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Commons Chamber

Volume 735: debated on Monday 26 June 2023

House of Commons

Monday 26 June 2023

The House met at half-past Two o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Defence

The Secretary of State was asked—

Armed Forces: Cost of Living

1. What recent assessment his Department has made of the potential impact of increases in the cost of living on the armed forces' (a) morale and (b) recruitment. (905596)

We have introduced a range of measures to support personnel and mitigate the cost of living, including capping subsidised accommodation charges, freezing food charges, increasing travel allowances, rebating contributions in lieu of council tax and introducing wraparound childcare, saving £3,000 per child a year. Additionally, over the past five years, the armed forces have received a cumulative pay award of 11%, with 2022 being the biggest percentage uplift in 20 years.

According to the House of Commons Library, this Westminster Government plan to spend £3 billion on renewing nuclear weapons for this financial year 2023-24. The UK Government are making a political choice on weapons of mass destruction. When we have seen reports of service people and their families using food banks, does the Minister think that is a wise use of public funds?

I have to differ with the hon. Lady. I fully support the continuous at-sea nuclear deterrent. It has kept us safe all these years, and so long as we have a Conservative Government, there will be a continuous at-sea nuclear deterrent. It is a pity that her party cannot line up behind the men and women of our armed forces, who are committed to that deterrent.

Veterans Support

We will shortly be publishing the quinquennial review into the armed forces compensation scheme and the independent review of Government provision of welfare services for veterans. Between them, they will ensure that the scheme remains fit for purpose and that we identify areas for improvement and better align support services. Crucially, we will continue to press ahead with the £40 million digital transformation of paper-based processes.

At the last Defence orals, I stated that claims to the Veterans UK compensation scheme have dropped and rejections have risen compared with a decade ago. The Minister for Armed Forces, the right hon. Member for Wells (James Heappey) said that the Department’s digital programme would address that. Is the Minister for Defence People, Veterans and Service Families concerned about the structural issues with the scheme? I say that because even the independent reviewer has said that the scheme’s process is

“overly burdensome and even distressing for the claimant due to unreasonable timeframes and a lack of transparency.”

I look forward to hearing the Minister’s response.

I am glad that the hon. Lady has asked that question, because two reviews are under way: the quinquennial review and the review being launched jointly by the Ministry of Defence and the Office for Veterans’ Affairs. I suspect strongly that those reviews will bring forward recommendations to improve processes, but all institutions have to change with time, and this is no different. I am pleased to note that fewer claims are now going to appeal or tribunal, and that is our measure of success. I pay tribute to those who administer such things; they work very hard.

Over the past year, the number of veterans claiming universal credit has increased by 50%. How does the Minister plan to help veterans in receipt of universal credit to acquire the skills they need to access well-paid employment?

Universal credit is an in-work benefit that will affect a small number of service people. The hon. Gentleman will know that we have done everything we can to mitigate cost of living rises. I said in response to the previous question that we have a freeze on accommodation costs, a freeze on food and a contribution to offset increases in council tax. All those things are helping our service personnel at this difficult time. We will continue to do what we can to mitigate those cost of living increases.

One group of veterans to whom a gross injustice was done many years ago is the LGBT community, who until 2001 were court-martialled, shamed and dismissed. That shame is still with them today and has not yet been corrected. The Government perfectly properly commissioned a report by Lord Etherton to look into the whole matter, and I understand it was provided last week. Will the Government undertake to produce that report and make an oral statement to this House to discuss it? Above all, will they give the apology it calls for and accept the need for financial compensation that those veterans deserve?

I suspect I will be asked the same question on Saturday, when I attend London Pride. The Etherton report has been delivered. It is pretty magisterial, as we would expect from Terence Etherton, with a number of recommendations that we are working through. When we respond, it will be a proper response, and I hope it will satisfy my hon. Friend.

The Minister will be pressed again for his response—he will not have to wait until Saturday—because until 2000 it was illegal to be gay in the UK armed forces. The loss of livelihoods and long-term suffering endured by LGBT+ veterans as a result of that cruel and unjust policy has been immense. I am pleased that there is such cross-party agreement about the publication of the report being so important to those who have experienced such injustice, but 18 months on there is still no report and no Government apology. Will the Minister confirm specifically when the report will be published in full, with all testimony, and when we can expect an apology from the Prime Minister for this historic injustice?

It was this Government who set up the review. This situation was going on from 1967 to 2000, and it was an appalling stain on all of us, so I am really pleased that, at long last, the Government have gripped it. I am afraid that the hon. Lady will have to be a little bit more patient, but I suspect that we will publish the report and a response very soon indeed.

Size of Armed Forces

The Government have injected more than £29 billion of additional funding into defence since 2020, investing in Army modernisation, major platforms such as Type 26, Type 31, Challenger 3 and F-35, and restocking of ammunition to ensure that we reversed the hollowing out of our armed forces that has occurred under successive Governments for the past 30 years.

I thank the Secretary of State for that response, but only recently the Deputy Supreme Allied Commander Europe said that Britain is “just holding on” to its status as one of NATO’s leading members and that our Army is “too small”. A former Chief of the Defence Staff said that all of our armed forces are too small, with the Army having “significant capability deficiencies”. The Government are failing our forces, are they not?

It is interesting, because of course it was Labour that cut 19 battalions from the Army when I was serving under the hon. Member’s Government. What is important is not just that the Army is the right size but that it is an Army that is properly equipped and able to do its job. Having just numbers and non-equipment leads to the place where we had Snatch Land Rovers in Afghanistan under her Government.

I endorse the words of my Defence Committee colleague, the hon. Member for South Shields (Mrs Lewell-Buck). The Secretary of State himself has used the words

“the hollowing out of our Armed Forces”.

Today, the Head of the Army said at the Royal United Services Institute’s land warfare conference that our world is heading back into the 1930s with growing threats. Does the Secretary of State agree that the Treasury’s argument for increasing Defence spending to 2.5% of GDP when the economics improve is not only naive but illogical, because our economy and our national security are one and the same thing? We need to invest in our Army, Air Force and Navy now, not when Britain’s economy improves.

My right hon. Friend makes an important point about levels of Defence spending. First, spend on the Army is 20% higher since I started as Defence Secretary, and I have made sure that a greater proportion of that spend is on catching up and modernising the armed forces, which had been neglected all the way back to Afghanistan and Iraq, where we were spending money on urgent operational requirements rather than the core budget to modernise that equipment.

On my right hon. Friend’s point about the Treasury, it has accepted—the Chancellor did so at the Dispatch Box—that Defence will require a greater share of public spending. Part of the big challenge is recognition across Government and in Whitehall that the culture has changed, with Defence requiring a greater proportion of spend if it is to defend these shores and indeed our people. That is how it used to be. I am confident that the Prime Minister’s support for 2.5% and the Chancellor’s position puts us on the right path, and of course that could not be needed quicker.

In January, the Defence Secretary admitted that his Government have “hollowed out and underfunded” our armed forces and, in the past week, a string of senior military figures have agreed. NATO’s second-in-command said that the British Army is “too small”, a former Chief of the Defence Staff said

“The Army is now too weak”,

and another ex-CDS said:

“The hollowing out of warfighting resilience within the Armed Forces has been the single most obvious shortfall…since 2010”.

Will the Defence Secretary halt this hollowing out in his new Defence Command Paper? Will it be published this month, as he has promised?

Time and again the right hon. Gentleman comes to this House knowing full well that my statements on hollowing out are not about this Government but about successive Governments for the past 30 years. Mr Speaker, I ask you to look at that statement, because it verges on misleading the House. The right hon. Gentleman knows that is a fact; I have consistently pointed out that that is not the case, but he continues to use it in this House.

We have started to reverse through an increase of £29 billion in the core funding of the armed forces. Whatever I have done with that new money, I have made sure that it is there to properly equip and support all the people of the armed forces. There is no point playing a numbers game when men and women could be sent to the frontline without the right equipment. All we see from the Opposition is a numbers game with no money attached.

I have the Secretary of State’s exact words here. After inviting me to get Labour’s shortcomings off my chest, he said:

“I am happy to say that we have hollowed out and underfunded.”—[Official Report, 30 January 2023; Vol. 727, c. 18.]

He boasts about being the longest serving Tory Defence Secretary, but in four years he has failed to halt that hollowing out; he has failed to fix the broken procurement system; he has failed to win fresh funding this year, even to cover inflation; and he has failed to stop service morale reaching record lows. Does he not find it a national embarrassment for Britain to go to next month’s NATO summit as one of only five NATO nations that has not rebooted defence plans since President Putin invaded Ukraine?

On that quote, I asked if he would admit that Labour had hollowed out during its term of office. How convenient it is to forget that the whole point is that, in the 30 years following the cold war, successive Governments pushed defence to the side and not to the centre. He talks about my defence record; let us look at defence procurement, since he is fond of coming to the Dispatch Box about that. In 2009 under Labour, 15% of armed forces projects were over cost and the average delay was 28%. Now, 4% are over cost and 15% of each project is delayed. We cut the bureaucracy in Defence Equipment and Support from over 27,000 to 11,400. That is value for money. At the same time, we have a real increase in the defence budget and we have injected £29 billion of additional funding.

