House of Commons
Tuesday 3 December 2024
The House met at half-past Eleven o’clock
Prayers
[Mr Speaker in the Chair]
Oral Answers to Questions
Treasury
The Chancellor of the Exchequer was asked—
National Insurance Contributions
As we set out in the autumn statement, the Government have set aside funding to support the public sector with the additional cost of employer national insurance contributions. The amounts are £4.7 billion in 2025-26, £4.7 billion in 2026-27, £4.8 billion in 2027-28, £4.9 billion in 2028-29 and £5.1 billion in 2029-30. The Government plan to update Parliament on allocations by Department as soon as possible.
Labour’s national insurance increase will cost Dundee city council a minimum of £7.3 million, while across Scotland an additional £500 million will be incurred, rising to £750 million when indirect employers such as GP practices are included. Labour promised to reset the relationship with the devolved Administrations, so, ahead of Scotland’s Budget this week, will the Minister confirm that the full cost of the national insurance contributions increase to the delivery of public services in Scotland will be reimbursed?
The funding for the impact on public sector organisations includes funding for the devolved Governments, which is allocated through the Barnett formula in the usual way. It is the responsibility of the devolved Governments to manage devolved workforces. Might I say that if the bill is somewhat higher in Scotland, that may be due to the Scottish Government’s decisions about the size of the public sector?
A major housing association serving not only Plympton, Plymstock and Ivybridge in my constituency but the rest of Plymouth and other parts of Devon and Cornwall will have to shoulder three quarters of a million pounds in increased national insurance contributions. That is money that could have been spent on new homes for some of the most vulnerable in my constituency. How will the Minister reassure my constituents patiently waiting for much-needed social housing when they realise that they will have to wait longer because of the Chancellor’s decisions?
We recognise that the decision on national insurance contributions is a tough one, but we also recognise that it was necessary for the Chancellor to set out a Budget that included a record set of promises on home building. We are set to build 1.5 million homes over the course of this Parliament, investing in social and affordable housing. That is what will benefit the hon. Member’s constituents who need a decent home.
The shadow Chancellor was touring the TV studios this morning to say that the Conservative party did nothing wrong in government. Will my hon. Friend confirm that the reason for the changes to national insurance is precisely to plug the £22 billion gap that the Conservatives caused and to ensure that our constituents can get a hospital or GP appointment?
I think that fits with the question, somehow.
My hon. Friend is absolutely right. The problem with Conservative Members is that they are all happy to say that they want more funding for the NHS; they are just not prepared to pay for it. What they need to realise is that, in government, we have to take tough decisions to ensure that we can fund public services and fix the public finances.
What reassurance can the Minister give to hospices such as Julia’s House, which serves my constituents, which are concerned by the planned increase in national insurance contributions and the impact that will have on the services they provide?
As my hon. Friend will know, many hospices are independent charities and therefore will be able to access the employment allowance, which we have doubled to £10,500 a year, as well as the other wider tax reliefs in the tax system for charities, such as business rates relief and gift aid. Of course, hospices often have statutory obligations with the NHS as well, so I suggest that hospices discuss their contracts with their integrated care boards.
I call the shadow Minister.
Later today, the House will vote on the Government’s £25 billion national insurance tax hike. To avoid any uncertainty when we vote, will the Minister confirm exactly which public sector organisations will be compensated?
If the shadow Minister would like to know which public sector organisations will be compensated, he could look at what his Government did with the health and social care levy, because the definition of public sector organisations—it is a regularly cited definition—is set out through the Office for National Statistics. We will reimburse Departments and other public sector organisations.
There was so little information in that response—the civil service will be very proud of the Minister. He will not say who will be spared by the Chancellor’s tax raid, but we know that working people will be made to pay—the Office for Budget Responsibility has said so; the Institute for Fiscal Studies has said so; even the Resolution Foundation has said so; and working people know so. Why is it that Labour always leaves office with unemployment higher than when it entered office?
I do not think the shadow Minister listened to my response to the previous question, in which I set out very clearly the definition of the public sector for the purposes of national insurance contributions. Look at what the OBR has said: yes, it recognises that we are asking businesses to contribute more and that this will have an impact, but it also says that the employment level will rise from 33.1 million to 34.3 million by 2029, meaning an increase in the employment level over this Parliament.
I call the Liberal Democrat spokesperson.
Citizens Advice in St Albans supports some of the most vulnerable people to access public services. It says that the changes to national insurance contributions will
“hit hard because we employ mostly part-time staff and the change to the threshold means we go from paying nothing to the full amount for each staff member. The increased rebate is intended to offset the NIC for small organisations but does not for us because so many of our staff are part-time.”
Will the Chancellor look again at the impact of the national insurance contribution changes on part-time workers?
We recognise that we have taken a tough decision to increase the rate and broaden the base through changes to the secondary threshold. I welcome the work done by the organisation mentioned by the hon. Lady in her constituency, but perhaps the need for advice would be less if public services were stronger. One of the reasons we are taking these difficult decisions on taxation, welfare and spending is precisely to ensure that these public services can provide the service that people need.
We all want to see stronger public services. According to Hightown Housing Association, the estimated extra total cost of the national insurance contribution changes will be £860,000 per year—money that would allow the association to pay the interest on a loan of around £17 million, which would pay for around 60 social homes. Will the Chancellor say whether she will conduct an impact assessment of these national insurance contribution changes on the number of social homes?
The Liberal Democrat spokesperson began her question by saying that we all want public services; the problem is that not all of us in this Chamber are prepared to pay for them. That is exactly why we have to take difficult decisions to ensure that we can fund our ambitious plans for the NHS, education and indeed housing. The impact of the impact assessment is published in the tax information and impact note, which is published alongside the legislation, which I am sure the hon. Lady will have seen. It comes down to the basic point that we have to make tough decisions on taxation if we want to fund those public services.
Affordable Housing
At the Budget, the Government announced major steps towards delivering a once-in-a-generation increase in social housing, including a £500 million boost to the affordable homes programme, increasing annual spend to £3.1 billion. The Government will set out future grant investment beyond the current affordable homes programme at phase 2 of the spending review.
In Stoke-on-Trent and Kidsgrove there are many historic buildings that are lying dormant, and they have done so for a very long time. What steps will the Chancellor take to help to bring these beautiful buildings back into use as affordable homes for local people?
Stoke-on-Trent has a proud industrial history and some beautiful buildings. My hon. Friend makes an important point—I will raise it with colleagues at the Ministry of Housing, Communities and Local Government. The £500 million boost to the affordable homes programme also allows up to 10% of that delivery to come from acquiring existing homes. Social landlords, including some local authorities, can bid for funding to bring empty homes back into use for social housing.
Many of my constituents have benefited over many years from the right to buy their council homes and social housing, which has given them an important step on to the ladder to home ownership. The discounts in Staffordshire are going to be cut to £16,000. I do not doubt that the Chancellor, like me, wants to help as many people as possible on to the path to home ownership. Will she pledge to review that decision with regard to the impact it will have on so many people, and look at restoring that discount in future?
As the right hon. Gentleman will know, home ownership fell under the previous Government. We are determined to turn that around and ensure that more people, particularly families, get on to the housing ladder. As he has confirmed, the right to buy discounts will continue, but in future every penny of that money will go back into building new social housing, so that more people can have a home of their own and a roof over their head.
Financial Conduct Authority
I read that report with great interest and have a lot of sympathy for those who suffered. However, a lot of the incidents described happened a very long time ago. The FCA has made substantial changes in response to those experiences. That does not mean the end of our engagement with the FCA, but we are continuing to hold it to account and it has made changes since the report came to light.
The FCA has been completely defensive in response to the report. Since the historical elements quoted by the FCA, 13 major scandals have erupted. I will not intrude on your time, Mr Speaker, because I am sure that you would not want me to list them all, but Woodford Equity, car finance and others have come to light since the details came out. Clearly, there is a need to fundamentally reform the FCA so that victims of scandals are properly compensated and the industry is properly regulated in the way that we would all like to see.
I understand that lots of people have suffered, as the report explains, which I said I have read. However, I do have confidence in the FCA; I have sent it remit letters outlining what we expect it to do to deliver on its objectives. The FCA is looking at certain things such as its rulebook, which we think is too extensive, to look at rules that no longer need to be applied but, overall, we are working with the FCA closely and we believe that it is trying its best. It is not possible to have a system where nothing ever goes wrong, but we are trying to minimise that and ensure that there is consumer protection. The FCA knows that we are working together to deliver on its objectives.
Money and Pensions Service
The Money and Pensions Service plays a vital role in supporting individuals to manage their money effectively. Its funding levels are regularly reviewed to reflect demand, inflation and evolving needs.
