is an issue that starts even before a child enters the gates of a school. Today I want to reform our childcare system.

We have the one of the most expensive systems in the world. Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.

For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers, such as Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than 1 million additional women working. And we can do that.

So today I announce a series of reforms that start that journey. I begin with the supply of childcare. We have seen a significant decline in childminders over recent years— down 9% in England in just one year. But childminders are a vital way to deliver affordable and flexible care, and we need more of them. I have listened to representations from my hon. Friend the Member for Stroud (Siobhan Baillie) and decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.

I have also heard many concerns about cost pressures facing the sector. We know that is making it hard to hire staff and raising prices for parents, with around two thirds of childcare providers increasing fees last year alone. So we will increase the funding paid to nurseries providing free childcare under the hours offer by £204 million from this September, rising to £288 million next year. That is an average of a 30% increase in the two-year-old rate this year, just as the sector has requested.

I will also offer providers more flexibility in how they operate in line with other parts of the UK. So alongside that additional funding, we will change minimum staff-to- child ratios from 1:4 to 1:5 for two-year-olds in England as happens in Scotland, although the new ratios will remain optional with no obligation on either childminders or parents to adopt them.

I want to help the 700,000 parents on universal credit who, until the reforms I announced today, had limited requirements to look for work. Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront. And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.

I turn now to parents of school-age children, who often face barriers to working because of the limited availability of wraparound care. One third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires it to be available before and after school. To address this, we will fund schools and local authorities to increase the supply of wraparound care so that all parents of school-age children can drop their children off between 8 am and 6 pm. Our ambition is that all schools will start to offer a full wraparound offer, either on their own or in partnership with other schools, by September 2026.

Today’s childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it. Taken together with earlier Conservative reforms, they amount to the most significant improvements to childcare provision in a decade. But if we really want to remove the barriers to work, we need to go further for parents who have a child under 3. For them childcare remains just too expensive.

In 2010, there was barely any free childcare for under-fives. A Conservative-led Government changed that, with free childcare for three and four-year-olds in England. It was a landmark reform, but not a complete one. I do not want any parent with a child under five to be prevented from working if they want to, because it is damaging to our economy and unfair, mainly to women, so today I announce that in eligible households in which all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three and four-year-olds, but for every single child over the age of nine months.

The 30 hours offer will now start from the moment maternity or paternity leave ends. It is a package worth on average £6,500 every year for a family with a two-year- old child using 35 hours of childcare every week, and it reduces their childcare costs by nearly 60%. Because it is such a large reform, we will introduce it in stages to ensure that there is enough supply in the market. Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping about half a million parents. From September 2024, that 15 hours will be extended to all children from nine months up, meaning that a total of nearly 1 million parents will be eligible. From September 2025, every single working parent of under-fives will have access to 30 hours of free childcare per week.

You’ll be gone by then.

Order. Mr Perkins, stop it.

Today we complete a landmark Conservative reform. We help the economy, transform the lives of thousands of women and build a childcare system comparable to the best, with a major early years reform for our education system—the E of education, alongside the three other pillars of our growth plan: enterprise, employment and everywhere.

In November we delivered stability; today it is growth. We are tackling the two biggest barriers to businesses growing—investment incentives and labour supply—with the best investment incentives in Europe and the biggest ever employment package. For disabled people, more help; for older people, barriers removed; for families feeling the pinch, fuel duty frozen, beer duty cut and energy bills capped; and for parents, 30 hours of free childcare for all under-fives. Today we build for the future, with inflation down, debt falling and growth up. The declinists are wrong and the optimists are right. We stick to the plan because the plan is working. I commend this statement to the House.

I thank the Chancellor of the Exchequer for his Budget statement. [Interruption.] I hope the House will settle down, please. Under Standing Order No. 51, the first motion, entitled—[Interruption.] The bad behaviour is now on the Government side of the House! Let us have a bit of decorum, please, while we go through the necessary procedure.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

(a) Stamp duty land tax (transaction funded with the assistance of a subsidy) (motion no. 39);

(b) Fuel duties (excepted machines) (motion no. 44);

(c) Rates of tobacco products duty (motion no. 46);

(d) Late payment interest (value added tax) (motion no. 57);

(e) Charities (value added tax etc) (motion no. 65).—(Jeremy Hunt.)

Question agreed to.

It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Tuesday 21 March. I call the Leader of the Opposition.

Thank you, Madam Deputy Speaker. May I say that it is good to see you back in the Chair?

For all the hype, this is a Budget for growth that downgrades the growth forecast. The Chancellor’s opening boast was that things are not quite as bad now as they were in October last year after the kamikaze Budget. The more he pretends everything is fine, the more he shows just how out of touch the Government are. After 13 years of his Government, our economy needed major surgery, but this Budget leaves us, like millions across our country, stuck in the waiting room with only a sticking plaster to hand. Our country is set on a path of managed decline, falling behind our competitors—the sick man of Europe once again.

This was a day for ambition, for bringing us together with purpose and intent, for unlocking the pride that is in every community and matching their belief in the possibilities of the future, but after today we know that the Tory cupboard is as bare as the salad aisle in our supermarkets. The lettuces may be out, but the turnips are in: a hopelessly divided party, caught between a rock of decline and a hard place of its own economic recklessness, dressing up stagnation as stability as the expiry date looms ever closer.

The figures published today spell it out: a year of stagnation, with growth non-existent. According to the International Monetary Fund, we are the worst-performing country in the G7 this year—a prediction today confirmed by the Office for Budget Responsibility, with growth downgraded in the years to come. This is a failure that can be measured not just by the figures, but by the empty pockets of working people right across the country: 13 years without wage growth, 13 years no better off, 13 years stuck in a doom loop of lower growth, higher taxes and broken public services.

The OBR makes it clear today that things do not look any better in the long run. A broken labour market is holding back our prospects. There are 7 million on NHS waiting lists. Ill health and disability are on the rise, and the consequences, as we have just heard, have been deferred to the future. It is the classic short-term, sticking-plaster cycle: decisions cynically ducked today; pain for working people tomorrow.

It does not have to be like this. Britain has enormous potential. In science, innovation and technology, we should be leading, not lagging. We need an industrial strategy that removes barriers to investment, but the announcements today are nowhere near the mark. The lowest investment in the G7: that is the Government’s record. All our competitors know this. They are gearing up for an almighty race, for the opportunities of tomorrow, and we have to be on the start line, not back in the changing room tying our laces.

The Chancellor mentioned the war in Ukraine. Of course the Opposition stand with Ukraine, and we stand with the Government’s response to Putin’s brutality. We will look carefully at the details of the military spending announced, and we will support them, but what we cannot accept is the use of the war as a blanket excuse for failure.

Our economy has weak foundations. Global crises hit Britain more than other countries. Wages in this country are lower now in real terms than they were 13 years ago. The average French family are a tenth richer; the average German family a fifth richer. Those countries faced the same pandemic and those countries face the same war. The war did not ban onshore wind, the war did not scrap our home insulation scheme, the war did not run down our gas storage facilities—the Government did, with decisions that hurt working people battling the cost of living crisis right now. It has been the same story for the whole 13 years: always the sticking plaster, never the cure, and today’s Budget does nothing to change that. Again, we see a failure to grip the long-term challenges—[Interruption.]

Order. People should not be speaking while the Leader of the Opposition is delivering his speech. They should be listening. We will now listen to the Leader of the Opposition.

Today’s Budget changes nothing. Again, we see a failure to grip the long-term challenges and no determination to create growth, which unlocks the potential of the many. Working people are being made to pay for Tory choices and Tory mistakes.

These are the organising principles of Conservative economics, and we should judge them by their choices: the running down of our public services, paid for by working people; the disaster of the Tory mortgage premium, paid for by working people; the opportunities still missed for a proper windfall tax, paid for by working people. That is what makes the Chancellor’s boasts about lower inflation so ridiculous—the idea that it is a tax cut. British people can see through that. They see their tax burden at its highest level for 70 years, and they know it is not the Government who are lowering inflation. It is working people, earning less and enjoying less. It is their sacrifice that is helping to bring inflation down, and they deserve better than another cheap trick from the Government of gimmicks, making them pay while trying to claim the credit.

Even with the price guarantee, the average energy bill has doubled in 18 months. Because of the Government’s recklessness, the average mortgage payment is up by £2,000 a year—a massive hit to living standards, however they cook the books. And yet there is still no real ambition on industrial strategy, no real ambition on the clean energy that will give us cheaper bills, no real ambition on house building. We are seeing the same old Tory choices, with sticking-plaster politics, no growth for the many, and working people paying.

Let us turn to “his” policies on the cost of living. I say “his” policies because there is a history to this—a pattern. Over the course of the whole cost of living crisis, time and again it is Labour who brings the Government not just to their senses, but to our position. Who first pushed for the energy price guarantee? Labour. Who first called for a proper windfall tax? Labour. Who first stood by people on prepayment meters? Labour. Who first said we should freeze the price guarantee this April? Labour. And we can go on, because it is also Labour that first committed to extending the fuel duty cut—a policy that, in January, the Chancellor dismissed, as part of a dossier that he published. So for one poor soul in their research team at least, this really is a back-to-work Budget. I have a word of advice for the Chancellor as he promotes this policy in the coming days: use your own car, and for heaven’s sake make sure you know how to use a debit card. I look forward to the Prime Minister promoting the swimming pools policy. He will not have to borrow one of those—unlike the car.

The cost of living crisis is not over, and once again the Government have left money on the table when it comes to oil and gas companies—money that could have been better spent on working people. Politics is about whose side you are on. There are loopholes that urgently need closing. Even the former CEO of Shell admitted that the companies should be paying more. The long-term plan just is not there. We are seeing the same old Tory choices and the same three principles—sticking-plaster politics, no growth for the many, working people pay—and we are seeing those principles at play in our broken labour market.