Nuclear Test Medals

The hon. Lady will welcome the commemorative nuclear test medal announced by the Prime Minister in November last year to recognise service veterans and civilian personnel who participated in the UK’s atmospheric nuclear test programme between 1952 and 1967. The first nuclear test medals are expected to be available this autumn—I hope in time for Remembrance Sunday.

A nuclear testing veteran has said:

“We have heard it all before, governments come and go, but the Nuclear Veterans keep fighting, that’s exactly what we did for our country all them years ago, so please, no more false promises just action…award us our medal”.

He speaks for the thousands who were promised medallic recognition by the Prime Minister on 22 November last year. Sadly, they are now informed that the medal has been delayed again by the Government. What is the delay? Why is it happening? Will the Minister categorically promise the House today that those veterans, whose average age is now 85, will finally be awarded their medals before Remembrance Sunday so that they and their descendants can proudly wear them?

Once again I remind the hon. Lady that it is this Government who got on and made the announcement on 22 November last year. I very much hope that by 22 November the veterans will get their medals. It is my sincere hope that by Remembrance Sunday they will be able to wear proudly what is due to them.

Ukraine: Military Support

The UK continues to be recognised as a leading nation providing military support to Ukraine, training more than 17,000 recruits and providing £2.3 billion-worth of support last year and this year. We have sent hundreds of thousands of rounds of artillery ammunition, thousands of missiles and hundreds of armoured vehicles. We have led the world on gifting vital capabilities such as multiple launch rocket systems, Challenger 2 and Storm Shadow missiles.

As well as contributing through the international fund for Ukraine and the Ukraine defence contact group, I really welcome that the UK has contributed an additional £60 million to NATO’s comprehensive assistance package for Ukraine, which focuses on capacity building in key areas such as cyber and logistics. What is my right hon. Friend’s assessment of whether Ukraine is receiving the right kind of assistance from NATO to support its longer-term ambitions for NATO membership?

NATO’s comprehensive assistance package for Ukraine is providing urgent non-lethal assistance to enable the defence of Ukraine. The CAP also focuses on meeting Ukraine’s longer-term needs, including reconstruction and transition to NATO standards, which are essential for countries wishing to join the alliance. Since February 2022, the UK has contributed £82 million to the CAP.

In the past few days there have been deeply alarming reports in our press that Russian forces may have placed highly destructive mines at the Zaporizhzhia nuclear power plant. What assessment has the Secretary of State made of the risk of a major nuclear incident?

My right hon. Friend asks a very important question about the risk posed by Russian activity not only within its own borders, but in Ukraine and at the nuclear power station of Zaporizhzhia. Sadly, Russia has shown no restraint in using munitions against civilian structures, critical national infrastructure, hospitals, surgeries and so on, which add to the long list of war crimes that it has clearly been engaged in. We monitor it very closely. We work with the international community to ensure that everything that can be done is done to protect the nuclear power station, and to remind Russia, not only through us but through third countries, of its obligations to protect the civilian population.

I fully support the provision of all the munitions that we have been able to give to Ukraine. I hope we will be able to continue to do that for the foreseeable future, and certainly until Putin loses. It seems that quite often different allies of Ukraine are giving different kinds of bits and pieces of armament and munitions, and that that does not necessarily add up to more than the sum of its parts. Would it not be better if we now looked to the future by commissioning jointly, so that we get more matériel at cost directly through to Ukraine?

The hon. Gentleman makes a really important point. To better co-ordinate the gifting, at the beginning we set up the International Donor Co-ordination Centre, with about 80 British personnel in the lead, alongside the United States, to ensure that what Ukraine is asking for is what it gets and that it is co-ordinated across the international community, because we all have different armouries. In recognition of his very important point about how we develop and encourage a sustainable supply chain to Ukraine, Britain alongside Denmark set up the international fund for Ukraine. We committed £250 million last year and another £250 million this year, and it is topping up towards €1 billion-plus of funding. One specific task is to commission effectively from supply chains and manufacturing plants, so that there is a long-term solution to the need and munition is rolling off production lines. We all have finite stocks, which is why we will use the cash in the fund to start commissioning, which we have already done.

The Liberal Democrats support the Secretary of State on the supply of arms and equipment to Ukraine for its sovereign defence. Has he assessed what effect the Storm Shadow missile has had on operations? Will he tell us whether other allies, such as the United States, also intend to provide long-range precision guided missiles?

I am grateful to the hon. Gentleman. My understanding is that the Storm Shadow missile has had a significant impact on the battlefield. Its accuracy and ability to deliver successfully the payload, as sent and designed by the Ukrainians, has been almost without fault. That is an extraordinary achievement in terms of both the engineering that went into it, and the Ukrainians deploying it and using it as it needs to. It has had an effect on the Russian army, mainly around its logistics and command and control. That shows the importance of deep fires. We absolutely urge other international partners to come forward with their deep fires that are required. When HIMARS was put in on the M270s, which have a range of 80 km, that had a similar effect and the Russians moved many of its C2 nodes out of range, which is why deep fires became important. The key is to recognise that if the Russians move out of range, we must work together internationally to provide the equipment to ensure they are back in range.

Armed Forces: Skills

6. What steps his Department is taking to ensure that the armed forces have the skills required for the future. (905601)

13. What steps his Department is taking to ensure that the armed forces have the skills required for the future. (905608)

Last week, the Ministry of Defence published the Haythornthwaite review of armed forces incentivisation. Rick Haythornthwaite and his team have done an absolutely brilliant job. The MOD is now working out how to implement the recommendations, but I think it true to say that Haythornthwaite addresses our pressing need to build a firm foundation for an increasingly skills-based future in which the MOD will have to compete extremely hard if it is to continue to recruit and retain the very best.

In February of last year, we were informed that the Ministry of Defence was

“actively considering recruiting people with neurodiversity”.

That will have given hope to many, including a constituent of mine who does not believe that his autism diagnosis should be a barrier to service. Can my right hon. Friend tell me what the status is of those considerations, and will the MOD consider running a pilot scheme so that neurodiverse individuals can be encouraged to give their skills to the armed forces?

We are very proud of the wide-ranging make-up of our armed forces, which includes many neurodiverse people. The Haythornthwaite review recognises that tomorrow’s defence will be very different from today’s, and that its people will be as well. I agree with the thrust of my hon. Friend’s perceptive question, and anticipate that the skills and attributes that we will need in the future will mean our casting the net much more widely than before.

In North Devon, our two military bases, Chivenor and Arromanches, have units specialising in logistics, engineering and unmanned marine technologies. What steps is my right hon. Friend taking to encourage more budding young engineers to fulfil their technical education and work prospects in our armed forces?

The Ministry of Defence is deeply committed to supporting future engineers both inside and outside the armed forces, and is one of the largest deliverers of UK apprenticeships: we have 22,000 personnel on 100 different apprenticeships at any one time. Furthermore, the Haythornthwaite review and the pan-defence skills framework will take the skilling of our defence people to the next level.

I thank the Minister for his response. Northern Ireland is one of the leading regions of the United Kingdom that are pushing cyber-security very hard. Has the Minister given any consideration to ensuring that companies that are involved in cyber-security, of which there are many not only in Northern Ireland but in the south-east of England, could work in partnership with the MOD to ensure that the skills to be found in private companies can be used in the Army?

I entirely agree with the hon. Gentleman. I think that in future we will see much more zig-zagging between the armed forces and the industry and back again, and, indeed, Haythornthwaite touches on the subject of so-called zig-zag careers. I expect to see a much closer working relationship between the armed forces and industry in the future: we are all in it together.

On Armed Forces Day last week, as a nation we thanked our armed forces for their service, and as a nation we rightly invest in the skills of those who serve, but year after year we are seeing more people with essential skills leaving the forces. Satisfaction with service life has plummeted from a recorded high of 61% under Labour in 2009 to 42% today, and among junior ranks it is even lower, at 39%. What is the Minister’s plan to restore morale in order to help to retain the skills that we need in our armed forces, and does he expect armed forces morale to be higher or lower than it is today by the time of the next general election?

It was a great pleasure to see the hon. Gentleman in Falmouth for Armed Forces Day at the weekend.

The armed forces continuous attitude survey was established in 2007 by the last Labour Government. It is interesting to look back at what the figures were then. There was no Labour nirvana. We find from the 2007 figures that the percentage saying that morale is high or higher is about the same now as in 2007. [Interruption.] The hon. Gentleman may chunter, but these are the facts. The percentage feeling valued has risen significantly, as has the percentage who would recommend their career to a friend. It is hardly surprising that satisfaction with kit, for example, is much better now than it was then. We remember 2007 and the Snatch Land Rovers—coffins on wheels—and we remember, do we not, the appalling kit with which the then Labour Government provided our armed forces in Iraq and then Afghanistan. I think that Labour’s record is nothing to be proud of.