New research from the Centre for Responsible Credit shows that 7.5 million people in this country are going without the debt advice that they need. We are in a cost of living crisis, so services are severely stretched. The Money and Pensions Service underestimates need by excluding people who are behind with their bills. That means that the financial levy that it proposes is not what it needs to be. Since a third of those who need financial help borrow from buy now, pay later lenders, and given the delay in regulating those companies, will the Minister meet me to look at the funding model of the financial levy and what more we can do to ensure that those profiting from exploiting our constituents pay to repair the damage?
My hon. Friend has been a tireless campaigner on this issue. We are reforming buy now, pay later, as the Economic Secretary recently stated in answer to my hon. Friend in the House. The Government recognise the gap between those who need debt and those accessing it, which is why the Money and Pensions Service is exploring ways to improve accessibility, including through outreach initiatives. We continue to keep a close eye on its funding levels to ensure that they reflect demand.
The Money and Pensions Service does tremendous work to support people in my constituency who come to surgeries in desperate need—particularly those facing crippling debt—as do organisations such as Christians Against Poverty. Would the Government consider putting more money behind the Money and Pensions Service, not just for staffing but for visibility and presence in local communities? Would they consider the proposal that others have made to make our post offices a shop window for Government services in our communities, including such advice?
As the hon. Gentleman knows, the Money and Pensions Service commissions other charities, particularly to work with hard-to-reach vulnerable people. We continue to review its funding and we keep a close eye on the evolving demand and need for its services.
Taxation: Online Multinational Corporations
Ensuring that online multinationals pay their fair share of tax is crucial, so the Government are finalising the implementation of internationally agreed rules for a minimum 15% effective rate globally. As set out in the corporate tax road map, we are seeking an international solution for a fair tax allocation of multinational profits. Meanwhile, the digital services tax ensures that search engines, social media platforms and online marketplaces pay UK tax reflecting a UK-derived value.
Amazon currently makes hundreds of millions of pounds in profits in the UK each year, and often gets away with paying little to no corporation tax. Meanwhile, high street businesses in Weymouth, Portland and Swanage in my constituency pay their fair share. To level the playing field, will the Chancellor consider further measures to ensure that online giants always pay their fair share of tax? I fear that, without action, our high streets will always be at an unfair disadvantage.
My hon. Friend is absolutely right, and supporting the high street is at the heart of our ambitions when it comes to business rates reform. On Second Reading of the Finance Bill last week, in which I spoke, we set out our plans to issue permanently lower tax rates for high street retail, hospitality and leisure properties. That will be paid for through an increase in the tax rate on properties with a rateable value above £500,000, a category that includes the warehouses used by many of the online giants to whom my hon. Friend has referred.
Support for Pensioners
Thanks to our steadfast commitment to the triple lock, more than 12 million pensioners will benefit from a 4.1% increase in their state pensions next year, and over the course of this Parliament they will be better off by £1,900. Pensioners also benefit from free bus passes, eye tests and prescriptions.
In September the Government released statistics showing that one in five pension credit claims were not being processed within 50 days, and I raised that in a written parliamentary question, No. 5385. Part of the answer stated:
“The department has secured funding for additional staffing to improve processing times.”
Two months later, data has been released showing that the processing of one in four pension credit claims is now taking longer than 50 days. How much funding was given, will more be provided to try to move this forward, and what conversations is the Minister having with the Department for Work and Pensions to ensure that the funding is spent properly, given that it is taxpayers’ money?
I am a Minister in both the Treasury and the DWP, so I have conversations with officials about this all the time. We are absolutely determined that those who are eligible for pension credit should be aware that they can apply for it, given our big campaign to raise awareness—only last week we launched a TV campaign on the issue. We have also deployed an additional 500 staff to process those pension credit claims. Thanks to our campaign there has been a 145% increase in the number of claims, which is why the processing is taking a little longer, but we are absolutely focused on speeding it up and ensuring that those who are eligible receive the help they need.
Economic Growth in Rural Areas
A prosperous rural economy will be underpinned by improvements in rural connectivity and productivity, the availability of affordable energy, access to public services and a thriving farming sector. To that end, the Government are investing £5 billion in broadband connectivity, which will support growth in rural areas across the UK. In addition, we are spending £5 billion for the farming budget in England over the next two years, including the largest amount to be directed at sustainable food production and nature’s recovery in our country’s history.
For generations the grim spectre of highland depopulation haunted the area I come from. I can remember my own father saying, before North sea oil came along, that I would have to go south; to go away. Today we have the Inverness and Cromarty Firth green freeport, and we have the prospect of a space launch in Sutherland. May I ask the Government to consider fiscal means whereby these projects can be assisted? I warmly invite a Treasury Minister to come north to my constituency to see what we are doing and what we have on offer.
The Chief Secretary to the Treasury will set out any fiscal measures in due course. I am not sure whether I will get away with committing him to a visit to the hon. Gentleman’s constituency, but I am sure that many of us would like to visit it. In fact, I shall be in Scotland in the next few days, but as it is for a Labour party fundraiser, the hon. Gentleman may not want to join me.
Rural North Shropshire is home to some great independent businesses that we are looking forward to celebrating on Small Business Saturday this week, but they are held back by the business rates system, which benefits big online retailers and holds back investment not only on the high street but in the countryside. Will the Minister consider a much more radical reform of business rates which takes account of land values, encourages businesses to invest and puts high street retailers on a level playing field with online giants?
Until the hon. Lady’s last sentence, I thought she was declaring support for our business rates plans, because we are setting out to level the playing field for high street businesses and the online giants. We are doing that by way of a permanent tax cut for retail, hospitality and leisure businesses on the high street, which is paid for by the higher multiplier for those with a rateable value of £500,000 or more—a category that includes the warehouses used by online companies. I look forward to the hon. Lady perhaps contributing towards our “Transforming Business Rates” paper, which sets out our wider ambitions for reform.
The last Government failed to stand up for British farmers in trade agreements and left them vulnerable to flooding, rollercoaster energy costs and poor infrastructure. Can the Minister confirm that this Government will protect British farmers where the last Government failed?
My hon. Friend is absolutely right to point out the failures of the previous Government, and to point out that this Government remain steadfast in our commitment to farmers across the country. That is exactly why we have committed £5 billion to the farming budget over the next two years, including the largest ever budget for sustainable food production in our history.
Living Standards
We plan to raise living standards by boosting economic growth to put more money in people’s pockets, and by developing a comprehensive strategy on child poverty to give every child the best start in life. Already, the independent Office for Budget Responsibility estimates that living standards will increase during this Parliament, at more than double the pace observed in the previous Parliament.
Fourteen years of Conservative rule meant that we all saw child poverty levels rise. One in five children across the country now grows up in scarring poverty. A quarter of all children in Bolsover live in poverty. Can the Minister please set out the measures that this Labour Government will take to end this travesty?
I thank my hon. Friend for her question. She will know that this Government, like every Labour Government, are committed to improving living standards right across the country. From 1 April 2025, the national living wage will increase by 6.7% to £12.21 per hour for eligible workers aged 21 and over. That represents an increase of £1,400 to the gross annual earnings of a full-time worker on the national living wage, and is expected to benefit around 3 million low-paid workers. My hon. Friend knows that the Government have set up a ministerial taskforce on child poverty, which will report in 2025.
In the Chancellor’s first ever Budget, she delivered over £1.5 billion for Scotland this year and £3.4 billion next year—the largest ever block grant settlement in the history of the Scottish Parliament. Unlike the Tories and the SNP, it is clear that this Labour Government are choosing investment over simply managing decline. Can the Minister share with the House a bit more detail about how the Budget will directly impact and improve the lives of people in my constituency of Motherwell, Wishaw and Carluke, and throughout Scotland?
I thank my hon. Friend for her question. As she said, the Scottish Government’s spending review settlement for 2025-26 is the largest, in real terms, of any settlement since devolution began. The Scottish Government are receiving at least 20% more per person than equivalent UK Government spending in the rest of the United Kingdom. That translates to over £8.5 billion more in 2025-26 alone. This Labour Government are delivering for the people of Scotland by giving the Scottish Government the power and money to get on with the job, and it is for the SNP to be accountable for what it delivers for the Scottish people.
Can the Minister confirm that of the £26.4 billion tax rise through the increase in employer NICs, £19 billion will come directly out of people’s pay packets? Secondly, can he confirm that the net amount that the Treasury will actually get from that £26.4 billion after behavioural change and public sector compensation is just £11 billion?