Much of what the Chancellor said today focused on that, as well it might. The figures announced in this Budget show how damaging the current situation is to growth—a long-term drag on our ability to create more wealth. Our inactivity levels are particularly shocking, up by half a million since the pandemic, and ours is the worst jobs recovery in the G7. More people are unable to work because of ill health than ever before.

We will look at what the Chancellor has announced today, because we on these Benches have long called for reform of the work capability assessment, and for a welfare system that supports people with disabilities and long-term health conditions and helps them to thrive at work. The universal credit system must help people into employment, and childcare is a huge barrier to that. We have made the case for reform.

When it comes to childcare, of course more money in the system is obviously a good thing—[Interruption.] They obviously were not listening when he told us when he was actually going to do it. We have seen the Tories expand so-called free hours before. As parents up and down the country know, it is no use having more free hours if you cannot access them, and it pushes up the costs for parents outside the offer. That is what we have seen before.

On pensions, the Chancellor made a big spending commitment that will benefit those with the broadest shoulders when many people are struggling to save into their pensions. We needed a fix for doctors, but the announcement today is a huge giveaway to some of the very wealthiest. The only permanent tax cut in the Budget is for the richest 1%. How can that possibly be a priority for this Government?

The truth is that our labour market is the cast-iron example of an economy with weak foundations. Our crisis in participation simply has not happened elsewhere—not to this extent. It is a feature of Tory Britain, and global excuses will not wash. We need a wider reform agenda. Instead of making working people pay, we need to make work pay. We need to move on from growth that is based on insecure, low-paid jobs to growth that comes from good work and strong employment rights and can deliver higher productivity: growth from the many, for the many, that makes people better off in all parts of our country.

I welcome the Chancellor’s announcements on devolution deals. The principle that we should push power out of Westminster is fully supported on this side of the House. In fact, we want him to go further: communities beyond Birmingham and Manchester deserve the right powers, and the same powers, to drive growth as well.

But the Chancellor is a former Health Secretary, and a published author on health, no less—he gave me a signed copy of his book. He knows that growth needs an NHS fit for the future, and no country can be fit for work when there are 7 million people on hospital waiting lists. So I was waiting for him to match Labour’s ambition—waiting for him to match our plan to train more doctors and nurses and to tackle the capacity crisis, a policy that he publicly praised just 15 days before becoming Chancellor. And yet it never came. If ever there was a symbol of the poverty of ambition, that is it, because the reality is that a country getting sicker is a country getting poorer, and a country getting poorer is a country getting sicker. Health and wealth must go together. Britain cannot afford to be the sick man of Europe. Britain cannot afford the Tories.

And there is another way. On these Benches, we understand that institutions must be respected, that constraints must be accepted, that fiscal rules should be sound and followed rigorously, and that every pound is precious and must not be wasted. The Tories want to shout about their record, so let them shout. Wages: lower. Taxes: higher. Borrowing: higher. Debt: higher. Their chaos has a cost.

Certainty is vital for the growth that we need, essential for businesses and investors in our country. As we have spelt out, compared with a blanket cut in corporation tax, investment allowances are the right approach, but the question that many businesses will ask today is this: how long before the wind blows again, and we all go through this again? That is what the Tories do not understand about business investment. Their endless fighting on tax is bad for growth, in and of itself. Real stability means that taxes do not go up and down like yo-yos, and the R&D tax credit regime does not get overhauled twice in six months. [Interruption.]

Order. Okay, that is enough. I now cannot hear the right hon. and learned Gentleman at all—and it is nothing to do with being old. Now, be quiet.

Let me give an example of that instability. It is a bit of a fraught subject at the moment, but when the Chancellor was Culture Secretary he apparently took some lessons on the rules of football. Let me provide a refresher. The number of times his Government have broken their fiscal rules: 11. That is one football team. The number of times they have changed corporation tax policy: 22. That is two teams—you have got a game. But if he wants the post-match analysis, he will have to consult the experts, who will be back on his screens and ours this weekend. I know that the whole House will want to applaud that.

But a Budget is about not just the choices made but the choices ignored. Britain needs more than certainty for growth; that is the least we should expect. We need change, stability and success. Anyone listening to this who is worried about NHS waiting lists or about crime going unpunished—[Interruption.] They do not want to hear about the waiting lists. They do not want to hear about crime going unpunished. Housebuilding rates are falling. I suppose they do not want to hear about that either. They will have heard very little that makes them feel hopeful about our future.

The Government could have used sensible taxation policies on non-doms or oil and gas companies and made the money work for working people. They could have tackled the vested interests that gum up our planning system and shown real ambition on the investment we need to turn us into a green growth superpower. That was the test today: could we move beyond the usual sticking-plaster solutions and set a new direction for growth that serves the interests of working people?

I am afraid that the verdict on this Budget is clear: they will not offer change because they cannot. And so our course is set: managed decline, Britain going backwards, the sick man of Europe once again. That is the Britain they have created and they should look it in the eye, because today’s figures on growth put their failures up in lights. After 13 years of Tory sticking-plaster politics, 13 years of no growth for the many and 13 years of being asked to pay, working people are entitled to ask, “Am I any better off than I was before?” After 13 years, with no excuses left, nobody left to blame, no ambition or answers, the resounding answer is no, and they know it.

Order. We will just let things settle down a bit. If people are leaving, please will they do so quickly and quietly, out of consideration for everybody else who is still taking part in the debate? Get a move on. I call the Chair of the Treasury Committee.

Thank you very much, Madam Deputy Speaker; it is wonderful to have you back in the Chair.

After that torrent of socialist declinism from the Opposition, I want to start by saying how lucky we are to have a lucky Chancellor. He has been lucky this winter because the weather has been a lot warmer than it was when he stood here in November, and as a result the price of energy has come down. But he has also made some of his own luck. Thanks to the steps that he took, the financial markets have stabilised and he has had to pay less in interest than he was expecting to—about £4 billion.

It is hard to believe that this is the first official Budget we have had in this Chamber since October 2021. A lot of things have changed since then. Our world-leading NHS vaccination roll-out has ended the severe contagion of the pandemic, but Putin’s evil and illegal invasion of Ukraine has sparked the worst inflation for 40 years. The challenges that those events have placed on the public finances have been extraordinary, and the spending cannot all be borrowed and passed on to the next generation. That is why I welcome today’s news that the Chancellor is forecasting 3% lower debt in years to come.

The Treasury Committee welcomes the fact that the Budget is accompanied by forecasts from the Office for Budget Responsibility. We think it is important that that stands alongside a Budget. It is a key part of the independent framework for Chancellors and we will be taking evidence from the OBR next week on the underlying assumptions behind its forecasts.

What has changed most perniciously since the last Budget in October 2021 is inflation. It was only just beginning to rear its ugly head back then, and as a member of the Treasury Committee throughout this entire period, I have been like Cassandra in highlighting some of the inflationary risks that we faced. Far from being transitory, as the independent Bank of England hoped, inflation has become quite deeply embedded in the UK economy in wage inflation and in expectations. That is why I welcome the news today that the OBR is expecting inflation to go back down to 2.9% by the end of this year.

Inflation is the worst tax that we have on our economy. It is a tax paid particularly by the very poorest, who spend the highest proportion of their income on food and energy, so the Chancellor must not listen to the siren voices urging him to increase or abandon the inflation target that he gives to the independent Bank of England. The top priority for our economy this year must be to at least halve inflation.

It is to be welcomed that in his Budget today, the Chancellor has tried to focus on measures that help to achieve that inflation target. The extension of the fuel duty freeze and the cap on household energy costs will all help to keep inflation almost 1% lower than it would otherwise have been. These might not feel like giveaways but they do cost money against the do-nothing counterfactual option. It is good to see that they are being implemented because of better public finances, and that these tax cuts can be seen as consistent with the Government’s second priority of reducing debt.

In our recent Treasury Committee report, we called on the Chancellor to think again about the fiction that lies behind fuel duty forecasts. Every year, they get embedded in the fiscal outlook, and every year Chancellors realise that it is not an ideal time to raise fuel duty. I welcome the fact that the fuel duty cut has been extended for another year and that, once again, the fiction has not been followed through into reality, but we need to think long and hard about why a tax that is inflationary, that harms growth and that is heading the way of the dodo, as we all move to electric cars, is still in the forecast numbers.

The third economic policy of growing the economy in a non-inflationary way will involve all of us working more productively. The Stride review, named after my illustrious predecessor, has rightly focused on this key question. Many helpful measures have been announced in today’s Budget. With over 1 million job vacancies in our economy, we are still, as a country, working fewer hours than we were before the pandemic. Unlocking that human and economic potential is key to strong, productive, non-inflationary growth.

The steps that have been announced today on childcare and on pensions will help to ease the labour shortages that are pushing up wage demands and help to counter those inflationary pressures. The Treasury Committee looks forward to exploring all these issues in detail with our expert witnesses and with the Chancellor in our next evidence sessions, because the details really matter.

The Treasury Committee has highlighted the new benefit cliff edges that my right hon. Friend introduced last November, when he announced that, next winter, only low-paid households will receive the £900 help with their cost of living. We asked for it to be spread over six instalments to reduce the risk of cliff edges. We are sorry to hear that a somewhat clunky computer system means there will be three instalments instead. We worry that, if a person loses their job just after the qualifying date, they will miss out on a lot of help.

There are still cliff edges, taper rates and disincentives to work galore in our benefit and tax systems, whether they are around free school meals, childcare limits, child benefit tapers, tax-free childcare cliff edges and the withdrawal of the tax-free allowance. The very welcome measures announced today on all those fronts, and the pension cap abolition, will all be studied in detail by the Committee. We plan to work closely with our colleagues on the Work and Pensions Committee to find recommendations to smooth some of those cliff edges and distortions.

The Chancellor can see how these cliff edges are disincentives to working more hours, and every hour of work should pay. We have made huge progress towards that today. At any stage in life, and at any age, people should be rewarded more the more they work.