NATO

I regularly engage with NATO allies, including most recently at the NATO Defence Ministers’ meeting on 15 and 16 June, at which we demonstrated our continued solidarity with Ukraine and preparations for the upcoming Vilnius leaders’ summit. We lobbied hard and successfully for Finnish NATO membership, resulting in Finland’s historic accession, and we hope to achieve the same for Sweden before long.

I welcome the announcement at the NATO Defence Ministers’ conference that NATO has agreed a new UK-based maritime centre to support the security of undersea infrastructure. Can my right hon. Friend assure me that this new centre is part of a long-term plan for the alliance to secure better critical undersea infrastructure? Can he provide any further details on the role of this new unit?

I am delighted that NATO will host its new Maritime Centre for the Security of Critical Undersea Infrastructure in the UK. The centre is part of NATO’s long-term plan to better secure our undersea infrastructure. Bringing together allies and industry, the centre will result in greater situational awareness and sharing of intelligence, expertise and innovation. It will also complement the latest Royal Navy ship, RFA Proteus, whose job is to go out and monitor critical supply lines and cyber cables.

NATO was created to protect democracy and safeguard the values that underpin it. A year ago, the NATO Parliamentary Assembly passed a resolution, under the presidency of Congressman Gerry Connolly, to create a democracy resilience centre within NATO. I understand that this has been agreed by all nations bar one. I wonder whether at the upcoming summit the Secretary of State can put some effort behind persuading that one member to agree to this initiative.

I think it is best if I write to the right hon. Member about the details of that. I will look at it and am happy to discuss with him what he thinks needs to progress. We will get to the bottom of it.

War Widow Pensions

9. What assessment he has made of the adequacy of his Department’s implementation of the lump-sum payments for war widows who previously lost their pensions after remarrying or cohabiting with another partner. (905604)

I was delighted to announce the war widows ex gratia payment scheme last month. A specialist team is being stood up to deal with applications and assist and advise widows when the process opens. This will ensure that people are treated with the care they deserve and that their individual needs are met. The scheme will start as soon as possible, and in any event by this autumn, and will be open for two years. It will not erase their loss, but I hope that this payment will offer some comfort to those affected. I again pay tribute to the staunch, dignified campaigning of the War Widows Association, which has brought us to this point; I also pay tribute to my right hon. Friend, who has been absolutely four-square behind the campaign.

In return, I would like to thank Ministers for persevering with the matter in the face of many obstacles erected by the Treasury. There is just one last hurdle to surmount: the question of taxation of the ex gratia payment. As war widows’ pensions are a recognition of sacrifice and not a benefit, they are not taxed. If this ex gratia payment is taxed, some war widows will get only slightly more than half the lump sum concerned. Will my right hon. Friend use his very best endeavours to avoid that unintended and unfortunate result of an otherwise successful initiative?

I fully understand the point that my right hon. Friend is making. He will know that the payment was uplifted to take tax into account. I appreciate that it may not be taking care of all tax in many, if not most, circumstances. What I will say to him, without setting any hares running, is that I am having a conversation with colleagues, but I emphasise that it is around how we deal with tax on this payment. I cannot really give him any more comfort than that.

Innovative Defence Technology

The Ministry of Defence works closely with UK industry and academia, including small and medium-sized enterprises, to identify and invest in innovative technologies that address our most pressing capability challenges, as well as publishing our future priorities to incentivise investment. We are transforming processes to drive this at pace, and we are already testing and deploying these technologies.

The integrated review said that artificial intelligence would be used to strengthen defence capabilities. So in what ways are the armed forces using AI and does the Minister agree that weapon systems should always be subject to direct human control and never be allowed to operate autonomously?

My right hon. Friend asks an excellent question and I know there is huge public interest in AI. I make it clear that last year’s defence AI strategy set out our intent to develop and use artificial intelligence ambitiously, safely and responsibly. We do not rule out incorporating AI within weapon systems, but we are clear that there must be context-appropriate human involvement in weapons that identify, select and attack targets. The UK does not possess fully autonomous weapon systems and has no intention of developing them. Finally, any weapon system used by UK military would be governed by the MOD’s robust framework of legal, safety and regulatory compliance regimes, irrespective of the technology involved.

Morpheus is a £3 billion next-generation defence communication programme. It is meant to replace the Bowman kit on Ajax vehicles and was originally set for introduction in 2025, but Ministers have recently said that a revised initial operating capability is “to be determined.” When can we please have a statement on the state of play and the delivery of Morpheus?

The hon. Gentleman asks an important question on an important programme. We are still committed to Morpheus, but there is a limit to what I can say at the moment because we are having contractual discussions with the supplier. I hope I can say more in due course. On Ajax, I make it absolutely clear that the intention is to upgrade the Bowman operating system within Ajax as the next step.

Defence Procurement

16. What recent assessment he has made of the effectiveness of the defence procurement system. (905611)

We are driving the delivery of capability to the frontline. Over a two-year period to December 2022, we have seen a one-year reduction in the average programme duration, but we can do more to improve and are committed to learning the lessons of the Sheldon review.

On 13 March, the Defence Secretary told me that UK steel was not specified in defence procurement because

“we do not manufacture the type of steel”—[Official Report, 13 March 2023; Vol. 729, c. 529]

required. But according to UK steel producers, this is not true as they adjust production lines to match the needs of each contract. Now he knows our steel producers can deliver, will he do what all other major countries do, for reasons of national security, and guarantee to use domestically produced steel in defence procurement?

I do not accept that. I am happy to write to the hon. Member with the details. Our position is that, obviously, we want to use UK steel and we recognise its quality, but there will be cases where the appropriate steel has to be sourced from elsewhere. Ultimately, we have to deliver the equipment required for our capability.

It is probably a bit of a shame but, after missing out on the job of Secretary-General of NATO, the Secretary of State seems to have reverted to “no more Mr Nice Guy” mode today, although it may improve as the day goes on.

I ask the Minister, in an amicable way, why, when every major military-industrial power is relentlessly focused on building domestic industrial capacity following Russia’s invasion of Ukraine, he is stubbornly refusing to do the same. His previous answer on steel shows again that the mindset has not changed. Why will he not back British industry and British military resilience?

I am happy to be Mr Nice Guy when it comes to British industry. A central tenet of the defence and security industrial strategy is that industrial capacity is part of our defence capability. I am absolutely clear about that. Of course we want to have a strong domestic industry. There are occasions when acquisition has to be undertaken at pace and, as we have seen in getting equipment out to Ukraine, we have had to be flexible in how we source that equipment. But we are absolutely committed to a strong industrial base for defence, both at SME level and with our primes.

Will my hon. Friend look at how the MOD can support the UK’s domestic supply chain by requiring prime contractors to adhere to a 30-day payment code for all defence suppliers, regardless of where they sit in the supply chain?

My hon. Friend is a champion of SMEs and makes an excellent point about prompt payment. I can assure him that the MOD has a standard contract term that requires primes to pay suppliers within 30 days. I am informed this is called DEFCON 534. Obviously, it is not to be confused with other uses of the word “DEFCON”, but it is a very important point. Like him, I want to see our SMEs supported.

When I asked the Minister for Defence Procurement to give a statement on the Sheldon review two weeks ago, he recognised the importance of workers to the defence industry. We have already heard from my hon. Friend the Member for Blaenau Gwent (Nick Smith) about the problems of Morpheus, which I understand is now rated red by the MOD; the problems we had on Ajax are emerging on Morpheus. One of the issues that came out of the Sheldon review was that the company was not listening to the voices of workers on the shop floor. What guarantee is the Minister putting in place to ensure workers have a system for reporting back, so that, when things go wrong, as with Ajax or, potentially, Morpheus, they are reported, listened to and acted upon?

As I said in the statement, I recognise the unique angle the hon. Gentleman has on this issue, because the factory in question is in his constituency. I stress that the employment of those employees is the legal responsibility of the company. We engage closely with them. One of the lessons learned is about that close engagement at SRO level through Defence Equipment and Support. Andy Start, CEO of DE&S, has led huge change in improving the way we work together. I suspect we will continue to build on the significant improvement the Secretary of State just highlighted, in terms of both cost and timing, between when the Opposition was last in power and now.

The previous Minister for Defence Procurement impressed many by hitting the ground running. He developed a forensic grip on the manifold issues within this dysfunctional area of defence and he worked up a plan to try to deal with that. Sadly, he moved on before he could implement that plan, so can I ask this latest Minister for Defence Procurement, does he have a plan? What will be the first evidence of that plan that our weary service personnel and taxpayers might see?

I am grateful to the hon. Gentleman for his praise for my brilliant colleague, my right hon. and learned Friend the Member for Cheltenham (Alex Chalk), who is now Secretary of State for Justice and the Lord Chancellor, no less. Absolutely, we have a plan, and that plan must take into account the lessons from the Sheldon review. In taking on this job, I recognise that there has been huge focus on Ajax, but I hope the fact that Ajax is now with the Household Cavalry for regular field training is a symbolic moment that shows we are turning the corner. We are going to engage right across defence to develop a better procurement system, and I want to ensure that delivers better outcomes. As I said at the Defence Committee, that is why we have tasked the permanent secretary to undertake an end-to-end review of the whole defence operating model.