The right hon. Gentleman seems to have forgotten the cost that working people paid as a consequence of his party’s actions in government, with inflation on house prices racing to 11%, the cost of living crisis, higher energy bills and a loss of grip on public spending. People suffered a direct cost in their disposable income because of the actions of the Conservative party. This Labour Government have wiped the slate clean, and we are getting a grip on public spending, fixing the foundations and delivering for working people.
Will the Chancellor admit, as she has already done in the media, that wages will be lower because of her jobs tax?
This Government’s commitment to economic growth will improve living standards for people right across the country. I refer the hon. Member to my previous answer and suggest that his party might want to apologise before trying to lecture this Government on the change that we are delivering.
Economic Investment
We have brought stability back to the economy, which is the foundation for attracting investment and is vital to our growth mission. We have already launched the national wealth fund, which will mobilise over £70 billion of private investment with an expanded remit for the Office for Investment overseen by the Minister for investment. In October, we welcomed global investors from around the world to London for the international investment summit, where we were able to announce a record-breaking £63 billion of private sector investment into our economy.
I have been meeting a number of maritime companies in and around the port of Southampton, and they tell me that the single biggest key to unlocking further investment would be the expansion of the national grid to our city. What steps is the Chancellor taking to secure that vital investment, and will she meet me and local industry leaders to discuss how this would boost our local and national economy?
It was a pleasure to go to my hon. Friend’s constituency in June to see the port and the wealth creation and jobs that it is bringing to Southampton. As I set out in the autumn Budget, as well as focusing on the national wealth fund’s capital investment in ports, we are committed to accelerating grid connections and ensuring that new network infrastructure is built at pace to unlock investment and growth opportunities. We are particularly focused on driving network build, including by completing the strategic planning of the energy system needed for 2030, to ensure that projects such as those my hon. Friend has mentioned in Southampton make the progress that they need to.
New green businesses such as XLCC in Ayrshire, a sub-sea cable manufacturer, are seeking long-term investment to create jobs. Recently, my hon. Friend the Member for North Ayrshire and Arran (Irene Campbell) and I visited its training academy in Irvine. What more will my right hon. Friend the Chancellor do to help Scottish businesses such as XLCC to secure long-term investment, and might she visit Ayrshire to see it in action?
I thank my hon. Friend for his question and for the invitation. In October, the Government launched the national wealth fund to mobilise billions of pounds of investment into world-leading clean energy and growth industries. I am pleased that the national wealth fund already announced a £20 million investment in XLCC to support it in moving towards a construction phase. This will support 900 jobs, as well as making a contribution to the UK being a clean energy superpower by strengthening the home-grown energy suppliers that are fundamental to achieving our energy independence.
As the chair of the all-party parliamentary group for Yorkshire and Northern Lincolnshire, I am always on the lookout for opportunities to encourage investment and growth in our region. That is why I am backing the campaign to put the national infrastructure and service transformation authority in Leeds, and I was delighted that the national wealth fund was put in Leeds. Given these facts, will my right hon. Friend the Chancellor meet me to discuss the opportunities we have to maximise the benefits from the national wealth fund?
I welcome the work that my hon. Friend does on the all-party parliamentary group for Yorkshire and Northern Lincolnshire. As I announced in October, the UK Infrastructure Bank has now become the national wealth fund and it will expand its team and be headquartered in the brilliant city of Leeds, to realise our ambition on the national wealth fund. The national wealth fund will also have a strong regional focus, working with the mayors, including Tracy Brabin in West Yorkshire, so that we can realise the potential of all our regions, including Yorkshire. Further details on the national infrastructure and service transformation authority’s governance and location will be confirmed in due course.
One of the economic investments that we do not want to see in Angus and Perthshire Glens, or anywhere else in Scotland, is foreign multinationals buying up farms because farmers have given up under the weight of the taxes introduced by this Government. This would destroy local supply chains and make larger farms that are less responsive to consumer demand. What has the Chancellor seen in her impact assessment of the agricultural property relief changes to allay those fears?
One of the current challenges, as the hon. Gentleman will know, is that agricultural property relief is often used for tax avoidance. People are buying farmland not because they are family farmers but because they do not want to pay any inheritance tax. That is why we are reforming the system to bring in much-needed money to fund our public services, and to have a fair system with a 50% discount to inheritance tax paid on agricultural property and a 10-year period to pay that inheritance tax, interest free.
Last week, I joined a biotech boot camp in South Cambridgeshire. Although the investors and entrepreneurs recognise and welcome the research and development budget announced in the Budget, they said it is a reduction from 2021. Does the Chancellor recognise that we need to increase investment in R&D to encourage long-term investment in our leading services?
We were really pleased to announce an R&D budget of more than £20 billion at the autumn Budget. This is important to funding and accelerating R&D not just in the hon. Lady’s constituency but across the country. Combined with the corporate tax road map, as well as the commitment to continuing funding for Horizon, our universities and great innovators can look to the future with confidence.
Local leisure and sports facilities, such as the Sovereign centre where I learned to swim, deserve more long-term investment. I want Eastbourne to be able to invest its £20 million from the towns fund in such facilities, but it will not be unlocked by the Treasury until 2026. Will the Chancellor commit to accelerating the unlocking of that funding, so that we can invest in facilities for local families and people in Eastbourne much sooner?
I agree it is important that all children learn to swim, especially in our coastal communities. We had to make difficult decisions at the Budget, but I am happy to try to arrange a meeting between the hon. Gentleman and the relevant Minister to make sure the investment can go ahead at pace.
Business Rates: High Street Retailers
To deliver our manifesto pledge, we intend to introduce permanently lower tax rates for high street retail, hospitality and leisure properties from 2026-27. This tax cut must be sustainably funded, so we intend to introduce a higher rate on the most valuable properties—those with a rateable value of £500,000 or above—from 2026-27. The Non-Domestic Rating (Multipliers and Private Schools) Bill, introduced last month, will enable the Government to deliver these changes, and it will come into effect in April 2026.
High streets in my Pendle and Clitheroe constituency were hollowed out under the last Conservative Government, with many shops left empty. Small, independent businesses are the backbone of our local economy, employing local people, keeping our towns vibrant and giving them their character and charm. Can the Minister assure me that multinational giants will pay their fair share under Labour, levelling the playing field and enabling our high streets to thrive?
My hon. Friend is absolutely right about the importance of small, independent businesses in his constituency, and I am sure his sentiment is shared by Members across the House. Through our reforms, we are setting out to make sure that those properties with a rateable value of £500,000 or more pay so we can have a permanent tax cut for high street business. This category includes the large distribution warehouses used by online businesses, which will make sure that those online businesses make a fair contribution to ensuring that our high streets are the success we all want to see.
Ahead of Small Business Saturday, I congratulate St Martha Greek taverna in Nantwich on being the first winner of my Crewe and Nantwich small business of the month competition. Small businesses on our high streets, such as St Martha, regularly highlight business rates as a significant challenge, so what steps is the Minister taking to ensure that they can continue to thrive?
May I extend my congratulations to St Martha Greek taverna in Nantwich? Given the time, I am feeling a bit hungry now that we are talking about food. I reassure my hon. Friend that our plans to reform the business rates system would see a permanent tax cut for retail, hospitality and leisure businesses. While I do not know exactly the details or the rateable value of the property in question, I am sure properties like that would be eligible for the cut. It is crucial that we support those much-loved local businesses. I am glad he is doing all he can to champion them, and I look forward to my invite.
Many people in my community rely on in-person banking and access to cash. I was pleased to recently open the banking hub in Ossett town centre. Ossett was previously one of the 55 bankless towns in the UK. How are the Government looking to further support those who rely on those services, particularly in towns and rural villages?
My hon. Friend is right to highlight the importance to communities of having access to cash and banking services, which is why we have committed to rolling out more banking hubs across the country—100 by the end of this year and a total of 350 through our commitment. We want to work with local communities across the country to deliver that, so that all areas, like Ossett, can benefit from a local banking hub.
The heavy burden of business rates and the national insurance contributions that the Government are going to impose on small businesses is taxing businesses to death. Does the Minister recognise that in doing so, he is going to cause unemployment, higher inflation and lower growth, and that we are heading for higher taxes in future because of the downward economic spiral?
As the right hon. Gentleman will see in the National Insurance Contributions (Secondary Class 1 Contributions) Bill that we will be debating this afternoon, we have doubled the employment allowance to help small businesses to employ up to four people earning the national living wage without paying a penny in national insurance. That is dedicated support to help those small businesses, in the context of what, I admit, is a tough decision. If the right hon. Gentleman has a chance to contribute to the debate, he might say whether he supports the extra public services funding that comes from those difficult decisions.