Speaking briefly as a constituency MP, I welcome the help for swimming pools, for pubs, for levelling up, for Malvern theatres and for childcare providers and nurseries. There is a lot of very good news for them today.

The Chancellor has had some luck since November and he has shared that luck with UK households today. He has a clear intention to bring down inflation, to grow the economy and to reduce debt. May good luck continue to follow him, and may the extra billions of pounds he has secured for the defence budget help our Ukrainian friends have good luck and to beat back the Russian invaders. Slava Ukraini.

I call the SNP spokesman.

I thought the Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), was about to launch a ship with her peroration.

If I may, I will make a couple of small observations before I start. The Chancellor mentioned Nigel Lawson and his deregulatory Budgets and spoke about the resolution for Silicon Valley Bank. I hope the Government learned the right lessons from those episodes and indeed from the 2008-09 crash: do not weaken regulation, do not weaken tier 1 capital and do not return the banking system to risk.

I was intrigued by many of the things the Chancellor said about reducing economic inactivity. Some of the measures may well work. To add more brutal sanctions on to universal credit claimants was probably rather unconscionable, given everything else that is happening.

The Chancellor gave the impression of broad, sunlit uplands, and there was lots of cheering and waving of Order Papers at the end. What he actually described, though, was a UK economy that has gone from being the most robust in the G7 to one of the weakest; a UK economy in which Brexit slammed the brakes on UK investment; a UK whose performance deteriorated after the Brexit referendum, in both absolute and relative terms; a country that unilaterally imposed trade barriers with its nearest neighbours; and the only country in the G7 whose economy has not returned to its pre-pandemic level.

One could make a case that this was not all the Government’s fault, but many of the difficulties were, and many were caused by the disastrous fiscal loosening of the Chancellor’s predecessor, the right hon. Member for Spelthorne (Kwasi Kwarteng). We can see the problem the economy faces through the prism of debt interest. The Chancellor is right about the comparison with last November, four months ago, but year on year, debt interest payments are £30 billion, £40 billion, £50 billion, £60 billion higher than they were a year ago. For ordinary working people, the OBR confirmed in November that real household disposable income remains below the 2019-20 level and will do so for the next four or five years, and I have seen nothing in the Red Book or the OBR forecast in the past few minutes to change my mind about November’s assessment.

We had every right to expect that today’s Budget would begin to address more of the long-term issues the economy faces and would contain action to tackle some of the cost burdens on ordinary people. Those long-term issues were addressed by both the CBI and the TUC in their Budget submissions. On growth, the CBI said:

“The UK economy continues to face global and domestic headwinds, with the prospect of several more years of low growth.”

The TUC said that

“the government is arguing once more that the state of the public finances is a reason to restrict economic growth, flying in the face of evidence to the contrary.”

On productivity, the CBI noted:

“Britain has experienced 15 years of low growth and flatlining productivity”.

The TUC called on the Budget to get

“productivity rising by rebooting our skills system.”

On exports and trade, they both said broadly the same thing. The CBI said the Government should

“work with businesses across the UK’s nations and regions to kickstart an exporting boom”.

On the supply of labour, the TUC said that

“acute labour and skills shortages are an albatross hampering UK growth.”

The TUC said

“there is a recruitment and retention crisis in public services”.

On the green economy, the CBI said:

“Going green is essential both for our international competitiveness and our energy resilience.”

The TUC demanded that the Government

“institute the Green Jobs Taskforce with a long-term remit and regulatory capacity to co-ordinate planning for decarbonising our economy.”

Some measures in the Budget are to be welcomed; there always are some. The changes on prepayment meters will help, more support for local charities will help and the replacement for the corporation tax super-deduction is absolutely essential—it could not be allowed simply to fall off the table. The problem is that even a cursory glance at the Red Book and the OBR forecast shows there is little to indicate that the Government have really understood, or are taking seriously, the issues raised.

On growth, the OBR forecast makes clear the impact of Government investment. It is negative in 2025, 2026 and 2027, and it will be a drag on growth for most of the forecast period. Productivity growth, even on the Government’s favoured productivity per hour metric, does not reach 1.5% in any year of the forecast period—it is below the 2% historical rate.

The much vaunted £20 billion of R&D spend by 2024-25 has been announced three or four times, but it was not mentioned today. I assume it is still on the table, alongside the £1 million a year permanent annual investment allowance. I welcome these things, but the problem is that, with the inflation we have had and the inflation that is forecast, the money will not buy the £1 million a year or the £20 billion of R&D spend that was originally anticipated.

On exports, trade and the balance of payments, the current account balance remains negative for the entire forecast period. Being outside the EU single market remains a drag on the ability of firms to trade easily with our nearest neighbours.

To be fair, the Chancellor spoke a lot about the supply of labour. Employment is forecast to rise, but it will barely dent the labour and skills shortages throughout the economy. My view, and my party’s view, is that only reversing Brexit and ensuring the free movement of people will do that. Even the current framework is instructive, is it not? With a 16-plus unemployment rate of 3.1%, an employment rate of 76.5% and an economic inactivity rate down to 21%, Scotland has the best employment, best unemployment and best economic inactivity rate of any UK nation. That demonstrates clearly that a competent and compassionate SNP Government can deliver on employment where the UK Tory Government are failing.

The Chancellor made great merit of going green. Some interesting things were said. The £1 billion a year or so investment in carbon capture and storage is to be welcomed, but we will look very carefully to see where it is spent. There was no mention, for example, of the Acorn project in Peterhead, which of course had £1 billion of funding pulled almost a decade ago. But the Chancellor did mention small modular reactors and nuclear power, which is at the heart of the Government’s energy policy. Given that that is now back on the agenda, it is useful to look at the economics of it. On SMR, remember: this is pipedream stuff. There is not a single small modular reactor design that has even been licensed for use.

The primary mechanism to drive investment in nuclear is either the regulated asset base model or a guaranteed price for electricity with a strike price at almost double that of real renewable energy, linked to CPI for 35 years. There are loan guarantees to transfer project risk, including that of cost overruns, to the Government and then the taxpayer. There is a waste disposal service for spent fuel and other waste. The price of those contracts is set according to the Government’s methodology, but if the prices go above a cap, they too will be passed on to the Government and the taxpayer.

Then there is the commitment by Government to manage decommissioning cost overruns, even though it is impossible to know what they will be, because they do not become apparent until the decommissioning takes place—massive costs to the consumer and a near unlimited contingent risk placed on the taxpayer. But here is the rub when the Government call it “green” or “renewable”: allowing one or two generations to buy expensive, overpriced nuclear energy, nuclear electricity, and then forcing the next 50 generations to decommission, store and guard toxic nuclear waste is not green.

You will recall, Madam Deputy Speaker, that the Government introduced their new fiscal charter last year: net debt to fall as a share of GDP in the fifth year of a rolling programme and public sector net borrowing not to exceed 3% of GDP in the same year. When the OBR reported in the autumn, those targets were due to be met in 2027-28, with the figures being, if memory serves, 0.3%, 0.6%, £9.5 billion and £18.6 billion. They are forecast today still to be met but, interestingly, the net debt measure is now showing a margin of only 0.2%. That tells us, because the debt figure is different, that there is probably a little more headroom than was anticipated only four months ago.

Therefore, the expectation should have been that the Treasury did more to tackle domestic and business energy costs, particularly for small and medium-sized enterprises; that it continued to act to squeeze inflation down, where it had the power to do so; and that it ensured things within its control, such as public sector pay, the minimum wage, the state pension and social security rises—it did this in November—did not leave people any worse off. If it does not do that, energy price hikes, inflation and weak pay rises will continue to erode people’s standard of living.

We know from the November OBR forecast that inflation was set to peak at a 40-year high and that wages and living standards were still set to be squeezed by about 7%, wiping out all the growth from the past eight years. What do we know today that we did not know then? We know that telecoms prices are due to rise; BT is putting its costs up by 15% at the end of this month. Grocery prices continue to rise —if you can get fresh produce at all. Grocery inflation rose in February to a record high of 17.1%. That will add the best part of £1,000 to the average family shopping basket throughout the year and we know that families are really beginning to feel the pain of increased mortgage costs.

So it is obvious that the Government had three urgent tasks today, all of which ought to have been designed to deal with the things that matter to the public. The first was to continue to support businesses that are struggling with high energy costs—not simply to freeze the “cap”, although it is not a cap at all, but to reduce it. They needed to recognise that this “cap” is an average and to pay attention to the fact that a UK average energy bill of £2,500 will mean one of £3,000 or £3,500 in Scotland. The Government should have supported the reduction to £2,000 and maintained the £400 energy bill support scheme.

Secondly, the Government ought to have continued to bear down on inflation. Forcing down energy prices would have helped with that, as it did last year—3.5% was the impact last year, and we would be talking about another 2% this year at the current rates. The Government could have gone further by mandating the regulators to stop the blatant price gouging and profiteering by energy and telecoms companies.

Thirdly, as I have said, the Government needed to ensure today, or even to signal their intention, that when it comes to the things under their control—the next round of public sector pay, benefits, the minimum wage and pensions settlements—nobody falls behind. They could have gone further to introduce real fairness and raise more cash to really support the economy and boost trade. They could have ended non-dom status, but that was not mentioned today. They could have taxed share buy-backs, but that was not mentioned today. Instead of doing costly vanity nuclear power projects, they could have been scrapping them and investing in real, green renewables. And fundamentally, they could have been rejoining the EU single market, to give our exporters and our economy a fighting chance to recover.

Order. Before I call the next hon. Member, let me say that it will be obvious that a great many people wish to speak this afternoon. I would prefer not to have to put a time limit on, and we will manage without one if everybody sticks to about seven minutes. You can say a lot in seven minutes. If we cannot manage to have a self-imposed rule, we will put on a time limit. I call Priti Patel.

Thank you, Madam Deputy Speaker. May I open my remarks by welcoming you back to the Chair and saying how wonderful it is to hear you, as well as see you, in robust form?