That response could be loosely regarded as a stab at the previous question, but it was certainly not an attempt to answer my question. Let me try to probe a little further and give the Minister some examples that he may wish to bombast us with about the progress he is making. How has he challenged the pedestrian progress towards the next phase of the new medium-lift helicopter tender? What is the delay with the Type 32 or Type 31 successor announcements? Why does his element of defence not procure ground-based anti-aircraft missile systems to protect these islands in a more responsible way?

The hon. Gentleman has ranged a long way, from air to ground. The key element is to strengthen our speed and agility, whatever the platform in question. Some of the platforms he refers to are at a conceptual phase. I am committed to driving pace because, although times are improving overall, ultimately we do not want to have the delays we have had in some notable programmes. We need pace because that is how we maintain our competitive edge against our international adversaries.

Service Accommodation

The Ministry of Defence fully recognises the importance of safe, good-quality and well-maintained homes. In the last seven years, the MOD has invested more than £936 million in service family accommodation. That includes £185 million last year on modernising homes, tackling damp and mould and improving thermal efficiency. Currently, 97% of MOD SFA meet or exceed the Government’s decent homes standard. Only those properties are allocated to service families. We strive to do better but, for context, the figure for social housing is 91%.

When he has been around various sites, I am sure the Minister will have noticed the substandard quality of accommodation, and indeed squalor in certain cases. He will also know that some 800 armed forces families are living in potentially unsafe homes that have not yet had gas safety checks. Will he confirm what action he and his Government are taking to make those homes safe?

I am grateful to the hon. Gentleman for his question. On gas and electric safety, my hon. Friend the Minister of State for Defence Procurement was made aware of the issue on 2 May and he worked exceptionally quickly to remedy it. Currently, there are some 555 gas safety certificates outstanding. That number is plummeting dramatically, and almost all of them will be cleared by the end of June, which is a measure of some success.

If a private or a professional landlord did not properly complete these safety checks, they would be sued. It is completely unacceptable that we put armed forces personnel and their loved ones at risk for months because the Future Defence Infrastructure Services contract that is meant to do that is completely broken. If the head of the Defence Infrastructure Organisation, who is meant to oversee this, is completely out of his depth, which some of us believe he is, after this, should he not consider his position?

I am grateful to my right hon. Friend for his comments. The important thing is that when my hon. Friend the Minister of State got to know about this, he acted immediately to put the matter right. I am not really interested in getting people’s scalps; I am interested in putting the matter right, and that is exactly what is happening.

EU Permanent Structured Cooperation

The UK applied to join the permanent structured co-operation military mobility project to help shape EU military transport procedures and infrastructure, addressing impediments to moving military personnel and assets across Europe at pace.

We are negotiating the technical terms of our participation in the form of an administrative arrangement and have reached agreement on the majority of the text.

Sir Richard Dearlove, former head of MI6, has given evidence to House Committees on this issue and he questioned why we were joining this and who had authorised it. He also stated that membership of these European Union defence structures are not an à la carte menu where the UK can choose what it wants and reject what it does not. It is very much a take it or leave it, all or nothing, situation. Does the Minister agree with Sir Richard’s assessment?

Conspiracy is not as rife as the hon. Gentleman seems to think. We can indeed choose which parts of the permanent structured co-operation we wish to be in, and the mobility projects, which co-ordinate the development of infrastructure for the movements of NATO weapons and platforms across Europe, seem to be a pretty good thing on which the UK should seek to co-operate with the EU.

As my right hon. Friend has mentioned, the UK at the moment is considering acceding only to the military mobility element of PESCO. There are, however, more than 60 separate elements. Can my right hon. Friend indicate whether the Government are considering joining any of those other elements?

We will consider those elements on a case-by-case basis. Where there is merit and where it is in the UK interests to work with the European Union to the advantage of NATO and our own national interest, we will, of course, do so. However, we will do so not blindly out of habit, but only where it is in our interests.

Topical Questions

As part of its summer campaign to reclaim illegally occupied territory, Ukraine has already recaptured approximately 300 sq km. That is more territory than Russia has seized in its whole winter offensive. Ukraine continues to make gradual but steady tactical progress, undertaking major offensive operations on three main axes in the south and eastern Ukraine. In Rohan, Russian forces have made their own significant effort to launch an attack on the Serebrianka forest near Kreminna. Russia has had some small gains, but Ukrainian forces have prevented a breakthrough. In Donetsk oblast, Ukraine has gained impetus in its assaults around Bakhmut. In multiple brigade operations, Ukrainian forces have made progress on both the north and southern flanks of the town. Russia does not appear to have the uncommitted ground forces needed to counter the multiple threats that it is now facing from Ukraine, which extends over 200 km from the Bakhmut to the eastern bank of the Dnieper river.

What discussions are the Government having with other NATO members to ensure that every member of the alliance meets the 2% spending targets?

As the Vilnius summit approaches, it is very important that we recommit, and get other nations to recommit, to the targets and to make sure that 2% is viewed as a floor, not a ceiling. It is regrettable that only seven to eight nations in NATO are reaching that target. Britain is, of course, above the 2%. This is very important, because freedom is not free; we have to pay for it in the end.

The Prime Minister told last week’s Ukraine recovery conference that

“we will maintain our support for Ukraine’s defence and for the counter offensive”.

With the developments in recent days, surely now is the time to accelerate, not just maintain, our military support for Ukraine?

Our support for Ukraine is made up of £2.3 billion, not all of which is committed. We continue to make sure that whatever Ukraine needs, we can try to give it or, if we do not have it, to use our network around the world to access it on their behalf. It is also important to ensure that we all focus on this offensive and give Ukraine what it needs for the offensive. The key test will be getting through all those defensive lines and ensuring that Russia is pushed back and is challenged from going into effectively a frozen conflict, which of course Russia would like. While it is easy for us to say that from the comfort of London, it is important to note that there are Ukrainian men and women going through minefields and horrendous obstacle crossings and facing an army that commits war crimes every single day.

T2. Is the Secretary of State confident that Sweden’s NATO membership application will be approved this year? (905623)

I would say that I am optimistic. In my phone call with my new Turkish counterpart last week, that was one of the first subjects I raised. I have also spoken consistently and on many occasions with Türkiye and its leadership. I am confident that we will get there in the end. Sweden has made significant strides in its counter-terrorism legislation to deal with some of the issues that Türkiye has raised, and I think Türkiye now recognises that as a strong effort.

T3. Can the Minister give us a progress report on the contract for the fleet solid support ships? Given that three of those are equivalent to two aircraft carriers in size, can he confirm where the steel is coming from? (905624)

T5. I was recently invited to visit the Army cadets in Arnold in my constituency, to see the work they are doing and the skills they are learning, from drill instruction to cardiopulmonary resuscitation. I was never a cadet myself, but will my right hon. Friend join me in congratulating Ben Mickle in Arnold and others across Nottinghamshire on the work they are doing in running cadet services, and will he encourage children and young people to take part? (905626)

I congratulate staff sergeant Mickle and his fellow instructors. Many of us were out and about for National Armed Forces Day on Saturday and saw some of our wonderful cadets. I pay tribute to all those instructors who put in so many hours to make it all possible.

T4. I have been asking the Prime Minister and other Ministers about Government bodies spying on the activities of British citizens, including politicians, activists and journalists. In a statement issued in 2020 the Ministry of Defence said that the British Army’s information warfare unit, the 77th Brigade,“do not, and have never, conducted any kind of action against British citizens.”However, the Secretary of State said on 30 January that the 77th Brigade scours Twitter “to assess UK disinformation”. Can the Minister clarify whether the 77th Brigade conducts any surveillance actions against British citizens, for what purpose, and whether that is really the best use of its time? (905625)

A whole range of agencies, including the 77th Brigade, will study media platforms that deliver social media to our citizens in this country. If that comes from a foreign state trying to manipulate our young people, it is obviously a concern. As a former Security Minister I saw the radicalisation, exploitation and sexual exploitation of people through those platforms, and we should all be grateful that those systems are monitored.

T8. Questions today have highlighted the importance of strong deterrence. Accordingly, people across the UK, including my constituents, will be taking a keen interest in the outcome of the NATO leaders summit in Vilnius in a couple of weeks. Will my right hon. Friend outline what he would consider positive outcomes for UK defence at that summit? (905629)

My right hon. Friend asks an important question about the Vilnius summit, which comes at an important moment for NATO and on the heels of war in Europe and the invasion of Ukraine. The summit will also be an important transition where NATO allies build on the commitments they made at the Madrid summit and go further and faster to bolster Euro-Atlantic security. The UK remains committed to supporting Ukraine for as long as it takes. The most powerful deterrent is our commitment to article 5 of the North Atlantic treaty, backed up by modern, credible forces, and that continues to hold firm.