Businesses like Mr Miles in Taunton High Street are being hit hard by the changes in taxes for hospitality businesses, including the increase in the wage bill and national insurance contributions, and the massive increase in business rates. That business is now considering reducing its opening hours, which would make our high street less vibrant than it should be. One challenge is the £50,000 rateable value limit for the discount, as many high street premises have a rateable value of more than £50,000. Will the Chancellor consider reviewing the limit placed on the business rates discount for small businesses?
As the hon. Gentleman will know, we set out our plans for reforming business rates to ensure that retail, hospitality and leisure properties on the high street with rateable values below £500,000 will benefit from a permanent tax cut from this Government. The importance of that tax cut being permanent is that it gives businesses the stability they need to invest and grow. I look forward to his support for our reforms when we vote on them in due course.
Management of Public Finances
Sound management of the public finances means spending wisely and not sending money to fraudsters. Today, I have appointed the health expert Tom Hayhoe as our new covid counter-fraud commissioner. As chair of an NHS trust during the pandemic, he saw the urgency of getting personal protective equipment to NHS staff when they needed it. Now he is at his desk in my Department starting the work to investigate the billions of pounds lost to fraud and underperforming contracts, and instead ensuring that that money is where it belongs—in our public services.
My constituents expect the Government to treat taxpayer money with the utmost respect. However, during the pandemic the Conservatives handed out contracts to their friends and donors and failed to prevent fraud, using the crisis as a cover for their greed. Does the Chancellor agree with me that that money belongs to the taxpayer?
My hon. Friend’s constituents in Thurrock are right to be angry about the waste and corruption that happened under the previous Government. That money belongs to the British people and in our public services, not in the pockets of fraudsters taking advantage of a national emergency. Tom Hayhoe will leave no stone unturned in investigating the carnival of fraud that the previous Government presided over, including in PPE contracts, where they recommended any attempts to reclaim that money be abandoned. Letting huge sums of taxpayers’ money be wasted would be egregious and I will not tolerate that.
The Treasury consistently insists that only 500 farms a year will be impacted by the family farm tax. However, the Central Association for Agricultural Valuers calculates that the real number will be five times higher and will include many farms in my Gordon and Buchan constituency. Who is right: the Treasury or the experts?
We have published the detail of how that money is raised, but the numbers from His Majesty’s Revenue and Customs are very clear: only a quarter of estates will pay any additional tax. At the moment, the vast majority of agricultural property relief is enjoyed by a very small number of very large and very expensive estates. That is not affordable, and it will not continue.
I declare an interest: I am a member of Unite the Union. The Grangemouth refinery costs £100 million a year to run, and its economic contribution to Scotland exceeds £400 million per annum. Unite has a credible plan to save the refinery and prevent thousands of job losses. Will the Treasury consider the plan, and meet me, Unite and the refinery owners to discuss its viability and Government intervention for the public good?
I am happy to arrange a meeting between my hon. Friend and the relevant Minister.
Last week, the Chancellor told the CBI conference that she would not come back
“with more borrowing or more taxes”.
Last Wednesday, the Prime Minister hung her out to dry and refused to repeat those words. Will she repeat them today and rule out any more borrowing or any more taxes—yes or no?
At the Budget in October, we had to fill a £22 billion black hole left by the previous Government. We will never have to repeat a Budget like this one, because we will not have to clear up the mess of the previous Government ever again.
I call the shadow Minister.
A cornerstone of sound management is economic certainty, but this Government seem to specialise in creating economic uncertainty; most recently they did so by delaying the date for the critical multi-year spending review. It looks like the Chancellor does not have a grip on either her Cabinet colleagues’ spending plans or her own plans for public sector productivity. Which is it—or is it both?
The hon. Gentleman talks about uncertainty, but he was a Minister in the Treasury under Liz Truss, when huge damage was done to families’ and businesses’ finances. Frankly, I will take no lessons from Conservative Members on how to run the economy. We have already done phase 1 of the spending review; phase 2 will begin shortly and be concluded next year, when we will make multi-year settlements on resource departmental expenditure limits and capital budgets for the next few years.
The Chancellor may find that in her job, she needs to listen and learn lessons. One of the many criticisms of the last Budget was that the Government fiddled the figures to borrow more money, and still left little headroom for if their forecast went wrong. Since the Budget, business confidence has collapsed, putting further pressure on that headroom. Does the Chancellor have a problem with balancing her books, and will she, like Oliver Twist, be coming back for more?
The hon. Gentleman will know that there is more headroom in our Budget in October than was left by the previous Government. The lesson I have learned is that I will never play fast and loose with the public finances, as the Conservative party did, because when it did, interest rates went through the roof and inflation topped 11%, and families and businesses in our country are still paying the price for its disastrous economic management.
Topical Questions
At the Budget, I wiped the slate clean after 14 years of chaos and mismanagement of our public finances, and I have brought stability back to our economy, so that we can get on with fulfilling our promise of delivering change. That means investing to fix the NHS and rebuild Britain, while ensuring that working people do not face higher taxes in their payslips.
Only through economic growth can we deliver on the promise of change. That is why we have wasted no time in delivering on the Government’s No. 1 mission. We have established the national wealth fund, have kick-started planning reforms to boost long-term growth, are developing an industrial strategy, and are announcing reforms for our world-leading financial services sector, including in pensions. I am under no illusion about the size and scale of the challenge that we face, and the struggles of working people. That is why we choose stability and investment. The Conservatives, however, choose chaos, austerity and decline.
According to the Local Government Association, local government spending on public services is down 42% on what it would have been had it kept pace with demand and costs since 2010. My local authority, Greenwich, faces a £3 million to £5 million gap in commissioned social care costs, and after 14 years of Tory austerity, there is very little headroom to bridge that gap. Does my right hon. Friend agree that local authorities need more assistance to bridge such gaps in the December local government finance statement?
As my hon. Friend will know, in the autumn Budget and phase 1 of the spending review, more than £1 billion was made available to local government, including £600 million for social care. The allocation of that money will be set out in the normal way over the next few weeks, so that local government is funded properly and can deliver the services that it needs to deliver.
I call the shadow Chancellor.
What a pleasure it is to appear opposite the right hon. Lady for the first time. I was tempted to ask her how things were going, but I did not want to start out by being unkind. I will instead ask this: when she recently pledged to the CBI that she would not raise taxes again, did she mean it?
I welcome the right hon. Member to his place, and look forward to many exchanges with him across the Dispatch Box. At the Budget in October, as he knows, we had to fix a £22 billion black hole in the public finances. Some of that black hole comes from the fact that we are the only G7 economy in which employment is lower than it was before the pandemic, when he was Secretary of State for Work and Pensions, so we had to raise taxes to fund our public services; but never again will we have to repeat a Budget like that one, because we have now wiped the slate clean and drawn a line under the mess created by the previous Government.
I did not actually discern any answer to my question, so may I put it this way? No. 10 has stated that it is not prepared to stand by the Chancellor’s commitment on tax. Is that because No. 10 changed its mind, or because the right hon. Lady spoke without thinking?
No Chancellor of the Exchequer would write five years’ worth of Budget in their first five months in post, but I can say that we will never have to deliver a Budget like that again. We took decisions in this Budget in order to wipe the slate clean after the mismanagement, decline and chaos of the previous Government. That required us to make difficult decisions, but we were right to make them, so that we can get going with our plans to achieve growth and reform public services, and deliver the NHS and schools that our country desperately needs.
My hon. Friend has campaigned extensively on this issue in his constituency. I understand that National Highways continues to develop proposals to improve the A50/A500 corridor through Uttoxeter. That is part of the pipeline of projects for future road investment strategies. He will know that in the Budget, we invested £1.6 billion to maintain and renew the nation’s local roads. That includes a £500 million increase in 2025-26 alone.
The tax rises in the Budget were used to provide a £22.6 billion uplift in the Department of Health and Social Care budget to ensure that our NHS is properly funded. The NHS will ensure that important services are properly funded, and those allocations will be set out in the normal way.
I will head to the Great Northern conference in Hull later this afternoon to speak about the impact of this Government’s policies on Yorkshire and the wider north of England. We are supporting local leaders and communities through integrated settlements, are investing in the trans-Pennine route upgrade, East West Rail and High Speed 2, and are reshaping public services.
Primary care providers have yearly negotiations with the Department on what services they provide and what money they are entitled to. More broadly, the reason why we are, in the Budget, taking difficult decisions about national insurance and other matters is precisely to fund the NHS, so that we have the health service that our country needs and deserves.
In the past four weeks since the Leader of the Opposition was elected, the Conservatives have made £7 billion of commitments to cut taxes, but with no idea of how they would cut public services to afford them. I do not know how they will vote on national insurance, but we can see pretty quickly how they ended up leaving us a £22 billion black hole.