As a former Treasury Minister, I understand the challenges that my right hon. Friend the Chancellor, his Treasury colleagues and all their officials have been confronted with, as well as the relentless lobbying from Back Benchers that they have faced in putting this important Budget together. I pay tribute to them all, and to the Chancellor in particular. The work that takes place in balancing the different, contrasting interests and representations received is difficult and challenging. Of course, no Budget will please everyone—there is no doubt about that. There will always be more demands for more resources, more simplicity and so on: I could read out a list, but I am not going to do that now.

Importantly, a key test for any Budget is whether it ensures that a robust framework is in place for sound money. Of course, that is what this Conservative party stands for in government; we believe in sound money, balancing the books, growing our economy and giving people the freedom to succeed, through many of the measures that my right hon. Friend the Chancellor has spoken about today. That test includes whether the Budget maintains a strong fiscal position and stability, and whether it delivers fiscal and supply-side reforms to enable the private sector to grow and flourish. He mentioned today a former Chancellor, Lord Lawson, who did exactly that. Those pillars are fundamental to the health, wellbeing and integrity of any sound policy, be it fiscal or monetary, for growing the economy, which then leads to supporting new jobs and creating wealth in our country in order to sustain public services. We should all dwell on that in considering what the Opposition parties are advocating, which would lead to greater instability and, I am afraid, more debt—I do not, however, want to get too party political at this early stage of my remarks.

I do believe that this Budget has combined many of those elements. We must bear in mind that we still face the challenges of the pandemic and of global inflationary pressures, which have disrupted our economy. Sometimes I feel that in this House Opposition parties fail to realise the extent of that disruption and the displacement it has led to in our Government’s fiscal position. It is very significant.

What I like to see, and have seen today, is a Government who are not fearful when it comes to pursuing an ambitious, pro-growth agenda that seeks to reduce the tax burden; I will turn to that shortly. This Budget also makes good progress towards economic growth—this being a Budget for growth—which is also about investment in people, our economy and the long-term future of our country. I will mention a few issues in that regard. First, I ask the Chancellor to keep the wider approach to corporation tax under review. I am personally grateful to him for having heard me on this matter, and I absolutely heard what he said today about the £9 billion of tax incentives that will be put in place, which I understand will be tapered depending on businesses and their level of investment.

There is an important message here that we all know but perhaps have not spoken about enough: many businesses—although not all, because it depends on their size—have been sitting on vast levels of investment that they have not had the confidence to release for investment purposes. I have no doubt that today’s measures will lead to them doing so, but as an Essex MP I have to think of the bulk of small and medium-sized businesses, to which we must put out the hand of support in particular. Thanks to previous policies under Conservative Governments, our country has seen the flowering of many thousands and millions of SMEs; I come from that background myself, as do so many others. We need those businesses to be the lifeblood of our economy, and to grow jobs and employment. Taxing businesses’ profits, the increase in corporation tax and the changes that have been brought in will seem attractive but the devil will be in the detail, and we must continue to work through that.

We do not want to do anything to frustrate business investment. We believe in growth, which is why I was delighted to hear the Chancellor go back to 2010, reminding this House and the country of the struggles and difficulties we faced back then, which led to the start of the corporation tax cuts to help businesses grow. That overall direction of travel was supported on the Government side of the House, while the Opposition obviously had quite a different legacy. I believe that there is more we can do to unleash a wave of pro-growth business reforms and transform our economy even more, particularly post Brexit. Britain post Brexit is about international partnerships and bilateral agreements, but also about showing that we are the place to come and invest. It is about leveraging our markets—our capital markets in particular—demonstrating that we have the financial capabilities to continue to grow, and getting investment back into our country.

When it comes to the wider prospectus of the minimum rate of corporation tax, which my right hon. Friend the Chancellor has heard me and other colleagues speak about many times, we know that the introduction of the minimum effective tax rate will be delayed in Washington and in other countries, so I would just ask him again to think carefully about the timing of this. Why now? Let us focus on the budgetary measures he has announced today and ensure we do everything possible to unleash the business potential and economic growth that we desperately and rightly want to see. I will continue to work with him on that issue.

Let me turn to everything that has been announced today regarding enterprise zones, and unlocking the potential of our country and different regions in our economy, to which levelling up in particular, but also tax deductions, will be vital. This will help with future capital investment and supply-side reforms, which will help us to build our infrastructure, invest in people and disperse jobs around the country—and crucially among generations—in a way we have never seen before, or certainly not in my lifetime in Parliament.

I am delighted with the announcements on pensions, lifetime tax allowances, and childcare in particular; I was the Treasury Minister who, back in the day, worked to bring in tax-free childcare. It is important that we focus on low-income households—those who struggle to get their foot on the ladder when it comes to childcare, and even to get sustainable employment. When I was Employment Minister, I worked with my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) in the Department for Work and Pensions, where we saw so many challenges with the introduction of universal credit and wanted to make reforms to work capability assessments. Today’s announcements are vital labour market reforms that will help to get more people back into work. I endorse the work of the Chancellor and colleagues across Government in that regard.

The Chancellor will not be surprised that I welcome his announcement that he is freezing fuel duty and keeping the reduction that was introduced last year. He understands the difficulties and pressures on household budgets, which he has spoken strongly about today. We are on the side of hard-pressed motorists and hard-pressed taxpayers; we have to stand up for them, as times have been tough. November’s Office for Budget Responsibility report alone caused families concern, so the headroom that has now transpired is welcome. This is an important, welcome and great buffer for motorists and for the country.

Keeping fuel duty down will also help the Government to meet their ambitious target of reducing inflation. Everybody wants to see inflation come down for the right reasons. That is how we grow the economy. This measure will save hard-pressed families, as well as businesses, hundreds of pounds a year. I represent Witham, which is full of logistics firms. We have ports surrounding us, and we are very proud of their work. They will absolutely benefit from the freeze. We have a proud record of supporting the nation’s motorists, including hard-pressed people, for 13 years—a record of which we should always remind everyone across the country. That, of course, compares favourably with the record of previous Governments. Families and businesses in London, Essex and the surrounding areas will look at what we have done on fuel duty against what the Mayor of London is proposing with the ultra low emission zone. That is absolutely something else; it is a charge that will hit low-income families. While Conservatives are constantly tackling issues around high taxes, we should also be pushing out this challenge.

I will make a few other observations, including on infrastructure needs, which are particularly down to supply-side reforms. Essex is a county of entrepreneurs, and our road network is vital. My right hon. Friend the Chancellor has heard me speak about the A120, the A12 and all the fantastic roads that, I am afraid, are gridlocked. We need wider investment, because it is the only way to keep our haulage moving and our motorists travelling, and particularly to ensure that our transport is fit for the future. That comes from Treasury investment as well.

In the interests of time, I will conclude my remarks. I commend my right hon. Friend the Chancellor for the way in which he has approached this Budget. Last year, he said to me, “We will have a Budget for growth.” He is true to his word. There are areas on which I would like to follow up with him and Ministers, but I thank him for having engaged constructively, and for having listened to commuters and motorists, as well as to the voice of Essex and others around the country.

Madam Deputy Speaker, you would think from the noises on the Government Benches that this Budget was a triumph, but let us not forget who is responsible for the state of the economy today. Wages are lower in real terms now than they were in 2010 and we are growing slower than most members of the G7. Obviously covid and the war in Ukraine have knocked the economy, but it was this Government who allowed fraud and error under covid schemes to hit the billions of pounds, much of which, as the Public Accounts Committee has repeatedly highlighted, will never be recovered—billions that could have been invested in public services and many of the measures that the Chancellor announced today.

It was this Conservative Government, a Conversative Prime Minister and Chancellor, who crashed the economy last autumn and have left havoc in many people’s lives. Every time someone goes grocery shopping, every time the mortgage bill and statement arrives, and every time a rent statement arrives, people are reminded that it is the Conservative Government who have crashed this country, and it is Labour who will deliver a better solution.

I should say, in generosity to the Chancellor, that I do welcome a couple of points. The support for leisure centres and swimming pools is much needed and the prepayment meter changes are long overdue, so they are good to see. Scrapping local enterprise partnerships and giving local authorities the opportunity to lead in their area is also long overdue. Again, the Public Accounts Committee has repeatedly highlighted concerns about how LEPs spent money locally with no accountability; I am all for involving businesses and others in an area in decisions for the future, but for those to be led without accountability was unforgivable, so it is great to see that change finally coming through after much pressure.

It is necessary to see an increase in money for defence, partly because of the challenges thrown up by the war in Ukraine, but it is vital that that money comes with real rigour on spending and project management at every step of the way. The Public Accounts Committee has repeatedly highlighted the defence equipment plan, the efficiencies that never materialise and the overruns on cost. A mere rounding error on some of these large defence projects would build a new school or maybe one of those vaunted 40 new hospitals that we have yet to see.

I represent many great pubs in Hackney South and Shoreditch, so it is great to see an 11p reduction in duty on pints, but even if we take that into account, business rates are going through the roof and pubs are often tied to energy bills that are very high and have ramped up in some cases by more than 200%—one of my pubs had a 700% rise in its energy bills. Add to that rent increases and other bills going up, and 11p a pint will not make the difference—some of my pubs say they would need to charge £15 or even £18 a pint to break even. Even in Shoreditch, that would be an extraordinary and unachievable amount for people to spend.

I can see where the Chancellor is coming from, trying to get the footfall into pubs, and I applaud the idea, but he needs to get into the real world and maybe meet some of the publicans in Hackney South and Shoreditch. I will buy him a pint if he will look them in the eye and tell them that this is a success.

The childcare changes are something I have been campaigning on for a long time. I welcome them in principle, and it is heartening to see the Chancellor taking a leaf out of Hackney Labour’s playbook, since Hackney Council led a successful programme to give grants to childminders, encouraging them to take up the work so that places could be provided for working parents. However, quality is as vital as cost. I speak here as a working mother of three, having had a baby while in the House; I knew that those child carers were fantastic, and it was the quality of the childcare that allowed me to come and do my job. They are often not recognised enough, so it is good that we are talking about them today.