T6. With the conclusion of events in Russia on Saturday being that Prigozhin has been relocated to Belarus, and Russian tactical nuclear weapons have also been relocated to Belarus, has the Secretary of State undertaken an assessment of the threat to Belarus, which is on the eastern flank of NATO and across much of the northern border of Ukraine? Will it form part of the discussions at the NATO summit in Vilnius? (905627)

The hon. Gentleman raises an important point about the role of Belarus. First, we should recognise that, so far in this illegal invasion of Ukraine by Russia, Belarus has simply supported through the use of its bases, but has itself committed no forces, and the international community would very clearly warn Belarus that it should not do so and join Russia in the folly it is engaged in. It is, of course, a deep concern when we see Russia trying to use Belarus as a sort of satellite state or, indeed, a place to put its nuclear weapons. We keep that under constant review, and we make sure, in the strongest possible terms, that Belarus is aware of the international concerns about its behaviour.

The war in Ukraine will have given us some insight into Russia’s war tactics. The defence Command Paper will soon be published, and it will look at investment decisions for the British Army and the armed forces in general from the 2030s and beyond. What lessons have been learned from the war in Ukraine? Can the Secretary of State give us some insight into what sort of investment will be undertaken?

The defence Command Paper will be published before recess—I hope that it will be published sooner rather than later; it is currently in the write-round process with the rest of Government—and we will make sure that we recognise what has happened in Ukraine. One of the biggest lessons of Ukraine is that, whatever army we commit, we must make sure that it is protected 360° with air defence, electronic warfare, signals intelligence and the ability to reach at range.

T7. In terms of aircraft carriers, it seems that the Prince of Wales is the spare. Why are Ministers struggling to manage the repairs of that vital NATO flagship? (905628)

That is an amusing way of putting the question but it is a serious point. Our plans have not been affected in operational terms because it was always planned that the Prince of Wales would return to flight trials this autumn, and that remains on schedule.

Forty years ago, Sir Galahad was struck during the Falklands crisis, and many Welsh Guardsmen lost their lives and burned to death. I have just attended a meeting of the widows and children, and some of the veterans, who have been desperate to get to the bottom of exactly why that happened but have been blocked through “no releases”. I beg my right hon. Friend to allow colleagues from across the House to come and see him about the release of that information.

My right hon. Friend might like to know that former colleagues of mine from the Household Division—from the Welsh Guards and others—have also been in contact with me. I have asked to see the papers that have not been released. I am not sure what powers I have to overrule decisions that were made earlier, but I think that that is important for closure and for relatives to get to the bottom of their questions.

T9. ACVC Hub, Community Veterans Support and Helping Heroes are three wonderful charities helping veterans in Glasgow South West. Veterans’ mental health is still an emerging field, so will Ministers consider providing a costed research and development plan to find innovative approaches to that vital research? (905630)

The hon. Gentleman will be aware of the range of mental health support services that are open to our veterans, particularly Op Courage and, he will be interested to note, Op Fortitude. Of course, there is always more we can do, particularly for those who have suffered as a result of their service, but I think it important to say that, in general, service in our armed forces is a positive for mental health, not a negative.

I accept that we will hear a Foreign, Commonwealth and Development Office statement in due course, but given the events over the weekend, what assessment has the MOD made of Ukraine’s ability to win in Ukraine?

The United Kingdom has always been confident that, given the right international support, leadership and investment, Ukraine can defend its nation and see off this aggressive, illegal Russian invasion.

The armed forces continuous attitude survey results have just been published. They show that less than a third of personnel believe that their basic pay is adequate, and nearly a quarter are looking to leave the forces. Will the Secretary of State admit that it is high time that he increased basic pay across the public service, but especially for those in uniform?

The hon. Gentleman will be aware that the Armed Forces Pay Review Body has reported, and that will be released shortly. Pay is part of a wider remuneration package, which includes an excellent non-contributory pension, subsidised accommodation, wraparound childcare, incremental pay, and a range of allowances. The non-financial aspects of the offer are also highly valued. What is not highly valued, frankly, are the tax increases that the SNP introduced in February, which make servicemen in Scotland much worse off than those in the rest of the United Kingdom.

The Royal Marines Charity, based in East Devon, helps to provide support to former servicemen and women in Devon, who we celebrated on Saturday as part of Armed Forces Day. What assessment has my right hon. Friend made of the welfare provision for veterans in Devon?

I am sorry that I was not in Devon on Saturday; I was next door in Cornwall, commemorating our armed forces, as my hon. Friend was.

There is a range of welfare support services in Devon. My hon. Friend will be aware of the regional welfare support operation there, which has expert welfare officers who can look after the needs of our wonderful veterans. Of course we can always do more, but I would cite, as I just have, Op Courage and, now, Op Fortitude, which I think will be of great assistance.

While we wait for the upcoming pay review, may I ask what assessment the Minister’s Department has made of relative poverty rates among our service personnel and, while they await a significant pay rise, what work it is doing with the Department for Work and Pensions to signpost colleagues to the benefits that they are eligible for?

The hon. Gentleman will be aware that, in addition to pay, things such as wraparound childcare and subsidised healthcare and dental care are available to members of our armed forces, as well as subsidised accommodation, the freezing of food charges and help with council tax—things that we have done in these difficult times to take the edge off the cost of living crisis. I hope he will welcome that.

Nowhere does events as well as my Southport constituency. This weekend’s Armed Forces Day was truly testament to that fact, so would my right hon. Friend welcome and support an application from Southport to host the national Armed Forces Day in 2025?

May I place on record our gratitude to Cornwall Council and Falmouth, and all the organisers of the national Armed Forces Day this year—the town laid on an extraordinary event, which was a great tribute to the men and women of the armed forces—as well as all the other local authorities that laid on events up and down the country? Of course I would welcome a bid from Southport; I will also welcome bids from all over the country, and I look forward to this becoming a growing competition to recognise the men and women of our armed forces.

On 24 October 2021, the former Defence Minister, the right hon. Member for Horsham (Jeremy Quin), wrote to my predecessor and confirmed that a badly injured veteran in my constituency would receive adaptations to his home. Delays ensued, and last week I had a meeting with someone from the Defence Infrastructure Organisation, in which he declined to turn his camera on and said that the work had not been signed off by a person with the right authority. Will the Minister confirm whether the former Minister had the authority, and will he honour that commitment?

The hon. Lady is more than welcome to write to me with the details, and I will look into this as soon as possible.

As we have already heard, we were lucky enough to welcome the national armed forces family to Falmouth on Saturday for the national Armed Forces Day. From cadets to veterans, and those involved in their air display and all the national armed forces personnel, will the Secretary of State join me in thanking everybody for their efforts, and does he agree that this was the best Armed Forces Day we have ever experienced?

My hon. Friend is certainly the best MP for Falmouth. She has been very good at lobbying and making the case for Falmouth, which put on an excellent event, although I am not going to risk insulting all the previous locations, which all did a fantastic job as well.

With the MOD estate an outlier in allowing trail hunting on its land, and with the memorandum of understanding to allow hunt monitoring access having been torn up—something determined personally by the Defence Secretary—will the right hon. Gentleman confirm that his delayed statutory response in terminating the MOU will be answered, and will he instruct an independent review of hunting on the MOD estate and the activities of the Royal Artillery Hunt? Or has he something to hide?

Nothing to hide. To hunt on my Department’s land, an organisation must have a recognised governing body. All persons participating in a hunt must be members of such an organisation, and that organisation must also hold an MOD-issued licence, the terms of which clearly state that only trail hunting carried out in accordance with the provisions of the Hunting Act 2004 are permitted. I withdrew the MOU—which had never been announced to Parliament under the hon. Lady’s party’s previous Government—because the only people who should be masked and camouflaged on MOD land are soldiers in training, not hunt saboteurs.

Mortgage Charter

Mr Speaker, last week the Bank of England increased interest rates to 5% as the UK, like other countries, grapples with high inflation. We are steadfast in our support for the independent Monetary Policy Committee as it takes whatever action is necessary to return inflation to the 2% target in the medium term.

None the less, I know that higher inflation and interest rates cause anxiety and concern for many families. That is why the Government are already supporting families with one of the largest support packages in Europe, worth £94 billion, or £3,300 per household on average. As interest rates rise, I will not take action that undermines the Bank of England’s monetary objectives, but where we can take non-inflationary measures to relieve the anxiety faced by families, we will do so. That is why on Friday, I met the UK’s principal mortgage lenders, alongside senior representatives from the Financial Conduct Authority and UK Finance, to agree new support for people struggling with their mortgage payments. At that meeting, I secured agreement from lenders to a new mortgage charter that sets out what support customers will receive, which we are publishing today. The charter has been signed by lenders covering 85% of the UK market, and provides support for two groups of people in particular.

The first group is those who are worried about their mortgage repayments. If they want to switch to an interest-only mortgage or extend their mortgage term to reduce their monthly payments, they will be able to do so, with the option of switching back to their original mortgage deal within six months without any affordability check or credit score impact. For most people, the right course of action will be to continue to make payments on their current mortgage. That will always be the best option, and will always mean that they pay less interest overall. However, this new measure means that people will be able to opt for a lower-cost approach for six months with full reversibility, giving them the peace of mind of knowing they can try out a new approach and still change their mind later.