The single most important factor in raising living standards, driving income equality and improving children’s life chances is having a job. Why is the Chancellor disregarding that fundamental truth, with tax policies that will actively harm employment, particularly youth employment?
If we look at the OBR forecasts for this Parliament, employment will increase from 33.1 million to 34.3 million. The right hon. Gentleman talks about youth employment. I suggest that he read our “Get Britain Working” White Paper, which sets out in detail what we will do to help get young people, and people suffering from ill health, back into work.
As my hon. Friend set out, the Government confirmed the introduction of a vaping products duty to ensure that young people and non-smokers do not take up vaping. Registration for the duty will open on the digital platform from 1 April 2026, and the duty will take effect from 1 October that year.
On economic black holes, the Labour Mayor of London thinks that Brexit punched a £40 billion black hole in the public finances. A very simple question for the Chancellor: has leaving the EU been a net positive or a net negative for the public finances?
The Government have no overall estimate of the impact of the UK’s exit from the EU, but the OBR has projected a 4% drop in productivity in the long term. That is why we are starting negotiations with the EU to improve trade in our mutual interest.
The Government recognise that ports are an important route to growth, which is why the national wealth fund will deploy at least £5.8 billion into five priority manifesto sectors, including ports. I would be happy to meet my hon. Friend to discuss that specific constituency issue in due course.
WealthTek was placed into administration by the Financial Conduct Authority after losing £80 million of its clients’ money. FCA-appointed administrators are now deducting fees from victims’ compensation. My constituents Dominic Knights and his wife have between them lost thousands of pounds. What is the Treasury doing to safeguard the £85,000 compensation limit?
The FCA is held to account by the Government and Parliament, but Treasury Ministers cannot comment on individual cases, and the Treasury has no stake in the operational issues of the FCA. I am very happy to meet with the right hon. Lady and the FCA to discuss that matter, but let me be clear: the FCA is an independent regulator.
I happily join my hon. Friend in welcoming Mansfield’s success. We have launched a revamped fair payment code, under which signatories commit to paying their suppliers on time, and the disability finance code for entrepreneurship. That comes on top of reforms announced at the Budget to protect small businesses, such as doubling the employment allowance to £10,500, and our commitment to maintaining the small profits rate and marginal relief at their current rates and thresholds, as well as to freezing the small business multiplier for 2025-26—
I call Greg Smith.
And like my hon. Friend, I look forward to small business Saturday this week—
Order. [Interruption.] No, we are going to have a little talk now, because this is not fair; I have to get all these other Members in. I understand that these are set questions, but questions and answers should be short—it works both ways—otherwise I cannot get Members in and it makes my job impossible. Please work with me.
The owners of a 380-acre farm in my constituency have worked out that they would have to spend 40 years paying back the money that they would have to borrow because of the changes to agricultural property relief. When will the Chancellor start listening to farmers rather than hiding behind Treasury figures?
We are taking an approach that balances significant tax relief for family farms with the need to fix the public finances in as fair a way as possible. The hon. Gentleman will have seen the data that the Treasury has put out, based on claims data from His Majesty’s Revenue and Customs. It shows how few farms will in fact be affected. The measures are a fair and balanced way to fix the public finances, which we desperately needed to do given our inheritance from the Conservative Government.
It is vital that we give value for taxpayers’ money, yet Conservative-run Norfolk county council’s doomed Norwich western link road is costing taxpayers £27,000 per day—that is nearly £50 million so far for not an inch of tarmac. Does my hon. Friend agree that the Norfolk Tories give us Liz Truss not just in Whitehall, but in county hall?
Minister, you’re running out of road.
The Government will always support local authorities to deliver good value for money road enhancements to support economic growth and improved connectivity. The Norwich western link road is currently the subject of a live planning application, so I am afraid that I cannot comment further on the specifics.
I cannot help but think that this morning has made for rather depressing listening. We hear this repetition about a £22 billion black hole, but we are dealing with very serious matters such as people’s employment. Ultimately I hear the Chancellor talking about a central planning agenda, but it is public services that are the problem; they are wasting money, and we must seriously consider that. Will the Chancellor accept, if the economy turns down next year, which it surely will, that she has made a mess of it?
We mention the £22 billion because that is the inheritance that the Government now have to address. We have published a line-by-line account of the £22 billion black hole that the previous Government left. We are now growing the economy through our national wealth fund, our planning reform and our pensions reform, and we are reforming our public services, so that we can deliver for the people we came here to represent.
As the Treasury team may be aware, there is a growing body of evidence that the growth of the financial sector beyond a certain size has an impact on the economy, particularly the productive economy. Over a 10-year period, it has cost the rest of the economy £4.5 trillion, so how will the Chancellor ensure that a growing financial sector will not harm the Government’s wider missions and the productive economy?
My hon. Friend will know that there is a long-standing debate about the relationship between financial and real economy growth, on which there is no consensus. The Government are clear that we see the financial services sector as a key part of our future economic success. The growth of the UK economy and our wider missions will not be achieved if we do not champion one of our biggest assets—the growth of the UK’s financial services sector—and mobilise it towards achieving those goals.
Achieving for Children is the arm’s length body of Richmond council that delivers its vital children’s services, yet because of the rise in employer’s national insurance, it now faces a staggering bill of £588,000 because the employees are not directly employed by Richmond council. When the Chancellor looks at her local government settlement, will she build in reimbursement for councils such as Richmond, or indeed exempt arm’s length bodies?
As the hon. Member will know, we announced in the Budget an increase in local government funding of 3.2% next year, and the Chancellor announced extra funding for early years providers to deliver Government-funded childcare places, meaning that total funding will be over £8 billion in 2025-26. I look forward to the hon. Member’s support for all that extra funding.
Today is International Day of Persons with Disabilities. With a disability employment gap of nearly 30% and a disability pay gap of nearly 14%, how is the Chancellor helping to address those inequalities?
Just today, the Government launched the disability finance code for entrepreneurship—something championed by my right hon. Friend the Secretary of State for Business and Trade—to ensure that people from all types of backgrounds, including those with disabilities, can start and grow their own businesses.
When the Windsor framework was introduced, it was accompanied by the boast that access to the EU single market would result in a huge increase in investment in Northern Ireland. Is the Chancellor aware that Invest NI has reported that there has been no upturn, and is that not because of the barrier presented by the Irish sea border to the bringing of raw materials into Northern Ireland from Great Britain?
The Government are committed to increasing the flow of investment to every nation and region of the United Kingdom, and we will continue to work with the Northern Ireland Executive to deliver that for the people of Northern Ireland.
Ukraine
(Urgent Question): To ask the Secretary of State for Foreign, Commonwealth and Development Affairs if he will make a statement on the war in Ukraine.
The UK’s support for Ukraine to defend itself against Russian aggression is ironclad. In July this year, the Government committed to provide Ukraine with £3 billion of military aid every year for as long as needed. In October, we announced that the UK Government would provide a further £2.26 billion as the UK’s contribution to the $50 billion G7 loan, earmarked as budgetary support for Ukraine’s military spending. This will be provided in addition to our bilateral military aid. We are also stepping up and speeding up delivery of our military support.
The UK is also leading the way in terms of pressure on Russia and Putin’s war machine. To date, we have sanctioned over 2,100 individuals and entities under the Russia sanctions regime. Sanctions have deprived Russia of over $400 billion since February 2022, equivalent to four more years of funding for the invasion. Putin’s problems are growing, with 700,000 casualties to date, voluntary recruitment down 40% and an unsustainable war economy. Russia has been forced to rely on Iran for missiles and on the Democratic People’s Republic of Korea for foot soldiers.
Our support to Ukraine is a core UK national interest. A Russian victory would diminish the west’s global standing, create a zone of instability on our eastern flank, and embolden Putin and other autocrats. This could require cold war levels of defence spending. On 19 November, we passed a grim milestone—1,000 days since Putin launched his full-scale invasion. Millions of Ukrainians have been displaced from their homes or forced into exile, and as we know from our constituencies, we have homes full of Ukrainian families.
The Prime Minister has made it clear that we need to double down on our support for Ukraine. As the Foreign Secretary told the United Nations Security Council last month, we stand with the people of Ukraine during this terrible period of its history. It is wonderful to have cross-party support for that, and for the support that the UK will deliver for as long as it takes until Ukraine prevails, to ensure that this can never happen again.
Thank you, Mr Speaker, for granting this urgent question. Following the Prime Minister’s comments yesterday, we need some clarity from the Government on their approach to Ukraine. At the Lord Mayor’s banquet, the Prime Minister said that it was important to
“put Ukraine in the strongest possible position for negotiations so that they can secure a just and lasting peace on their terms”.