However, the Chancellor is borrowing here from the right hon. Member for South West Norfolk (Elizabeth Truss), the former Prime Minister, who proposed this “pile them high and teach them cheap” approach to childcare, and I worry about the change in ratios. I am heartened that it is only voluntary, but those voluntary changes creep in, and the money proposed will take a long time to deliver the people and places and the certainty childcare businesses and individuals need to invest.

If we do not get that right and those payments are not uprated, we will see that ratio increase creep in as the norm, and that will be a deterrent for many working parents. I would not have been able to come to work and do the job I do if I had not been confident in the quality as well as the cost of childcare. Of course, I am a privileged Member of Parliament who can afford quality childcare, but we need to make sure that is available to everybody.

The Budget does nothing to solve the fundamental problem in my constituency: housing. We have 8,500 people on the waiting list for council housing; there are many more who want it, but those are the ones who qualify under the rules, which are now quite stringent. On average, there is a nine-year wait for a three-bedroom property and a three-year wait for a one-bedroom property, but those are notional waits. Every week, I visit people on their doorsteps, go into their homes and see the overcrowding.

On Monday, someone came to see me at my surgery; he is living in the private sector, renting a one-bedroom flat. He, his two children and his wife live there. He works hard, he wants to save up to buy his own home, but he cannot do that while he is renting privately. He cannot get a council property because he cannot qualify, even with that level of overcrowding, and that is not the worst overcrowding I have seen. The week before, I visited a woman with four daughters in a two-bedroom flat, a tiny kitchen, one living space, and the tiniest bathroom—I have seen cubicles in Parliament that would be bigger than their entire bathroom.

That is a real challenge for people. Fundamentally, without a secure roof over their head, people cannot operate. That does not even cover the issues for “generation rent” in the private rented sector, but let us be clear: it is the Conservative party that ripped up the opportunity for people to have a safe and stable home. It is the party that has lived off the back of the right to buy—I will not go into that now—and has nothing to offer “generation rent” or people desperate for council housing who cannot afford to rent privately. It has done nothing on that, and I am very concerned.

On pensions, the problems with the lifetime allowance were first flagged by the Public Accounts Committee in 2012. Now, in 2023, it is being reversed. No Chancellor should ever be allowed near pensions: an announcement is made in the Budget about pensions, without an impact analysis over the decades that we need to consider, and without revisiting or uprating for many years. The change was out of kilter with other pension changes, which has caused ongoing problems.

Abolishing the lifetime allowance helps the richest 1%, but it does nothing for poorer workers. They are in auto-enrolment, which is a good first step, but it is nowhere near enough to stop the ticking timebomb of poorer pensioners, which will cost the Exchequer in benefit payments in years to come. It will also do nothing to reverse the exodus from work. It might stop some people in their tracks and make them think, but many will have already made their pension plans. Many have factored in the idea of a lower pension and—for doctors—locum work, or for others, a second job, and have decided that that is an option. That is built into people’s way of thinking after more than a decade of the lifetime allowance not being uprated.

Meanwhile, in Hackney, nearly one in two children live in poverty, and of those, 61% are in working households. There are small measures in the Budget that might help them a little, but not enough to tackle the real issue of the working poor in my constituency, and there is no hope on housing for generation rent and families who need it. Without that housing base, there is nothing they can do to improve their lot. They can work as hard as they want, but they will never be able to pay the rent. The measures are slim pickings for people who face systemic lifestyle challenges every day. The Chancellor has not delivered for them.

I take a different view from the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), for whom I have great respect; I feel that this is an excellent Budget and I would like to set out some reasons why, as well as some questions for the Chancellor and his team.

To start with, the cost of living is obviously the single biggest issue for all our constituents, and has been for some time. The fuel duty freeze is an excellent and essential decision, but again, like my hon. Friend the Chair of the Treasury Committee, I wonder why we continue to have that automatic fuel duty rise. It was introduced by the last Labour Government and is always costed into every OBR forecast, giving people concern; perhaps it needs to be scrapped altogether.

On energy bills, it is fantastic to be giving people that extra bit of support until the spring when it gets warmer, they are not using fuel so much, and it is widely anticipated that bills will come down anyway. Again, however, I would like to see the Chancellor giving thought to encouraging energy suppliers to offer term-fixed rates, as we have with a mortgage, so that people can have a fixed rate for their energy bills for the next one or two years.

I go back to the fuel duty issue, because I know the right hon. Lady has been concerned about climate change, at least in the past. The freeze in the fuel duty has meant that emissions have gone up by 5%, while the Treasury has lost out on billions in funding. If she really wants to help hard-pressed drivers and others, why not look at a wealth tax, for example? A wealth tax on the 1% richest people could raise up to £70 billion. She could then help not only those drivers, but public transport and the public sector people who are out on strike right now. They are out on the streets wanting more funding, so why is she not doing that?

I agree with the hon. Lady that decarbonisation is vital, but where we part company is that I think people have to live in the meantime, and some of the ideas she puts forward are utterly unworkable and impractical.

The measure on childcare costs is fantastic news and will be transformational for so many families. I know that lots of colleagues across the House have been campaigning for that for a long time. I would, however, ask the Treasury team to consider going further by considering an attendance allowance for grandparents who look after their grandchildren. That is something that so many families would like to take advantage of, but too many grandparents simply cannot afford to do so because it means giving up their income; in fact, it will cost them money.

We also need a further look at childminder regulation. One regulation is the requirement for fire doors throughout the house, which is a huge expense for a childminder who wants to start up. Of course, that is a huge obstacle for people who want to offer flexible choice for families.

On quality of life, the Budget also goes a long way towards helping people. In particular, it will help into work people with disabilities and long-term illnesses. Some constituents who come to my surgeries are desperate and feel that they are on the scrapheap because nobody will give them a job—it is so difficult—so I really applaud the measures.

It is right to help people with up-front childcare costs when they are on universal credit. I had a Ukrainian family staying with me. They had an eight-year-old daughter and a two-year-old daughter, and helping my guest to apply for universal credit, and then for the childcare element, was a huge issue. Inevitably, I could lend her the money for childcare costs, but for somebody who cannot get that, the help in the Budget is absolutely essential.

On help for the over-50s, I absolutely applaud the Government for encouraging and providing support to get people back into the workplace, but again, I highlight the fact that it is often women over 50 who find that they are applying for job after job and getting nowhere. Often, it is because they have been out of the workplace for quite some time.

The pension cap and annual allowance measures are fantastic news. That is something on which I agree with the hon. Member for Hackney South and Shoreditch: this should have been done a long time ago. There is no question that the cap has encouraged people to think, “Well, there is no point carrying on working because I can’t improve my quality of life in retirement.” Although those sums sound like a lot, they do not actually deliver a decent pension, so I think that the measures are essential. Sadly for many colleagues in this House, that might even keep me working. [Hon. Members: “Hooray!”] Thank you! It is important that we continue to look at the issues for those who have already fixed their maximum pension cap in recent years. Some fixed it at £1.2 million or £1.4 million. What are we going to do about them? That will be an issue for some people.

The draught beer duty freeze is fantastic and will really help pubs—a great quality-of-life move—but in my South Northamptonshire constituency, which includes 92 villages, we need buses so that we can get to the pubs. There was nothing on buses, so that is another pitch.

The pothole news is fantastic, but let us see some innovative ways of fixing them. Too often, a pothole gets fixed but, a couple of weeks later, there is another pothole where it was, so we need to think about that. We also need to think about clearing litter from roads. We could do a lot more about such quality-of-life issues, which have badgered us in our constituencies for so long. On quality of life: great, but there is more to do.

The tax incentive to invest in new plant and machinery assets will be a massive boost for business. The Chancellor is absolutely right to focus on GDP per capita by improving investment and reducing lower-quality jobs. We have to move to more automation, more use of technology, and better quality, higher-paid jobs. It is absolutely right to do that.

The Chancellor is also absolutely right to focus on R&D and science. He gave very impressive statistics on the UK’s performance in a globally competitive environment. Certainly, our progress is strong. When I was Secretary of State for Business, Energy and Industrial Strategy, I met amazing businesses in space technology and cutting-edge life sciences, as well as in nuclear. I visited the brilliant fusion project at Culham, and worked with the Rolls-Royce-led consortium in small modular reactors. I absolutely applaud the Chancellor’s commitment to nuclear, as well as to carbon capture, usage and storage. The big challenge of our age is keeping the lights on, keeping the cost of bills down and decarbonising. We cannot do any one of those things on their own; we have to keep that energy trilemma in balance. That is the critical challenge of our age.

I think there is much more that the Government could and should be doing to build more electricity infrastructure, to promote more renewables with much better local payback and to make homes and businesses far more energy efficient. Too little work has gone into that. I commend to my hon. Friend the Financial Secretary to the Treasury, who is on the Front Bench, the report of the 1922 Back-Bench committee that I chair on the future for energy. The report has a wealth of practical actions—29 of them, in fact—and I urge the Chancellor and the whole Treasury team to take a close look at it.

On finance, I was, like many, heartily relieved by the OBR’s revised forecasts today, but I wonder: does the Chancellor worry about the impact of forecasting on business and consumer confidence? I worry that some of the incredibly negative forecasting that we have seen recently can become a self-fulfilling prophecy. I see the astonishment on the faces of some Opposition Members about the great achievements of the UK since 2010, from halving unemployment and reducing poverty to the huge growth in female entrepreneurship and the success of levelling-up right across the UK. There is so much to be proud of but, as many of my constituents ask me, what more can we do to get the positive messages across? The same is true of Brexit. From new trade deals to freedom on taxes and subsidies, to improved financial regulation and our influence in the world, how can the Chancellor ensure that we are getting the positive messages about Brexit across to our constituents?