The measure will take effect in the next few weeks. It means that a homeowner with a £200,000 property with £100,000 outstanding on their mortgage over 15 years can change their payments—with no immediate impact on their credit rating—by extending the mortgage term by 10 years, which could save over £200 a month, or moving to interest-only payments, which could save over £350 a month.

A further measure for this group of customers means that if they are approaching the end of a fixed-rate deal, they will be offered the chance to lock in a new deal with the same lender up to six months ahead. However, they will still be able to apply for a better like-for-like deal with the same lender, with no penalty if they find one, until their current deal ends. That will provide people with more flexibility and optionality to find the best deal for their circumstances.

The second group of people we are supporting is those who are at real risk of losing their home because they fall behind in their mortgage payments. Mortgage arrears and defaults remain at historically low levels, with under 1% of residential mortgages in arrears in 2023, and are at a level lower than just before the pandemic. None the less, for the families involved it is extraordinarily distressing to lose their house, so we will do all we can to support people who find themselves in such a challenging financial position.

As part of our strong regulatory framework for mortgage holders, banks and lenders already provide tailored support for anyone who is struggling and deploy highly trained staff to help such customers. Support offered includes temporary payment deferrals and part-interest part-repayment, as well as extending mortgage terms or switching to interest-only payments. To supplement that, we have agreed as part of the mortgage charter that in the extreme situation in which a lender is seeking to repossess a home, there will be a minimum 12-month period from the first missed payment before there is a repossession without consent. Anyone at all who is worried that they could be in this situation should know they can call their lender for advice without any impact whatsoever on their credit score. Lenders will also provide support to customers who are up to date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability test, and provide well-timed information when their current rate is coming to an end.

Taken together, these measures should offer comfort to those who are anxious about the impact of higher interest rates on their mortgages, and provide support to those who do get into any extreme financial difficulties. The mortgage market itself remains robust, and the average homeowner remortgaging over the last year had close to 50% loan to value, indicating that most people have considerable equity in their homes.

Tackling inflation is the Prime Minister’s and my No 1 priority. We said we would halve inflation not because it was an easy thing to do, but because it is the right thing to do, and we will not flinch in our resolve, because we know getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses. That is why we will seek to remove inflationary pressures in our economy, not stoke them. That is what the measures I have set out today will help to do, and I commend this statement to the House.

Thank you, Mr Speaker. I would like to thank the Chancellor for advance sight of his statement this afternoon.

Families are worried sick to their stomach about what is happening at the moment, but the Prime Minister says, “Don’t worry—it will all be okay”. However, it is not going to be okay for the millions of homeowners who face an average increase in mortgage costs of £2,900 this year—all of this during a wider cost of living crisis. The Prime Minister told the country yesterday to hold its nerve, but where are people meant to find the money in the meantime to pay for the Tory mortgage bombshell? The Chancellor and the Prime Minister have not yet said.

For many, the Tory mortgage bombshell will mean holidays cancelled, family savings draining away and missing out on days spent with family and friends, but for others it could be much worse—not moving up the housing ladder, but heading down it through no fault of their own. The Chancellor does not need to take my word about how many people will be facing the Tory mortgage bombshell. He could speak to any of the 11,600 families in his own constituency who will be paying £450 more every month in mortgage costs alone as a result of this Conservative Government.

The Resolution Foundation estimates that millions of households will have to pay a combined total of £15.8 billion more in mortgage payments a year by 2026. That is just devastating. The Tories gambled last autumn with people’s livelihoods, and since then things have got worse, not better, yet Ministers take no responsibility for the damage that they have caused, and blame anything and everyone else. Again today, the Government claim that this is all due to global factors, yet the latest data show that a typical household in Britain are now paying over £2,000 more per year for their mortgage than in France, over £1,000 more per year than in Ireland or Belgium, and over £800 per year more than in Germany. The Chancellor is going to need a better scapegoat.

Labour set out our plans last week. Our measures were a requirement—yes, a requirement—because all lenders need to play their part when people are struggling. Our plan would have provided real help, but the Government have provided just a bad cover version. While many banks and building societies are doing the right thing by their customers, a voluntary set of measures is just not good enough. The Chancellor said today that the voluntary measures would cover 85% of the mortgage market, but what is his answer for the more than 1 million families who are missing out because their lender has not signed up to this scheme—tough luck? Just how bad does it have to get before the Chancellor recognises that mandatory action is needed to provide meaningful assistance?

I would like to ask the Chancellor the following questions. Can he confirm what consequences there are for firms who have not signed up to this scheme? Where is the plan for renters? The Chancellor did not even mention them in his statement, but many of them are paying higher rents because the mortgage costs of their landlords have gone up? Why does the Chancellor think that savers are not enjoying the full benefits from rising interest rates in the same way that mortgage holders are feeling the full pain? Why does the Chancellor think that the UK has the highest inflation in the G7, and does he still think the Government are on track with their target of halving inflation by the end of the year? How does the Chancellor think getting rid of house building targets will help increase home ownership? Finally, six days ago the Chancellor said that he was “proud” of this Government’s economic record. With energy bills twice as high as last year, food inflation close to 20% and millions hit by the Tory mortgage bombshell, is he seriously saying he is proud of that record?

People work hard to get on to the housing ladder, yet there is now a risk that dreams will become nightmares due to the decisions of this Conservative Government. The Chancellor today has come to the House with a watered-down package that does not meet the task of dealing with the Tory mortgage bombshell.

I will deal with the right hon. Lady’s specific points first. She says these measures should be mandatory, so why did Labour oppose the intervention power in the Financial Services and Markets Bill that would have made that possible? She said she wants action for savers, and I have indeed been talking to banks about action for savers and will keep the House updated. What she carefully did not mention is that we secured on Friday more than Labour committed to, because our measures provide protection for people who miss payments not for six months, but for 12 months.

The main point is that the right hon. Lady wants people to think she is fiscally responsible and will not take risks with inflation, so why on earth is she committed to borrowing £28 billion more a year when, as a former Bank of England economist, she should know that that will be inflationary and push up the cost of mortgages? Members need not listen to me; they should listen to people such as Paul Johnson of the Institute for Fiscal Studies, who said about Labour’s plans that

“additional borrowing both pumps more money into the economy, potentially”—[Interruption.]

The right hon. Lady might not want to hear this but this is what Paul Johnson says about Labour’s plans:

“additional borrowing both pumps more money into the economy, potentially increasing inflation, and also drives up interest rates.”

It is Labour’s mortgage bombshell, hidden in plain sight.

The right hon. Lady does not want people to notice the real comparison here, which is that her party faced an economic crisis in 2008, just as this Government did last year, but we are taking the difficult decisions to restore sound money and the public finances while they ducked each and every one of those decisions, ran out of money and left it to others to clear up the mess.

Given that we do not want too much pressure on mortgage holders, who will be struggling, will the Government launch a series of supply-side measures to increase the supply of things that are short, to promote more home-grown food and home-produced energy, and above all to work with public sector employees and managers to have a productivity revolution in the public services where there has been a collapse in output?

As so often, my right hon. Friend is absolutely right and it is in supply-side measures that we see the long-term solution to the inflation problem that we and many other countries face. That is why the Budget was focused on labour supply measures such as a massive reduction in the cost of childcare—a reduction of up to 60% for families with young children—and it is why my right hon. Friend the Chief Secretary to the Treasury is launching the very productivity review my right hon. Friend the Member for Wokingham (John Redwood) has called for many times, to make sure we are getting better value for public money spent.

With a debt to GDP ratio of 100%, the Chancellor was rather brave to talk about sound money. However, I welcome the statement and early sight of it. Notwithstanding the fact that it was described by Reuters as a package of limited relief measures, it is none the less necessary and welcome, with support from lenders, no repossession within 12 months of a missed payment, the chance to lock in a deal six months early, a temporary move to interest-only, and no impact on customer credit scores. The Chancellor’s words about anxiety and concern struck the right tone, unlike his Prime Minister yesterday.

However, that that does not begin to answer some of the fundamental questions. Given that the base rate drives the mortgage rate, and the base rate, as the Chancellor knows, is the primary tool that the Bank has to tackle rising inflation, is this now not the time to review the Bank of England’s targets and tools? Secondly, are the Government genuinely convinced that using a rising base rate to tackle input inflation caused by external shocks is the best approach we have, other than to tip the economy into recession, as some people are suggesting? I hope the Chancellor would agree that that would be an idiotic and catastrophic thing to do. Thirdly and finally, should we now not revert to forward guidance on base rates from the Bank of England, as we had under Mark Carney during the financial crisis? It may not affect the trajectory of interest rates and mortgage rates initially, although it might, but it would certainly provide certainty to business, retail and mortgage borrowers.