We can all agree that Ukrainians must be able to determine their own future. I am sure the Minister recognises that the language used by the Prime Minister yesterday evening at the Lord Mayor’s banquet about negotiations is new.
On 21 November in the House, the Prime Minister made no reference to negotiations for peace, stating:
“We have consistently said that we will do what it takes to support Ukraine and put it in the best possible position going into the winter”,
and that
“Russia could roll back its forces and end this war tomorrow.”—[Official Report, 21 November 2024; Vol. 757, c. 373.]
As the Minister pointed out, the Foreign Secretary stated here on 19 November:
“The final truth is that Putin has no interest in a just peace.”—[Official Report, 19 November 2024; Vol. 757, c. 163.]
We all agree that putting Ukraine in the strongest possible position to counter Russia’s illegal invasion is right. We are all proud in this House, across this Government and the previous Government, of how we have led on that support to Ukraine and its people. However, if the Government are framing that through the lens of negotiation, does the Minister believe that that represents a departure from the current approach and from the statements issued in this House?
The Minister will herself have seen President Zelensky’s latest remarks about NATO membership. It is important for NATO to speak with one voice on these matters, and this unity is absolutely crucial, so can the Minister update the House on the Government’s current position on Ukraine acceding to NATO?
We all continue to see more appalling brutality from Putin, with his pummelling of civilians and Ukraine’s energy systems constantly as winter kicks in, which is starting to hurt the people of Ukraine. The misery that that could inflict is the most atrocious form of psychological and physical warfare. The UK has led so much on Ukraine, so can the Minister confirm whether the Government are looking at what more can be done to protect Ukraine’s energy infrastructure? Can she reassure the House that we will keep on doing everything we can do to support the defence of freedom in Ukraine?
I reassure the right hon. Lady that there is no change in the UK position. We have always said that we will support Ukraine to achieve a just peace on its own terms. The PM has been clear, including in his speech last night, that
“we must continue to back Ukraine and do what it takes to support…self-defence for as long as it takes”,
because it is for Ukraine to determine its position in any future discussions. Putin cannot be trusted—Russia has violated multiple previous agreements—and the clearest path to peace is for Russia to withdraw its troops from Ukraine tomorrow and respect Ukrainian borders.
On the NATO membership question that the right hon. Lady poses, Ukraine’s place is in NATO. The allies agreed in Washington on 10 July that Ukraine is on an
“irreversible path to full Euro-Atlantic integration, including NATO membership”,
and the UK fully supports that goal.
I call the Chair of the Foreign Affairs Committee.
While Europeans spend barely the cost of two cups of coffee a week on support for the war in Ukraine, 41% of Russia’s total expenditure is spent on the war. They have had to cut social security and raise taxes to pay for the war effort. While speculation about the future of the war is understandable in the current circumstances, it is really important that we remain firm. Does my hon. Friend agree that we must remain steadfast in our support for Ukraine? We stand with Ukraine.
The Chair of the Foreign Affairs Committee, and its members, heard from the Foreign Secretary last week about the UK’s steadfast support for Ukraine and our strong friendship. I am sure my right hon. Friend the Select Committee Chair is aware of that given all the Ukrainians who are based in homes in her constituency, and I reassure her that we will be steadfast and keep the support going for as long as it takes.
I call the Liberal Democrat spokesperson.
We are watching with grave concern the most recent developments in Ukraine, and the attacks on its energy networks at the weekend show that Putin has no concern for non-combatants. The use by Russia of a hypersonic missile and the alleged change in Russia’s nuclear doctrine are clear efforts to intimidate Ukraine’s partners. Does the Minister agree that we must stand firm in our support for Ukraine?
President-elect Trump has said that he will end the war within 24 hours, and Vice President-elect Vance has said that Ukraine must give up its territory in negotiations, but ceding any territory will only give the wrong signal to other autocratic regimes around the world. We must urgently repair our broken relationship with our European allies to ensure that we act united in support of Ukraine, regardless of Trump’s potential actions. What is being done to strengthen the UK’s commitments and contribution to European collective security to support Ukraine?
We support the Bill to release the interest on frozen Russian assets that are held in the UK to help Ukraine, but will the Minister commit to work with allies to mobilise the principal, not the interest, on more than $300 billion of assets, so that there is a plan B if America withdraws financial support?
I thank the hon. Lady for her meaty contribution. On energy, the UK has provided more than £370 million for energy security and resilience in Ukraine through grant, in-kind support, and loan guarantees. That includes £64 million to support Ukraine to repair, protect and replace energy infrastructure targeted by Russian strikes. There is nothing worse than seeing families in darkness during conflict.
On Russian assets, we are pleased that our sanctions regime has respect across the globe. That began under the previous Government and enjoyed cross-party support throughout the last Parliament, and it continues to enjoy support. Our best legal minds are designing out the fraud and kleptocracy that for so many years has dogged our economy—that is a personal priority of the Foreign Secretary. Right down to the proceeds of Chelsea football club, we are fighting every inch to ensure that money from those assets goes straight back into supporting Ukrainians.
I agree wholeheartedly with the Prime Minister’s comments last night that we need a just and lasting peace for Ukraine on its terms, and in any negotiations that should be the central position. Following the election of President Trump, what discussions have the Government had with our international partners about the potential impact of that on Ukraine, especially given reports from Kursk in Russia that certain troops are holding on to their positions, waiting on the outcome of the incoming Trump Administration’s thoughts on negotiations?
I thank the Chair of the Defence Committee for his questions. We are all watching closely what is happening in Kursk, and we are extremely concerned by the additional forces from the Democratic People’s Republic of Korea, who are estimated to be around 10,000 in number. It is so sad to see the strong potential for those young men to be victims of this war. We are also aware that it will be a tough few months while we re-establish our joint working with all partners across the US, the UK and Europe, but of this we can be sure: it is not a good sign or a good message for anyone to see that an aggressive invasion, such as Putin’s invasion across the borders of Ukraine, can somehow be the right thing or that it can be successful. We must use all our diplomatic tools across the Chamber to speak to friends in the UK and the US who have great friendships with the people of Ukraine and to continue to make the case for the men, women and children of Ukraine.
It is excellent to see all Front-Bench spokesmen, including the Minister, so united on this question. Does she accept that Putin has made his attitude to the independence of Ukraine—namely, that it should cease to exist as an independent nation—crystal clear, and therefore any enforced treaty to which he is a signatory is utterly and completely worthless?
The right hon. Gentleman makes an important point about the psychology of this conflict. It is why it is so important, particularly in these desperate winter months, that we remain firm. I commend him and others for all their work on the all-party parliamentary group on Ukraine, and all their work on security and intelligence, to provide that important, dedicated cross-party support to Ukraine. In the end, we know that it is for Ukraine to determine its position on its future, its just peace and its vision for its own people, but we will be behind the Ukrainians so that they know we can be relied on.
I was heartened to hear the Minister say that we would support the self-defence of Ukraine for as long as it takes. One of the most important aspects of that is the development of new military technology, particularly through joint ventures between the UK and Ukraine on areas such as drones and unmanned aerial vehicles. One such example is the Black Arrow project. The first stage of that project has been completed and the drones have been manufactured, but they have been stuck here since May this year, because no export control licence has been granted. Will the Minister implore her colleagues in the Department for Business and Trade to facilitate those licences quickly, as those drones will help not just the defence of Ukraine, but our sovereign manufacturing capability for defence?
I commend the chair of the all-party parliamentary group on Ukraine not just for his very long train trips across Ukraine to visit and offer his support, but for his technical knowledge. If he will give me permission, I will write to him with details of exactly where the project is at, so that he can give reassurance to all of his many followers in Ukraine.
Today, the BBC is reporting a Russian submarine sailing between Japanese islands and close to Taiwan. Last month, we had reports of a Russian ship being monitored by HMS Cattistock near our own UK waters. How concerned should we be that Russia is flexing its muscles? Will the UK be stepping up its direct support to Ukraine and making our troops, particularly our Royal Navy, ready for additional patrols and potential direct involvement to defend our allies and our shores?
I thank the hon. Lady for her detailed knowledge and her question. We know that the Euro-Atlantic and Indo-Pacific work closely together on all these Navy questions. I would not want to give anything specific away at the Dispatch Box that might help President Putin, but it is good to see that she is monitoring that. It is so important that we continue to work together, whether that is through the training of forces on the ground, air defence or Navy assets.