Finally, I make a plea as an ex-City Minister and someone who sat on the Treasury Committee in 2010, when the last Labour Government wrecked our economy. Many good reforms have been made to strengthen the banking sector, and I urge the Chancellor to keep the ring-fencing in place.

I emphasise that it is not fair on others when Members do not stick to the guidance given by the Chairman of Ways and Means, which was for seven-minute speeches. That may well have to go down. I urge colleagues to be mindful of that advice. I call Sir George Howarth.

Thank you, Madam Deputy Speaker. It was a pleasure to see the Chairman of Ways and Means in her place earlier.

As with most Budgets, the next few days will show the extent to which the Chancellor’s rhetoric and the measures that he has announced stand up to scrutiny. The early indications are, as my right hon. and learned Friend the Leader of the Opposition pointed out, that they do not undo the damage of the last 13 years or resolve the doubts about the strategic economic direction for the future.

Two problems have already been highlighted. The Office for Budget Responsibility forecasts a 5.7% fall in real incomes of over the next two years. That means that the cost of living crisis that many of our constituents are facing in very real terms will continue. The second problem is that, adjusted for inflation, real wages have fallen recently by about 3.2%. The Chancellor has in the Budget signalled measures to boost productivity. Of course, that is important in principle, particularly given our need for greater economic growth, which he also referred to.

The Financial Secretary to the Treasury, who I am pleased to see in her place, and the hon. Member for Altrincham and Sale West (Sir Graham Brady), and others from various parties across the House, are aware that last year I tabled a ten-minute rule Bill aimed at reforming employee share ownership schemes. As such, I welcome the reference in the Red Book to the research that the Department has commissioned into those schemes—how they are doing and how they can be improved—as well as the engagement we have had with the Financial Secretary, which is much appreciated.

I take this opportunity to give notice that the hon. Member for Altrincham and Sale West, subject to the provisions of the Finance Bill, hopes to table an amendment that would create a new employee share ownership scheme for the benefit of low-paid workers. That proposal, in addition to helping those who are vulnerable to the still-acute cost of living problems to achieve greater financial stability, would boost productivity in the companies that take such a scheme on board. Moreover, I believe that the Financial Secretary is favourably disposed to such a scheme, at least in principle—whether or not she will accept our amendment remains to be seen—and I would be grateful if she could give some indication of her willingness to continue to work with the hon. Member for Altrincham and Sale West, and with others from all corners of the House, to bring about the sorts of changes that we hope to achieve in employee share ownership.

Madam Deputy Speaker, I have declared my business interests in the Register of Members’ Financial Interests.

I strongly welcome all the measures in the Budget to try to help more people into work. The Government are absolutely right that we want to move away from the model of always inviting in many hundreds of thousands of people from abroad to take low-paid jobs here. We need to work away at having more worthwhile and better-paid jobs here, with the right supporting investment and training.

I look forward to seeing the benefits in my constituency of Wokingham: more and cheaper childcare of a decent standard, better help for the disabled, improvements in the tax and benefits system so that it is even more worthwhile to go into work, and any supporting training packages or confidence-building activities that may be needed so that those people can get into jobs. Those benefits are very welcome, and they will make an important contribution, not just to our economy and its prospects, but to our wider society.

Where I take issue with the Chancellor and the Government is over their correctly specified need to boost investment and to get a lot more company activity in growing what we do here in Britain. I welcome the aim, and I of course appreciate that the 100% first-year allowance will be helpful. However, we need to remember that it is a replacement for an even more generous allowance, and that it is coming in at the same time that the Government propose a 31% increase in the rate of business taxation on profits.

On a couple of occasions in the past, I led industrial international companies, and as I have no more interests in those areas, I can draw some conclusions from my experiences. When we were making decisions about where to put the new product or the new investment, where to expand the workforce or where we might need a new factory, the headline rate of taxation in any country on our longlist was, of course, a relevant consideration. When we got down to a shortlist—countries with high rates did not tend to get on to that shortlist, unless we were already there—we then did detailed analyses of the project. Any first-year allowance or initial allowance would make a positive difference, but if over the 20 or 25-year life of the factory or project under consideration we would be paying 31% more profits tax, it would clearly not look nearly as good as it does this year in the United Kingdom, when we have one of the lower tax rates in the world.

The Government need to understand that at exactly the time that they are putting the rate up, our competitors are going the other way, particularly the United States of America. Although the Government say that its headline rate is slightly higher than ours, the details of the Inflation Reduction Act make it very clear that there will be all sorts of tax breaks, incentives and subsidies for a wide range of industries, including some of the industries that the Government wish to target here, such as digital and green. That will be a very important counter-magnet for the investment that we could otherwise get. The United States is, like us, an English-speaking country with common-law principles and so forth; it has many advantages, and we need to have a better offer to counter those.

Even closer to home, we have proof that lower corporation tax rates work for businesses and for the society that uses them, in the Republic of Ireland. The Republic of Ireland has the lowest tax rate of the main advanced countries competing for investment. A relatively small country, it has achieved giant steps in attracting large amounts of investment—much of which would, I think, have otherwise come to the United Kingdom—by having a much better rate of corporation tax. The proof that lower rates produce more revenue and help growth is that GDP per head is much higher in Ireland than in the United Kingdom, and business tax raised per head is much higher in Ireland—four times higher, I think—than here at home in the United Kingdom. As such, I ask the Government to look again at that issue.

The final point that I can fit in is that the Government need to look at this issue on a sector-by-sector basis. The energy sector is capital intensive. It is one of the areas where we could get a lot of big investment quite quickly with a lot of very well-paid jobs. We could improve our national energy security, cut the import bill and gain an awful lot of future tax revenue, because we tax energy at a much higher rate than other things. However, because we now have this incredibly complicated system with price controls on domestic energy, windfall taxes and carbon taxes—as well as subsidies to the industry itself because we realised the difficulties that those high tax rates were creating—we are causing complications. More importantly, we are putting off many big potential investors who would otherwise get more oil and gas out of our reserves, produce more deliverable renewable power and help to expand the grid, which will need to happen if we are going to carry on with those developments.

If we take heavy industry—ceramics, steel and so forth, which are big energy users—I think we have the highest carbon taxes of any major country. We have some of the highest energy prices on top of those very high carbon taxes, which means that we are not competitive in areas such as steel and ceramics. The Government then have to provide taxpayers’ money to those businesses, giving back some of the tax revenues in the form of subsidies, but that is often too little, too late, and we end up losing capacity. As such, I say to the Government, “Stop this subsidy, windfall tax, high-tax model. It is not working for the businesses, it is not working for our country, and it is not raising additional revenue to spend on other things.”

I am conscious that colleagues wish to get in, so all my other analysis and comments will be put on my website in the usual way.

I will go straight to the right hon. Gentleman’s website as soon as his analysis is up there.

Despite all the growth and back-to-work billing from Tory Central Office, this was a Budget that was treading water and going nowhere fast. There was nothing effective on falling real wages, which are now in a slump not equalled since the Napoleonic war. In fact, the OBR says that wages are expected to fall by 5.7% over the next two years—the largest fall since records began. After 13 wasted Tory years, we have a productivity problem so entrenched that the UK is now the only G7 economy that has not yet returned to its pre-covid pandemic levels of output, and the Bank of England does not expect that milestone to be reached until 2026 at the earliest.

Before Government Members start blaming global factors for this, global factors do not explain our alarming relative decline. They do not explain why, under this Government, the UK is stuck in the economic slow lane. All economies have had to deal with the impact of the covid pandemic and the war in Ukraine, but only the UK has managed to go from being one of the most robust economies in the G7 to one of the weakest. The decade of austerity that followed the banking crisis left us unprepared for future challenges, and Brexit has had a further dismal effect on our economic prospects. Both were deliberate Tory choices.

It is important to recognise that Ireland has the highest rate of debt in all the EU. The UK does not have that. Does the hon. Member not recognise that the issues raised today with regard to fuel will help vast rural constituencies such as mine and will address, in a way that has not been the case before, the mobility of people who are poor?

I am coming to some individual issues later, but obviously the fuel issue is important to those in constituencies such as that of the hon. Gentleman.

The self-harm of unilaterally deciding to impose trade barriers on our closest trading partnerships was unique to the UK. It generated huge regulatory uncertainty for business, hindered the recruitment of workers and has done immeasurable and senseless damage to our economic prospects. The OBR forecast said that Brexit would cost up to 4% of GDP—twice the losses inflicted by the covid-19 pandemic—and it has. In fact, today’s OBR document shows that trade is down an alarming 15%. That is the record for which this Chancellor and the Tory party must take responsibility.

After 13 years in office, the Tories have given us: five Prime Ministers, with three in the past six months; seven Chancellors, with four of them in just three months; and the catastrophe of last September’s mini-Budget and the meltdown in the bond markets that it caused, unremarked upon by Government Members in today’s proceedings. They have shredded the UK’s reputation abroad and were the opposite of fiscally responsible.

It is little wonder then that during this incoherent chaos the Government have delivered us the worst of all possible worlds. We have the highest tax burden for 70 years—up again as a percentage of GDP in the OBR documents today to 37.7%—alongside crumbling infrastructure and overstretched public services. Do not forget that this Chancellor has pencilled in £55 billion more of austerity cuts in public expenditure, to begin conveniently after the next general election. Today, he announced a mere 1% increase in departmental spending in the future, which is ongoing and damaging austerity. We see our NHS teetering on the brink, with 7.2 million people on waiting lists and record job vacancies; our transport system is not fit for purpose; and the privatised water industry pollutes our waterways with sewage, while shareholders and executives pocket massive profits and put consumer prices up. We see a brutal cost of living crisis juxtaposed with soaring levels of private wealth for the few, and the pension tax cut for the top 1% will make that worse.

The last proper Budget was delivered in this House in October 2021, not by the Chancellor’s predecessor, or even his predecessor’s predecessor, but by the current Prime Minister, who was the Chancellor’s predecessor’s predecessor’s predecessor. This farcical string of irresponsible Tory Administrations has delivered only uncertainty, turmoil and chaos. What they have not delivered is the business certainty or political stability upon which economic prosperity can and must be built, and we have all paid the price.