I often do not agree with what the right hon. Gentleman says, but I thank him for the constructive tone of his comments this afternoon, because he is absolutely right to talk about external shocks. He will know, as we do, that interest rates have gone up by similar amounts in the United States, Canada, Australia and New Zealand and that core inflation is higher in 14 EU countries. We need to look at all the tools at our disposal. Whether the Bank of England Governor issues forward guidance is a matter for the Governor, but I am sure he will have heard the right hon. Gentleman’s comments. It is important, because we respect and support the independence of the Bank of England, that I allow the Governor to make those judgments. I disagree with the right hon. Gentleman’s suggestion of reviewing the target for inflation. That target is the right target, and it is important that we give everyone confidence of our total commitment to hitting that target, which we will.

Given the significant tightening in the measures of monetary growth, is the Chancellor absolutely sure that the Bank of England has got it right?

The Bank of England Governor himself has been very open about the fact that the Bank’s inflation forecasting has not been accurate, and it is conducting an independent review to see how it can do that better. It is clear that there have been some issues with how that process has worked, but what I would say to my right hon. Friend—

Mr Speaker, you are absolutely right to correct me on that point. What I would say to you about the point raised is simply that in my dealings with the Bank of England, I have never once had any reason to question its resolve to hit the target, but we need to ensure that the forecasting is better.

Some 8,600 families in Wallasey are facing increases in their mortgage bills of up to £1,800 in a year. That is a huge extra chunk of worry. I welcome the Chancellor’s statement, but does he not worry that the banks are being very slow to pass on interest rate rises to those who are saving, while almost immediately passing interest rate rises on to those who borrow? That makes the interest rate mechanism much less effective in dealing with the inflation situation. Did he notice, as I did, that the banks this autumn made more than £4 billion extra on the differential between those interest rates? Should he not have been much tougher on the banks? What will he to do to stop this profiteering?

The right hon. Lady is absolutely right. It is taking too long for the increases in interest rates to be passed on to savers, particularly with instant access accounts. The rates are more frequently being passed on to those with fixed-term and notice accounts. She is right that there is an issue there, which I raised in no uncertain terms with the banks when I met them. I am working on a solution, because it is an issue that needs resolving.

My right hon. Friend will know that increasing liquidity in the housing market will give homeowners more options and choices. Will he look at reducing the burden of stamp duty to help both current and future homeowners?

I thank my hon. Friend for his comment. The level of stamp duty is, as with all taxation measures, kept under review. We make decisions at the time of fiscal events, whether autumn statements or spring Budgets, and we will continue to do that.

The root cause of soaring interest rates—other than the shambles of the mini-Budget—is the Government’s failure to control inflation. The Prime Minister took personal responsibility for halving inflation this year. Will the Chancellor explain why the Government are refusing to take obvious steps to tackle inflation such as reinstating energy support for farmers and businesses, cutting import costs for small businesses and bringing down the NHS waiting list to alleviate the squeeze on our workforce?

I find it strange that the hon. Member should be criticising the Government’s failure to tackle inflation when her party is suggesting a multi-billion-pound package of mortgage support that would increase inflation. I must say that the Liberal Democrats are positioning themselves brilliantly as the pro-inflation party.

I welcome the new mortgage charter, but may I say, along with all Members across the House, that constituents are suffering and that they are very concerned? Many are having to choose between food, clothes and shoes and paying the mortgage or the rent, and decisions that we make here, either as the governing party or cross-party, are having a direct impact on individuals’ lives every single day. I join cross-party with the hon. Member for Wallasey (Dame Angela Eagle), who is absolutely right that, so often, when the base rate rises, lenders are quick to raise those interest rates on our constituents. Will my right hon. Friend ensure that when interest rates fall, as they surely will—hopefully they will soon; possibly in the autumn, but we will see—those reductions are passed on to our constituents as quickly as possible?

My right hon. Friend is right to draw attention to the human consequences of any economic shock. I am extremely proud that, under the Government since 2010, 1.7 million people have been lifted out of absolute poverty, including 400,000 children. That is why in the autumn statement we prioritised those facing the biggest challenges with a £94 billion package of support to help people through the cost of living crisis. But one thing that can definitely happen better than it is now is passing on increases in the base rate to savers.

One reason nearly 10,000 of my constituents will be hit by the Tory mortgage bombshell is that many deals ending in this 12-month period were taken out when interest rates were below 2%; they are now at 5%. Will the Chancellor set out clearly his private analysis of the likely rises in arrears and repossessions over the next few months?

I do not have any private forecasts that I have not shared with the House. What I can say is that about 0.9% of families with mortgages are currently in arrears, and that is nearly four times fewer than in 2009.

I thank the Chancellor for his statement. A third of my constituents have mortgages and will welcome this range of measures. Now that the majority of the mortgage market is fixed, not floating, does he agree that rising short-term interest rates will not necessarily result in falling inflation and that we need to look at other measures such as making sure that interest rate increases are passed on to savers so that they keep their money in the bank?

My hon. Friend is absolutely right. Notwithstanding the fact that 85% of mortgages are now fixed to some degree, an extra 1.2 million families will feel the increase in interest rates over the months between now and the end of the year. That will be felt by many families, but we should do everything in our power to tackle inflation, because in the end that is the only way to end the misery for so many people.

Many of the banks that the Chancellor has been talking about are raking in bumper profits by refusing to pass on higher interest rates to their savers. Surely, a windfall tax on those additional profits would allow the Government to provide mortgage holders with the kind of support they really need at this time. Before the Chancellor dismisses that idea, may I gently remind him that even Margaret Thatcher imposed such a windfall tax on banks’ excess profits?

I hear what the hon. Gentleman says, but he will be pleased to know that banks already pay a 3% surcharge on their corporation tax—they pay 3% more than everyone else—as well as a levy on their balance sheets.

I welcome the action that the Chancellor has taken on this issue. Increasing the flexibility of mortgage terms and conditions will provide welcome relief to homeowners who are struggling with anxiety at the present time. The mortgage charter sounds great. What obligations has he insisted on with the mortgage companies to get that information out to mortgage holders to inform them of the extra flexibility available?

My hon. Friend makes a good point. All lenders had some of those measures to a lesser or greater extent. What is significant about Friday is that they aligned their offer so that it is much easier to communicate to all families with mortgages. The charter has been agreed by 85% of the market, so a very large majority of mortgage lenders are agreeing to a simple set of terms that they will all follow so that it is easy for people to understand their rights.

The people watching this who have too much month at the end of their money need better and straight answers from the Chancellor. He has ducked the question about whether he thinks the Government will reach their own target to halve inflation, and he needs to be honest about what he thinks the consequences will be of only reaching an inflation target of 5%.

I join colleagues across the House who have raised concerns about the fact that the vast majority of mortgages are fixed. People facing the possibility of eviction even in a year’s time will be sick with worry. What assessment has he made of the impact if inflation only gets down to 5%? When will he learn the lessons from the energy companies, and not wait to hold the banks responsible for their role in all this?

I have a lot of respect for the hon. Lady, but she is being a little churlish about what the Government have done. I have not waited; I called in the banks and the lenders on Friday, and I got them to commit to a set of terms that will make life easier for 85% of families with mortgages if their mortgage comes up for renewal. On the Government’s target to halve inflation, both the Bank of England and the International Monetary Fund have said that we are on track.

I have never forgotten the anxiety caused to my parents in the late 1980s, after they bought their current home and interest rates soared. Does my right hon. Friend agree that the package of measures that he has announced will help enormously to alleviate the anxiety that many households are feeling, without allowing rampant inflation to put my constituents’ dreams of home ownership even further out of reach?

I thank my hon. Friend for a thoughtful question. The measures agreed by the banks and principal lenders on Friday will make a big difference, particularly for people who are genuinely in arrears, who now know that their house will not be forcibly repossessed for 12 months. That is an important reassurance, and gives people longer to get their finances in order. It also encourages people who are worried about the impact on their credit score that the simple fact of having a conversation if they are in distress will not have any impact on it. For people in a similar situation to his parents, this is an important set of measures.

In his statement, the Chancellor said that there will be a minimum 12-month period from the first missed payment before a repossession without consent. Does that come into effect from today, or will it apply retrospectively? What will that mean for hard-pressed families who, because of soaring costs, missed August but managed to pay September, October, November and December, and missed January? At what point does the clock start ticking on their repossession?

The agreement will take effect in the next few weeks, but the context of the agreement with the banks and lenders is one where they are agreeing to do everything they possibly can to give people longer to get their affairs in order so that repossessions are reduced or eliminated altogether. I think it will be a positive step forward.

I listened very carefully to the shadow Chancellor, because I want to hear serious ideas. The public are not daft; they can see there are incredible pressures across the world. But not only is Labour not coming up with ideas, it is breaking its own economic pledges. It made me think of the latest Labour councillor to step down, who said recently that she watched Keir Starmer’s leadership with increasing concern and frustration because of a “lack of policy” to help those most affected by the cost of living. Does my right hon. Friend agree with me? Will he say more about how we can keep working with lenders—so it is not just a one-off conversation—to create solutions to help with some of the problems ahead of us?

I am happy to give my hon. Friend that reassurance. I will continue to talk not only to the lenders but the regulators, who I am meeting later this week, to see if there are any areas at all where price reductions that should be passed on to consumers are not being passed on. I hope to update the House further.