It is clearly more important than ever that the UK works closely with our European friends and allies as we face the common threat of Russian aggression. Can my hon. Friend outline how the Government intend to strengthen co-operation with the EU on the security challenges that we all face?
My hon. Friend will be aware that just last week, Germany made an important announcement about continuing military support. There has been a step change, particularly in light of the importance of the defence of Europe. Having a war on European soil is so instructive, and I think people are slowly coming to the table. It is clear that the UK has a real leadership position, and that is why the EU-UK security pact work is so important. The Europe Minister, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), is working hard to develop that. As Members will be aware, we have just announced more collaboration with Germany where possible, and specifically in relation to Ukraine. In general, the UK has so much to offer the EU in that regard. We know that the ongoing conversations we are having more holistically about EU-UK relations are enriched by our defence capability.
I congratulate the shadow Foreign Secretary, the right hon. Member for Witham (Priti Patel), on securing this urgent question, and I thank the Minister for her statement. We are just past the anniversary of when Ukraine voted for independence. To remind everybody, every single part of Ukraine voted for independence. Does she agree, and will she remind any incoming Administration anywhere—perhaps in the United States—that the territorial integrity of Ukraine is set in international law and must be respected?
The key words are “respecting borders”, and that is where the neocolonial philosophy of President Putin, as he laid out originally in that seminal essay before the war, shows how completely at odds with the modern viewpoint he is. Yes, we will support Ukraine on its vision of its own borders, its own strength and its own sovereignty.
It can feel, with Russian submarines recceing our waters, with North Korean troops fighting for Russia and with Iranian drones causing the death of Ukrainians, that Russia wants a bigger war. We must deter it. That is why we must absolutely drive a victory for Ukraine—a total victory. Does the Minister agree with me and General George Marshall that the best way to win a war is to prevent it in the first place?
I thank my hon. and gallant Friend for his service to the UK and for his intimate knowledge of what it actually means to be at war, and therefore to talk about deterrence. I am committed, as is the whole Front-Bench team, to working as closely as possible on all the international friendships and treaties and the pressure that we can bring to bear, so that we can achieve a lasting peace together and be behind Ukraine as it steps forward into a very uncertain future.
One aspect of support that the UK could offer Ukraine is expired medical equipment and dressings. A charity based in Axminster in my constituency, called Medics4Ukraine, has just got back from Odesa. It has been training municipal workers, and it says that it needs dressings, haemostatic dressings and gauzes. Will she speak to her counterparts in the Department of Health and Social Care to see whether some of the expired items could be released for that purpose?
I refer the hon. and gallant Gentleman to the discussion in the Adjournment debate last night on medical assistance in conflict. The UK has an enormous amount of resource in that area. I will certainly look into what is possible and write to him with what we are already doing in relation to Ukraine.
I very much welcome the statement, the ongoing commitment we have seen from this Government and the co-operation with the previous Government on Ukraine, because it is not just about security in Europe, as these things are in our self-interest. May I impress on the Minister that if Ukraine is allowed to fall, it will not just be a European problem? So much grain that is grown in Ukraine finds its way to Africa. If Ukraine falls, people in Africa will starve, too.
I thank my hon. Friend for making an important point. We all watched two summers ago with bated breath as the Black sea grain negotiations occurred, and the impact of missing out on that important agricultural wealth in Ukraine, and the deleterious effect it had on developing nations, were of concern to all in this House. He is right to speak about the knock-on effects of conflict. We must redouble our efforts to stop that happening.
Many of the Ukrainian refugees living in my constituency have expressed relief and gratitude that there has been continuity of policy in still supporting Ukraine with the change of Government. But at a time when Russia is finding that its economy is affected by the war and is having to rely on Iran, China and Korea to continue the war, does the Minister think it unwise to start talking of negotiations about land and so on, which will only encourage Putin and his regime? Should we not be talking about increasing the resolve of our partners, giving military support and seizing Russian assets to let Ukraine use them?
There is no change in the UK position; we have always said that we will support Ukraine to achieve a just peace on its own terms. The Prime Minister has been clear, including in his speech last night, that we must continue to back Ukraine and do what it takes to support its self-defence for as long as it takes.
The Chair of the Foreign Affairs Committee made a strong case about the financial pressure that Russia finds itself in. What additional pressure can we place on Russia? Are there any plans to introduce a sanctions Bill?
I thank my hon. Friend, the Chair of the Work and Pensions Committee—we have a good showing of Select Committee Chairs in the House today. I reassure her that the UK has imposed measures on over 2,100 individuals and entities, the most wide-ranging sanctions ever imposed on a major economy. Most recently, we have imposed sanctions against 69 vessels in Russia’s shadow fleet transporting Russian oil outside G7 sanctions. May I say how pleased I am—I am sure that I speak for everybody across the House—that through our leadership on sanctions, with our best legal minds, we have managed to bring in all those financial penalties against the aggressor?
I thank the Minister for her answers. President Zelensky has been clear that NATO membership must mean article 5 including the entirety of Ukraine territories. What discussion has the FCDO, and perhaps the Minister, had with our NATO allies to ensure that that is the case? Will she commit in particular to discussing the issue with the current and incoming US Secretaries of State to ensure that a co-ordinated approach is taken on behalf of Ukraine?
As the hon. Member is aware, Ukraine’s place is in NATO; it has said so itself. He supports that principle. Allies agreed in Washington on 10 July that Ukraine is on an irreversible path to full Euro-Atlantic integration, including NATO membership. Of course, the UK fully supports that goal. The hon. Member plays an important role in that because in the US there are important Irish counterparts, or those who might have heritage there, who will want to hear from him to lay out the case for supporting Ukraine.
Given the NATO Secretary-General’s recent warning about a growing alliance between China, Russia, Iran and North Korea, will the Minister clarify what work the UK is doing to counter that threat?
As my hon. Friend might have gathered, it is from a position of weakness that those countries are being relied on to shore up support. That is why it is so important that we look holistically at our sanctions regime, which cannot be just about the current conflict. It must also be about how we stop the Iranian military juggernaut and how we look at the military industrial complex, which works across all sorts of different regimes. That is why it is also so important to understand how the economies of the DPRK can tip into Russia and for us to work with countries who support us and do not support that particular access so that we can win the argument as well as the battle.
I am grateful to the Minister for the clarity she has brought to the urgent question. I do not think anyone in the House agrees that Vladimir Putin can be allowed to get away with taking even a single inch of territory in Ukraine, and I do not think that anyone is not alive to the danger of giving people like that what they want—they always come back for more. Given those facts, will she confirm that we will back Ukraine for as long as it takes, and that any eventual deal will be completed entirely on Ukraine’s terms and not on Russia’s?
Of course. That is why we have supported Ukraine as it has made the case for wanting to be in NATO and as it has made the case for being as close as possible to friends in Europe. That is why we have supported the Ukrainians in their requests for either military or non-military aid. That is why we have implored others, even as far away as the Indo-Pacific, to assist in this push to ensure that there is as much support as possible to stand up to bullies.
Georgia
(Urgent question): To ask the Secretary of State for Foreign, Commonwealth and Development Affairs if he will make a statement on the outcome of the parliamentary elections in Georgia.
I thank the hon. Gentleman for his question. Following the elections in Georgia on 26 October, the Minister for Europe, North America and the Overseas Territories, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), made clear our support for the findings of the OSCE office for democratic institutions and human rights’ election monitoring mission preliminary report on the election. That report highlighted a range of concerns, including frequent breaches of voter secrecy, procedural inconsistencies and reports of intimidation and pressure on voters, which had a negative impact on public trust in the process. This has seriously damaged Georgia’s international reputation. I hereby reiterate our call on the Government of Georgia to implement the recommendations issued by the OSCE monitoring mission after the publication of its final report.
Georgia and the UK have enjoyed a long history of close bilateral relations, and we have fully supported Georgia’s Euro-Atlantic aspirations in line with the strong will of the Georgian people and previously supported the Georgian Government’s reform agenda. However, since gaining EU accession status almost one year ago, several measures introduced by the Georgian Government have taken the country on a harmful trajectory away from European values, and we have seen an increase in anti-western rhetoric by the Government.
The Minister for Europe, North America and the Overseas Territories spoke to Georgian Foreign Minister Darchiashvili on 9 October to relay the UK’s concerns about the introduction of a law on transparency and foreign influence and a law on family values. On 11 October, we reiterated our concern as to how that contributed to pressure on civil society and human rights. Those actions undermine Georgian citizens’ clear ambition for a modern, inclusive Euro-Atlantic future and jeopardise the UK's close partnership with the Georgian Dream Government. People in Georgia are making clear their opposition to Georgian Dream’s decision to pause the country’s further moves towards a European future.