There is only one answer to dysfunction and incompetence on this scale: a wholesale change of the entire management, and I do not mean the pretend change that this Chancellor and the unelected Prime Minister represent. All of them are culpable for the bleak economic performance. Those who caused the problems are incapable of fixing them. The Bank of England forecasts that growth will be virtually non-existent this year and anaemic next year.

The OBR reveals that the economy will shrink by 0.2% this year, and it has downgraded the UK’s long-term forecast in all years afterwards. We did not discern that from what the Chancellor had to say in his Budget today. This contrasts with an average annual growth rate of 2.7% achieved between 1998 and 2007 by the last Labour Government. If that had been replicated since 2010, GDP would now be £800 billion higher. Had that happened, we would have been able to collect £300 billion in tax revenues to prepare our economy properly to face the future.

In this Budget, there is little sign of the strategic planning needed to improve productivity performance, and therefore growth. That is perhaps not surprising from a Government who for 13 wasted years have completely failed to develop an industrial strategy worth the name, as they do not really believe that Governments have any legitimate role in guiding markets.

We are in the middle of a brutal cost of living crisis, with sharp falls in household living standards, for which Government policies are not adequately compensating, despite the Chancellor’s welcome extension of the current energy cap until summer. Even with extended public support, energy prices are due to be 20% higher than last year. Soaring inflation has hit the poorest hardest, because energy and food costs take up a larger share of the income of the poorest. Mortgage costs are also rising, with interest rates costing those who have to refix their mortgages up to 10% more. Many are paying the mini-Budget premium as the costs of the Tory chaos last year. Rents are rising steeply, while real wages are falling for all. For those in the public sector, they are falling for the 12th successive year. Today’s Budget had nothing to say about that.

Real wages are below where they were 18 years ago, and this decline is forecast to continue for at least this year and next. The Chancellor’s decision to instigate a stealth tax by freezing income tax thresholds will reduce take-home pay substantially and make the cost of living crisis worse for many already teetering on the brink. The OBR shows that these stealth taxes will raise £29.3 billion because of fiscal drag, equivalent to a 4p increase in the basic rate of tax, dragging nearly 6 million people into higher tax rate bands for the next few years, and we did not hear the Chancellor refer to that in his Budget either.

The Chancellor always has people asking for more than he could possibly grant, but what I know is that everything that we on the Government Benches ask for is designed to help back British businesses and to go for growth, so that we can create more jobs and boost people’s wages. We do that because all of us know that it is not just about those policies, particular taxes or lines of expenditure, but people and their families out there. This Budget makes positive steps to support families and to ensure that we are supporting the future of our country by helping with childcare, providing the footings for a great education, helping people to get a GP appointment and clearing the NHS backlog.

On that last point, to which I would like to turn first, the abolition of doctors’ taxes in this Budget shows that tax reform does not necessarily mean putting money in people’s pockets, good though that is. Tax reform can be for a simpler tax system that creates positive outcomes for our country and backs our public services. By abolishing the lifetime allowance, and by increasing the annual allowance and the money purchase annual allowance, we are helping people to provide for their own futures and supporting our NHS.

I ask my hon. Friends on the Front Bench and the Chancellor to bear in mind that there is always more to do. There are still tax traps for some of our doctors. For example, there is the 62.5% tax trap between £100,000 and £125,000, which affects some of our most qualified medics, whom we want to retain in our NHS to help provide the care we need. The rate goes down to 45p after £125,000, which shows that it is a trap, and I hope that the Government will look at that in the weeks, months and years ahead. There is also a 71% tax trap for families between £50,000 and £60,000, which affects some of our younger doctors, and we should be finding ways to deal with that.

I welcome the Chancellor’s commitment to helping families with the cost of childcare specifically. It is a great starter for 10. Finding ways to keep down the cost of childcare for parents is important, but we must not lose sight of keeping down the cost of childcare for the taxpayer too. It is extraordinary to see some on the Opposition Benches and elsewhere attack the alignment of the system in England with the system in Scotland, increasing the ratio from 1:4 to 1:5, but what is missing is choice. For 25 years, the consensus has been that everyone should go to work, and the state will provide ever more free childcare, except that it is not free—taxes are at a 70-year high—and I contend that choice is missing from the equation.

Instead of a one-size-fits-all system from Whitehall, families should be able to decide what works for them. Instead of the Government dictating how many hours of free childcare and from who in the years ahead, how about moving to a system of tax reliefs, so that parents can pay for the childcare they want, and from whom they want? Indeed—a radical thought—one parent could even choose to stay at home, allowing the other to work extra hours, if that is what they want to do.

I therefore urge the Treasury to consider reigniting the review into family taxation. Things may have changed since 2019, but I recall that in 2019 single people without a family paid 8% less tax than the OECD average, but a single-earner couple, with two children, paid 26% more. There is an injustice in this that I hope the Government will address in the not-too-distant future by commissioning a family tax review.

That tax review should reflect the fact that familial support not only for childcare but for elderly relatives provides about £1 trillion of unpaid care in this country, which people could decide to pass to the state. I do not believe that is desirable, and I believe that the state should in turn provide the environment that allows people to take responsibility for themselves.

On wraparound childcare, this is an excellent step to help working parents and for them not to have to worry about what happens after school time, but I urge the Government to ensure that we give that money directly to schools and academies to do what is right, providing a co-curricular offer that is suitable for their particular community and their children, who they know best, rather than any Government Department, or indeed any local authority.

We cannot pay for any of this without strong British businesses, and I welcome the full expensing of the business investment. This is a good step to ensure that businesses can take decisions today, but as my right hon. Friend the Member for Wokingham (John Redwood) mentioned a moment ago, we should still seek to revisit corporation tax in the months and years ahead, because any increase in corporation tax will make us less competitive, reduce investment in the long run and stifle job creation, all of which are required for growth. We have seen that with AstraZeneca deciding to move what would have been a £300-million investment in north-west England to Ireland, which means not only a lack of business taxes being paid in this country, but also the personal taxes that would have been paid by the hard-working people who would have worked at that plant. It is not necessary to believe me: even the Institute for Fiscal Studies says the increase in corporation tax will not raise the expected revenue currently suggested by some, and Europe Economics says it will muffle our growth potential, with £30 billion less over 10 years.

I offer one final idea: I urge the Chancellor to look at the VAT threshold for small businesses into the future. Today it stands at £85,000: it has been there since 2017 and is planned to remain there until at least 2026. The fiscal drag means that 60,000 extra businesses are being dragged into this threshold, which halts their growth and pushes them into the grey market. A £250,000 profit is the threshold in the new planned corporation tax and perhaps it provides a round figure for a £250,000 turnover threshold for VAT registration in the future. By not increasing corporation tax or reversing it in the future, by raising the VAT registration threshold and by reversing IR35—which other Members may mention, but I will not—we would be delivering a £67 billion boost after 10 years on top of other growth in the British economy. Investment would be up, jobs would be created, and it would pay for itself.

Families were looking to this Budget for support, but the Chancellor, instead of throwing them a lifeline, has thrown them under the bus. Mortgage bills are up, the cost of the weekly shop is up and energy prices are up, all because of Conservative chaos, yet this Government have offered no immediate help with the cost of living. They are so out of touch they might as well be on a different planet.

The Chancellor could have done so much more if only he cared enough. He had enough money in the Treasury to cut people’s energy bills by £500 and take them down to last April’s levels, yet he simply chose not to. And while he may claim he is extending support, that is simply not true: people will pay more for their energy this year than they did last year, not less—even though gas prices are falling. In three months’ time there will be no extra help in place whatsoever. The £400 payment is also gone. Fuel poverty will get worse, not better. The Government will now cut energy support for businesses by 85%. Those shops and restaurants that will not be forced to close will have little choice but to raise their prices. The price of food, clothes and the pint in the local pub will all go up, and all because the Government are cutting support to businesses.

We heard the Chancellor say that this Government will grow the economy by getting people back to work, but his plan is merely tinkering around the edges of a system broken by his very own Government: changing pension rules that will not benefit the majority of people; piecemeal changes to a childcare system that needs wholesale reform; and forcing people with ill health to work by threatening to take away their benefits. Are we really meant to believe that that is the recipe for economic growth?

On this Government’s watch, more than 7 million people are waiting for treatment in the NHS and thousands cannot get discharged from hospital when they are ready because there is no one to look after them. I have some news for the Chancellor: people are not off work because they are on the golf course; they are off work because they are stuck on a hospital waiting list. We cannot fix the economy if we do not fix the workforce, and we cannot fix the workforce if we do not fix the NHS and social care. Giving care workers a pay boost of £2 an hour would be a good way to start. Finally, we should be fixing our crumbling hospitals, which are crying out for some proper investment, but the Government simply do not get that.

Liberal Democrats have been championing the need for properly funded, genuinely free childcare for years, but unless the Government fund free hours at the actual cost of providing them, they will make the problem even worse: a lack of providers and eye-watering fees for full-time childcare. It takes real nerve for the Chancellor to say he wants to get more people into work when he is the one who froze the personal allowance, an unfair stealth tax penalising people for every extra pound they earn.

Do not take it from me that this Government have no idea how to grow our economy: just look at the figures. Under this Conservative Government, the UK is the only major economy that is still smaller than before the pandemic. The International Monetary Fund expects Britain to see the lowest growth of any other G7 country. While, thankfully, it looks like a recession could be avoided, this Government seem content with growth moving at a snail’s pace. If the Bank of England is right, the Government’s economic policy could keep long-term growth stuck at 1%. What does the OBR make of the announcements we have just heard? By 2028, they will add no more than 0.2% to our GDP. What a waste that would be of all the talent and ambition I see across every part of the UK.