I will put aside the fact that the Chancellor did not answer my right hon. Friend the Member for Leeds West (Rachel Reeves) on what happens to the 1 million people who are outside the 85% of mortgage providers, or why we have higher borrowing costs than France, Germany and Ireland. Some 9,200 families are affected by the increase in interest rates and the mortgages they are paying. We know, for example from the prompt payment codes, that voluntary codes have a limited impact, so who will monitor the compliance of the code? How many people will have to be disappointed by their lender before the Chancellor puts it in statutory form?

It is generous of the hon. Lady to put aside so many things. I will also put aside the fact that Labour opposed the powers that would have meant the mandatory imposition of the charter on the banks and lenders would have been possible. What I will say to her is that the charter will be monitored by the Financial Conduct Authority. It will take appropriate action if it thinks that banks and lenders are in breach of their statutory duties.

I recently met constituents in The Wolds villages who have shared ownership arrangements for their properties with a housing association. They have never missed a payment. Please will my right hon. Friend confirm that the mortgage charter will assist those across the country with shared ownership schemes?

During the 2008 credit crunch, Plaid Cymru, as part of the One Wales Government, developed a mortgage rescue scheme. Through the co-operation agreement, we have now secured £40 million to support Welsh mortgage holders in difficulty. People look to Government to help them to keep their homes in a crisis. Will the Chancellor follow where Plaid Cymru led and implement direct protections for those hardest hit by interest rate increases?

We will do everything we possibly can to help people in difficulties, except measures that are themselves inflationary.

I welcome the fact that my right hon. Friend, in tackling this huge challenge, is determined not to increase inflation. Does he recognise, however, that with so many people owning their properties outright and not having a mortgage on them today, increasing the payment for people who save is a very important element in tackling inflation? I wish him every success in his further conversations to encourage the banks to pass on interest rates to savers.

My hon. Friend is absolutely right. If more people are encouraged to save, that is technically counter-inflationary and something to be encouraged.

Due to the disastrous policies of Conservative Governments, including eventually crashing the economy, hard-working Brits, including people in my Slough constituency, are having to pay the price via painful premiums on their mortgage or rent. Why does the Chancellor think that the latest data shows that someone with a £200,000 loan is paying over £800 more annually in the UK than in Germany and over £2,000 more than somebody in France?

If the hon. Gentleman wants to look further at Europe, he will see that 14 EU countries have higher core inflation than we do. As for interest rate rises, they have been at similar levels in Australia, New Zealand, Canada and the United States.

I thank my right hon. Friend for his statement and for his hard work in securing the new mortgage charter, which will give people certainty and comfort in globally uncertain times. The simplification of the terms and the coverage of 85% of the market are welcome, but what are my right hon. Friend’s views on the 15% who are not currently round the table, and what message does he think he should be sending to their customers?

We will be making big efforts to sign up any remaining lenders who have not subscribed to the charter. To reach a level of 85% over a period of four days is a good start, but we would love to get the other 15% on board. I should add that if they are not on board, that will make their mortgage offer less competitive from the viewpoint of the many thousands of families who will want to arrange their new mortgage with a lender who makes an effort to reduce the anxiety they may feel.

My constituents who are facing eye-watering increases in their mortgage repayments are asking—as have other Members—how they can square those increases with the increased profits that the banks and building societies are making, and are also asking whether this pain is for any gain. Inflation has not fallen in the way that the Government hoped. Is the current mortgage market not fundamentally different from that of the early 1990s, when we last had spiralling interest rates, and is this tool not merely hammering a group of people rather than tackling the core problem? Does the Chancellor believe there is an element of truth in that, and does he believe that there are other tools at his disposal to get inflation down?

The hon. Gentleman is entirely right to say that the mortgage market has changed, given that 85% of deals now involve a fixed-rate element, but I still think that interest rates are the most effective tool. Other countries that have used them are seeing their inflation starting to fall, and I would expect it to do so here.

The mortgage crisis is not the only crisis over which this Government are presiding. According to StepChange Debt Charity, 45% of mortgage holders—some 7 million—are now struggling to keep up with all their other bills following the rise in interest rates. What conversations is the Chancellor having with companies providing other forms of consumer credit, and with debt advice charities which are giving support on the frontline to many people who have never had to call on their services before?

We continue to have conversations with everyone who is involved in relieving families who are in distress because of debt arrears, whatever they may be, but I think the most important help we can give people is cost of living support. The extension of the energy price guarantee has reduced people’s electricity bills, and means overall that we have paid about half people’s electricity bills over the last year.

Last week the Bank of England confirmed that the rise in interest rates has been worst here in the UK, with overnight swaps—the key driver of mortgage rates—rising by twice as much in the UK as in the United States. What assessment have the Chancellor and his Department made of the reasons why the UK has been so much worse hit than other countries, and will he finally admit that that is the case? Will he also indulge me by explaining the difference between poverty and his new catchphrase, “absolute poverty”?

The hon. Lady may want to belittle the fact that 400,000 more children and 200,000 more pensioners have been taken out of absolute poverty, but I think that that is an important achievement, and I am proud of it. I also think the hon. Lady should recognise that the primary causes of the inflation we are seeing are international factors that are affecting many other countries, which is why we are also seeing interest rates rise across the world.

The 8,600 mortgage holders in Chesterfield whose mortgages have increased by an average of £1,900 a year will be very conscious that in the Chancellor’s responses he has been very happy to blame global factors, but that when he is asked about specific countries such as France and Germany—the major European nations where outcomes are not as bad as in the UK—he quickly deflects and says, “Let’s talk about Australia or Canada.” Will he answer the question that my right hon. Friend the Member for Leeds West (Rachel Reeves) asked? Will he explain why it is worse for my constituents in Chesterfield than it is in France, in Germany and in other countries he has been asked about?

The truth is that Members can pick countries in Europe where things have not been as severe as they have here, but they can also pick countries in Europe where things have been more severe, such as the 14 EU countries that have higher core inflation.

The Chancellor is not going to get off with not answering that question. We are going to keep asking him again and again until he answers. Why is it that people are paying £800 less in Germany, £1,000 less in Ireland and Belgium, and £2,000 less in France than they are paying here? What is it that their Governments and their economies are doing differently—or is it just that they do not have the problem of 13 years of this Tory Government? What is behind it?

Let me give the same answer that I gave to the hon. Member for Chesterfield (Mr Perkins). Core inflation is higher in more than half the EU countries, so it is not just about us.

We have had 13 interest rate rises in a row, yet little help for those in housing need, and 13 years of public sector pay cuts. All the Tory Government have done is double down on more real-terms pay cuts. When will this Government take action to tackle the cost of living crisis by raising incomes? Having bailed out the banks in 2008 and 2009 to the tune of hundreds of billions of pounds, should the Government not now deal with the causes of inflation by controlling bank profiteering and redistributing the extreme wealth that exists to the millions of people, including people in my constituency of Cynon Valley, who are suffering and at serious risk? They are petrified of losing their home through no fault of their own.

The hon. Lady is absolutely right to be concerned, as we all are, about families in her constituency who are worried about the impact of rising interest rates on their mortgage repayments. She is wrong to suggest that this Government have not been extremely generous in our cost of living payments, which at £94 billion are more, actually, than her party was calling for. If she wants to talk about the last 13 years, maybe she should reflect on why a Conservative-led Government were elected in 2010: it was to pick up the pieces of the terrible economic mess that her party left behind.

Citizens Advice Scotland has reported that requests for advice from people who are homeless or at risk of homelessness reached their highest ever level in May this year and were up 30% from May 2022. What additional measures is the Chancellor planning to protect the most vulnerable households from the impact of soaring interest rates on their mortgage repayments?

Let me tell the hon. Gentleman what we have done for those families. This year, families on means-tested payments will get a payment of £900, pensioner families will get a payment of £300 and families with someone who is disabled will get an extra payment of £150, alongside a lot of other measures.

Two of my constituents face a near tripling of their mortgage payments to over £2,600 a month. It is easy for me to talk about the Tory mortgage bombshell and rightly blame the Government for crashing the economy, but what does the Chancellor have to say to my constituents? Why do they have to pick up the bill for Government incompetence?

What I would say to the hon. Gentleman’s constituents is that we are taking the difficult decisions to deal with inflation in this country, as other countries are doing. We will do what it takes, because dealing with inflation is the only way in the long run that we can stop more families going through what is happening to the constituents he mentions.

I have constituents whose mortgages were with Northern Rock when it collapsed back in 2008. They have been moved against their will to inactive lenders that have not allowed them to remortgage on fixed rates. They are now, and will continue to be, trapped paying variable rates for a long time. Is there any help for mortgage prisoners in the measures that the Chancellor has announced today?

The hon. Lady raises a very fair point. I will write to her with some details of what we are thinking in that area.

Private rents go up when mortgages go up, yet local housing allowance disparity is growing faster in places like York than anywhere else in the country. What process has the Chancellor set in train to review local housing allowance and the broader rental market, which is out of kilter in places like York compared with surrounding areas?