I am deeply concerned by reports of excessive use of force by Georgian police against protesters exercising legitimate democratic rights. This morning, the Minister for Europe, North America and the Overseas Territories released a statement condemning the use of brutal force that has continued over recent days. We have called on the Georgian authorities to de-escalate the situation and reverse their harmful trajectory away from European values. Continued steps away from democratic norms and freedoms will serve only to harm Georgia’s international reputation and risk fundamentally damaging relations with Georgia’s friends and partners. The UK Government have already decided to review their relations with the Georgian Government, including by freezing our annual Wardrop strategic dialogue until we see signs of a reversal of this anti-democratic slide.
First, thank you for granting this urgent question, Mr Speaker. As you will be aware, people across the Chamber have friends in Georgia, who will be reassured that we have taken the time to discuss this matter. I refer the House to my entry in the Register of Members’ Financial Interests as a trustee of the John Smith Trust, which has done fantastic work in Georgia and elsewhere. I hope you do not mind me mentioning that.
Georgia is a country in which I have lived and worked; I know that other colleagues have done so as well. Like others in the Chamber, I care for it deeply. I thank the Minister for her statement. I highlight the work that she mentioned of her ministerial colleagues, the excellent work of the embassy in Tbilisi, and UK-based international non-governmental organisations, who have done fantastic work for years.
We have been so disturbed in the aftermath of the elections. The dangers of destabilisation in Georgia are acute when 20% of Georgia’s territory is still under Russian control—it is occupied.
Further to her statement, will the Minister tell us what discussions she has had with European partners over Georgia’s EU accession, which is vital to its long-term stability, and what work is ongoing to ensure that the rule of law is enshrined and fortified and to protect the freedom of the media and journalists and the freedom to protest? Finally, having visited the border with Russia recently, I ask the Minister what work is being done to ensure that Georgia maintains sanctions on Russia regardless of the Administration in Tbilisi.
I thank the hon. Gentleman for his commitment to and intimate knowledge of Georgia. I underline the importance of his points on the freedom of the press—we need to know what is happening—and the freedom to protest. Emotions were running high following the election campaign, but police brutality is never acceptable. It is so important that people who wish to are able to express their views safely. I thank him for putting that on the record.
On the discussions the Minister for Europe, North America and the Overseas Territories has had, the hon. Gentleman underlined the importance of UK support for the democratic process and spoke about the irregularities during the election campaign, which worried us, as partners during the election proceedings. As he will be aware, we have called for an investigation into those irregularities so we can be clear that the results were correct. We have taken the decision to pause our discussions at a political level until there is more stability; in that time, we will see how things develop with the forming of the new Government, and so on. The hon. Gentleman is right to lay out his concerns. We will relay them not just from ourselves as a Government, but from this Parliament.
I call the Chair of the Foreign Affairs Committee.
I read with some alarm the reports about the Georgian elections, including a report by the OSCE on vote buying, multi-voting, Russian disinformation and intimidation. Is the Minister aware that the European Parliament passed a motion last Thursday stating that the elections had been neither free nor fair, and should be rerun? Is the British position the same?
I thank the Chair of the Foreign Affairs Committee for her intimate knowledge of the elections in Georgia. Our current position is to monitor the situation. We are looking carefully at what our European partners say, but we are also encouraging the Georgian authorities to determine any complaints, as there have been a number of complaints about irregularities. We are clear that all irregularities should be thoroughly investigated. In addition, we are calling for demonstrations to be peaceful, an end to any police brutality, the exercise of restraint, and respect for the process of the formation of a new Government. While we are not calling for a rerun of the election, we want to know the outcome of the investigation into those irregularities.
I call the Opposition spokesperson.
I am grateful to the Minister for her remarks so far. The shocking and disturbing scenes in Georgia have been hard for all to witness, and I note the statement put out by the Foreign Office this morning. We share the Government’s deep anxiety over the situation in Georgia.
What is happening in Georgia matters. From the law on foreign influence to election irregularities and the excessive use of force in recent days against protesters and journalists, we are witnessing Georgia being dragged down a dangerous path. It matters for the Georgian people, for our important bilateral relationship, and for the wider Euro-Atlantic community, which sincerely seeks closer ties and a deeper friendship with Georgia. Our clear and unambiguous aim should be to support the Georgian people, and that includes their desire for a future rooted in the Euro-Atlantic community.
Will the Minister confirm she has told her Georgian counterpart, in no uncertain terms, that they need to tone down the aggressive rhetoric, de-escalate the situation on the streets and stop blaming others for the current tensions? Will she also commit to pulling every diplomatic lever to support the Georgian people as they go through this dark period?
Finally, and more broadly, I will circle back to the question I asked last week at Foreign Office questions, because this is a clear example of the dangers of Europe becoming a more contested space. Will the Minister urgently come forward with a plan that builds on the work of the previous Government to be more muscular in leveraging our soft power, so that we can counter attempts to sow division and instead bang the drum for the Euro-Atlantic community? We need to demonstrate to countries in Europe and around the world that a partnership with us, and choosing democracy and openness, is the best route to prosperity.
We believe that the Georgian authorities must investigate all irregularities and reverse the declining commitment to democracy, as the right hon. Lady has laid out. We fully support Georgia’s Euro-Atlantic aspirations, in line with the strong will of the Georgian people. Georgia is a valuable international security partner in the south Caucasus with which we enjoy a long history and close bilateral relations. We are therefore redoubling our efforts to connect with Georgians, to encourage restraint and peaceful demonstrations, and to encourage the investigation of those irregularities, so that there can be no doubt about what actually happened at the recent elections. The UK remains resolutely committed to Georgia’s independence and territorial integrity within its internationally recognised borders.
The right hon. Lady asked about soft power. Of course, in this House we all know the importance of soft power. That is why we are working hard with the British Council and groups that support democracy and young people in different democracies. Following 14 difficult years for soft power in the UK, when all funding was drained away from our important soft power organisations, that is also why we are seeking to rebuild our reputation for soft power, where perhaps we have stepped backwards a little over the past few years.
My Georgian friends and colleagues in civil society, with whom I have worked for many years, are calling this a Maidan moment for the country. Protesters have been brutally assaulted, and there have been reports of journalists being hospitalised. Given that many Georgian Dream officials have ties to the UK, will the Minister say whether, if this continues, the full range of Government tools will be considered? Sanctions, visa bans or financial restrictions, for example, would hit those responsible where it really hurts.
I thank my hon. Friend, who chairs the all-party parliamentary group on anti-corruption and responsible tax, for his pointed question and his support for freedom of the press. We know that journalists must be free to report the facts. Although he tempts me to speculate, he knows that I will not go there on any future sanctions arrangements; we always keep those quiet until we make the announcement, for obvious reasons. He commented on the backsliding on freedom of the press and on the links between Georgia and the UK, which we will certainly investigate. If he has specific questions or concerns in relation to those matters, could he write to us so that we can investigate?
I call the Liberal Democrat spokesperson.
The suspension of Georgia’s EU accession process is the latest troubling step taken by the pro-Russian Georgian Government, and I welcome the assurance that the Government are pressing for the investigation of irregularities in that election. However, the use of excessive force against protesters and journalists is unacceptable. Political and democratic rights should be protected, and free and open political protests must be permitted.
What further steps can the UK Government take to raise these issues with the Georgian Government? The US has decided to suspend its strategic partnership with Georgia. I heard the Minister say that the Government are pausing UK engagement, so will she tell the House under what conditions she would follow the US and go further to formally suspend the UK’s strategic partnership?
Finally, the UK and the EU must speak with one voice in opposing democratic backsliding and Russian interference in Georgia. How is the Minister strengthening the UK’s dialogue with our EU partners to roll back Russian influence and support democratic groups in Georgia?
I thank the Liberal Democrat spokesperson for his fulsome questions. With regard to our involvement in the region, we backed and paid for observers for the election period. We are waiting to hear about the investigation into irregularities. The current UK position is that, due to our growing concerns over Georgia’s negative Euro-Atlantic trajectory—going away from the EU—and democratic backsliding, including on the laws on transparency, foreign influence and family values, in June the UK decided to freeze the annual Wardrop UK-Georgia strategic dialogue and defence staff talks. We use a suspension initially because we want to appear reasonable, and we want Georgia to be reasonable back, but that does not preclude future more definitive actions if necessary.
The Minister will be aware of widespread reports of vote buying, ballot stuffing and carousel voting—people voting multiple times—in the Georgian election. It comes just a few weeks after very similar reports from Moldova where, again, there was massive electoral interference. What more can we do to help countries that are trying to move away from Russia’s orbit and become more democratic, and to stop Russian interference in those elections?