However, there is no greater indictment of this Government’s economic policy than their track record on living standards. The OBR today warned of the largest two-year fall in living standards in almost 70 years. According to the Resolution Foundation, the typical household income saw a hit of £700 this year and it is about to fall by another £1,100 over the next year. What is more, over half of that—£650—is due to Conservative tax rises. That is an eye-watering £1,800 over two years taken away by Conservative chaos and tax rises.

Will the hon. Lady give way?

No, you’ve spoken.

This Government are letting people down all across the UK. In very tough times, the British people have shown remarkable decency and strength, but they are finding it harder and harder to make ends meet. Nearly 3 million people are expected to fall into poverty over the next two years, and in four years’ time over a third of children could be growing up in poverty—the highest point this century. That is the true cost of the cost of living crisis under the Conservatives.

That is why Liberal Democrats are calling for more help with energy bills and mortgages and investment in our public services. Many of these people will either be carers or be receiving care from a loved one, so one thing the Government could do to help right now is finally to raise the carer’s allowance. That would go a huge way towards helping some of the most vulnerable among us. All it takes is a Government who really care, rather than a Government who make people pay for their own mistakes.

It is interesting to follow what we have just heard and reflect on where our energy supply would be if we had new nuclear reactors coming on line last year. The then Deputy Prime Minister, Nick Clegg, claimed about 10 years ago that it was not worth doing them. It is also interesting to reflect where motorists and household bills would be if we had listened to the resolution at a Liberal Democrats conference to reintroduce indexation of fuel duty. So I did find some of the comments we have just heard rather interesting.

Today’s Budget comes at a challenging time globally, including in the rest of Europe, so much of the package that has been announced is welcome. The Chancellor rightly focused on the fact that one of the best tax cuts he could deliver is cutting inflation, particularly as that helps to ease the pressure on family budgets, and there is a lot to like in that regard.

On the energy price guarantee extension to July, wholesale energy market prices are now starting to come down, which is encouraging, as is the additional three months of support that will now be provided. I particularly welcome the change on prepayment meters because it always struck me as rather odd that those already struggling to pay their bills, who are put on to a prepayment meter because of the danger of non-payment, have to pay the highest rates of the lot. The era when someone had to go round and collect money from a meter is long gone. The systems that manage it are digital and automatic, so there is no reason to have that differential and for some of the poorest in Torbay and across the country to face that premium charge. It is welcome to hear about the move to abolish that.

The freeze on fuel duty for the 12th year, and keeping the 5p reduction, will be welcomed not just by motorists who have to fill up their tank. We must remember that it affects the cost of virtually everything in the shops, because the vast majority of products are delivered by road. It is welcome to see that change.

I certainly welcome the extension of free childcare to one and two-year-olds, which will get more people into work. I also welcome the fact that the Chancellor recognised that it is about not just increasing the hours for parents, but making sure that there is an appropriate funding package for providers. That cannot be done easily, but I welcome the fact that he clearly listened to the representations made by the sector.

On what many people called the doctors’ tax, the changes to the pension allowances and the abolition of the lifetime allowance, it is absolutely clear that there are doctors and skilled professionals who would be working in our NHS today but for the fact that they have hit the lifetime allowance and were penalised through their taxes for carrying on working. It is extremely welcome to see that change being made. Obviously, an annual allowance prevents it from being a way to commit larger-scale tax avoidance, and it means that those who want to carry on working are not penalised for doing so.

There are areas where I would have liked the Chancellor to go further—I think virtually all hon. Members would say that. For example, it is disappointing that one of the 12 investment zones is not in the south-west. I would also have liked us to build on planning reform in areas where local authorities are signed up to doing so. Our town centres, because of the advent of online shopping, probably need the type of regeneration and alteration to their purpose and structure that we saw with the introduction of the motorcar some 50 or 60 years ago as the main method of people travelling into them. We cannot go on as we are. For me, it made eminent sense to allow some flexibility in places such as Torquay and Paignton town centres where the local authority supported that move—perhaps we will see more development on that in future.

Like my right hon. Friend the Member for Wokingham (John Redwood), who is not in his place, I am sceptical about how much income will be produced for the Government by raising the corporation tax rate. I note some of the changes that have been made, however, and it will be interesting to see their impact on investment.

There was a time when Torbay rarely featured in lists of Government funding announcements, but we have seen a welcome change in the last eight years with the town deal, the future high streets fund, the new stations fund and the building a brighter future project for Torbay Hospital, which could be the largest single investment in Torbay’s health services since the creation of the NHS in 1948. I could cover at length the lack of delivery of some of those funded schemes by the Lib Dem-independent coalition on Torbay Council.

I hope that today is the start of getting on with the job of delivering in our bay, particularly given the news in the main Budget document that it will be a levelling-up partnership area. In areas such as Blackpool, I have seen how, when the Government focus and work together, they can start to drive projects forward; I hope that we can look forward to that in our bay. I also welcome the fact that there will be a third round of the levelling-up fund. It is vital that this time, Torbay has a strong bid that can get the funding needed to level up our community.

I accept that delivering a Budget is a difficult job, because there will always be more demands than resources to meet them. There are more general aspects to welcome, such as the increase in defence spending, particularly given the defence interest in south Devon and across the south-west. Overall, this is a good package that will deliver for people and shows that the Chancellor has taken on a difficult job and is doing it well. I will continue to speak up about some of the areas where I believe we could do more and where I hope we can go further, particularly in relation to Torbay, but overall, this package will be broadly welcomed. As we have seen so far in this debate, no serious alternative is being presented by Opposition Members.

The first test for the Budget was whether people would be better or worse off as a result. The Chancellor has failed that first test, because the OBR’s forecast and analysis delivers a damning verdict. In its executive summary, it says that real household income is due to fall by 5.7% in the next two years, which is

“the largest two-year fall since records began in 1956-57”,

with living standards lower than pre-pandemic levels even up to 2027-28.

There was no mention of support for mortgage prisoners and the Chancellor missed the chance to end non-dom tax status, which could have helped to fund an expansion of the NHS workforce. His pledge for potholes is all very well, except that the highways maintenance budget was cut in 2021 by £400 million, which would have been enough to fill 8 million potholes. There is good progress on childcare, prepayment meters and supporting the over-50s back to work, but all that is playing catch-up with where Labour has been.

My starting point is optimism and ambition for what Britain can become, and how we can rebuild our economy and restore our reputation for trust around the world after the devastating damage particularly done by September’s mini-Budget. That needs a serious plan for stability and growth, however, that commands confidence and makes Britain the best place to invest and to start or grow a business.

We know that it is the Government working in partnership with industry that will help British businesses to thrive, grow and invest if we are ever to achieve any of our goals, whether they are making all parts of the country better off or getting on track for net zero. The investment that businesses undertake to develop products and services, increase productivity, and create jobs is the most crucial ingredient.

The challenge that we have in the UK is that business investment has been lagging for years because of 13 years of Tory failure. That was a problem before the pandemic and the war in Ukraine, and makes it much harder for us to recover from those shocks. It is a consequence of the low-growth, low-productivity and high-tax economy that the Government have created. The continual chopping and changing of Government policies and priorities has made our economy less stable and has contributed to falling living standards, falling business confidence and falling consumer confidence.

In that context, let me speak to today’s Budget—what a missed opportunity. We needed to see a strong, serious industrial policy framework for the long term that businesses could trust and that could bring clarity, consistency, stability and certainty, which are even more necessary in the uncertain world that we face. Today’s Budget did not even come close, however, which is not surprising as the Government have spent the last few years watering down their industrial strategy and hoping that nobody will notice. The only E here was for everything but a serious plan. What a contrast that is with Labour’s clear strategic missions and priorities for the British economy and our goal of securing the highest sustained growth in the G7.

What we have seen today is little more than tinkering around the edges, more sticking-plaster politics and more attempts at short-term fixes, with a handout for the richest 1% slipped in. This Budget falls way short of the wider plan for green growth that our businesses and communities have also been calling for. The Chancellor announced a £20 billion investment over two decades to create carbon capture technologies, but, as ever, this is yet another poor imitation of Labour policy.

There has not been nearly enough of such policies. Last September, over 200 leading businesses and financial institutions wrote to the then Prime Minister, saying that they were committed to protecting and restoring nature and delivering a net zero economy in support of the UK’s targets, with delivery mechanisms strengthened across the whole of Government. However, the steps announced today are yet again a poor imitation of where Labour has been, and it has taken the Society of Motor Manufacturers and Traders to say:

“There is little…that enables the UK to compete with the massive packages of support to power a green transition that are available elsewhere.”

Small businesses should also be part of the transition to a green economy. Roundtables I am doing with small businesses across the country have shown how much they need to be central to our plans for growth. However, all we seem to see from the Government is a record of failure and a lack of ambition. The Federation of Small Businesses has said today:

“The distinct lack of new support in core areas proves that small firms are overlooked and undervalued.”

The latest ONS data available show that business deaths have outweighed business births for seven consecutive quarters.

Even schemes set up by the Government to help small businesses grow are falling short. The Government’s Help to Grow: Digital programme was billed as their flagship small business productivity policy, but after a year of its running, the Government pulled the plug in February because of low take-up.

When I recently asked the Minister of State, Department for Energy Security and Net Zero, what programmes were available for SMEs looking to transition to net zero, he cited the boiler upgrade programme. However, the scheme’s own impact assessment says that the impact of the scheme for small businesses is “negligible”. The latest data released from the scheme shows that 0.4% of all installations in the scheme have been for SMEs. So the evidence is clear: the Government are simply not serious about helping SMEs transition to net zero or about supporting them at all.

If the Government were serious about supporting small businesses, they would back Labour’s plan to help Britain become a clean energy superpower by 2030 and provide £0.7 billion in “help to green” grants for SMEs. The lack of a long-term shift in the Chancellor’s statement has left us with the usual sticking-plaster politics. This is the natural end result of what happens when a Government spend 13 years hollowing out public services and not investing in workers and businesses, and of having a tired Government who have run out of ideas.