Order. I know it is the first Wednesday back; we are all excitable. Let us have a little calm, so that I can hear the Minister. Come on, Minister.
As we know, the world has faced surging energy prices since Putin’s illegal invasion of Ukraine. We have seen very high inflation across the western world, and we have seen a cycle of increasing interest rates across western economies as well—across many western economies. But let me reassure the House that the fundamentals of the United Kingdom’s economy remain resilient. Unemployment, at 3.5%, is the lowest it has been in my lifetime—and for the record, I was born in 1976. Economic growth last year, the calendar year 2021, was the highest of any G7 country—7.5%. Just yesterday the IMF forecast that economic growth—GDP growth—this current year in the UK would be at 3.6%—once again, for the second consecutive year, the highest of any G7 country. So our economy is in resilient condition.
But I know that many families are worried about the challenges we face, and that is why, just a few weeks ago—two or three weeks ago—we introduced the energy price guarantee. Families were genuinely fearful that they might face this winter energy bills of three, four, five, six or even seven thousand pounds per year, but that energy price guarantee will ensure that the average household sees energy prices no higher than £2,500 on average—not for six months, like the Labour plan, but for two years.
We also introduced a growth plan to get our economy growing, to see wages sustainably rising, to see good jobs created and to create a sustainable tax base to fund our public services. This Government have a growth plan; the Opposition have no plan.
We intend to do this in a way that is fiscally responsible, and that is why—[Interruption.]—and that is why, on
People are facing insecurity, instability and deep anxiety and they deserve answers. Conservative economic policy has caused mayhem with financial markets, pushed up mortgage costs and put pension funds in peril, and it has wiped £300 billion off the UK’s stock and bond markets—all directly caused by the choices of this Government. The mini-Budget, just 19 days ago, was a bonfire made up of unfunded tax cuts, excessive borrowing and repeated undermining of economic institutions. It was built and then set ablaze by a Conservative party totally out of control—not “disrupters” but pyromaniacs. And that fire has now spread. Yet Government deny all responsibility.
So will the Minister tell the House, what guarantees will the Government give that the currency slide will stop, and that people’s pensions are safe? How do they expect people to pay £500 more a month, on average, on their mortgages? How many more repossessions of family homes will there be if the Government do not change course? How much more are the Government spending on debt interest because of higher borrowing costs?
While Ministers desperately try to blame global conditions, why is it that no other central bank in the world has had to step in three times in less than three weeks to protect financial stability?
The country now faces a very serious situation. Ahead of the ending of the Bank of England’s emergency operations this Friday, what action will the Government take to ensure that their Budget does not have further consequences for financial stability, or for people’s pensions?
This is a Tory crisis made in Downing Street, but it is ordinary working people who are paying the price. It can be resolved only when the Conservatives put aside their pride and reverse this catastrophic mini-Budget, and they must do so now.
The shadow Chancellor calls for a reversal of the growth plan, yet at the first opportunity—last night—the Labour party voted for it. She asks about mortgage rates, so let me point out to her that mortgage rates around the world have been on an upward trajectory all year. In fact, if we compare base rates in the United Kingdom with those in the United States, we see that in both countries, as she will be aware, the base rate started this year at 0.25%. In the UK the base rate is currently 2.25%, and in the US it is 3.25%, a full percentage point higher.
The shadow Chancellor referenced borrowing costs. I am sure she is aware that two-year Government bond yields are about the same in the US as they are in the UK—US bond yields have been going up over the course of this year as well. She referenced the currency: the dollar has shown strength against a basket of currencies throughout this calendar year. If she looks at the dollar strengthening against the euro, she will see that it strengthened about 15% this calendar year, and strengthened about 15% against sterling—very similar figures.
The shadow Chancellor also asked about the cost of living. We are very mindful of that, which is why we have introduced a £37 billion package to help people, disproportionately targeted at those on lower incomes, so that people on the lowest third of incomes receive £1,200. It is why we introduced the energy price guarantee on our second or third day in office, ensuring that people do not pay, on average, more than £2,500, instead of facing bills of £5,000 or £6,000—and not for six months, as the Labour party offered, but for two years. It is why the national minimum wage was increased by a large amount last April. It is why the national insurance threshold was increased to £12,500 in July, so people on lower incomes now pay virtually no national insurance or income tax. That is the package of measures that this Government have introduced, because we stand on the side of working people and have taken the steps needed to support them.
My right hon. Friend the Chancellor was quite right to bring forward the date for the medium-term fiscal plan and the Office for Budget Responsibility forecast. He now has, of course, a huge challenge in landing those plans in order to reassure the markets. He has to get the fiscal rules right and come forward with spending restraint and revenue raisers that are politically deliverable. Given the huge challenges, there are many—myself included—who believe it is quite possible that he will simply have to come forward with a further rowing back on the tax announcements he made on
I thank my right hon. Friend the Chair of the Select Committee for his counsel, which the Chancellor always listens to very carefully. The Chair of the Select Committee, along with others, suggested publicly that the date for the medium-term fiscal plan should be brought forward, and the Chancellor listened to him and responded by bringing the date forward from
There are no plans to reverse any of the tax measures announced in the growth plan. There is, I think, a measure of consensus—indeed, the Labour party voted only last night for the reduction in national insurance. We want to ensure that the UK is a competitive jurisdiction that companies and high-potential individuals who are internationally mobile choose to come to, to locate and grow. However, as the Select Committee Chair says, we of course need to do so in a way that is fiscally responsible, to ensure that debt over GDP falls in the medium term. The plan will lay out to the House in detail exactly how that will be achieved, scored by the OBR, on
The Treasury Committee took evidence this morning from a range of economists, all of whom echoed the concerns of the public about the chaos that this shambolic UK Tory Government have created. I am not sure whether the Minister considers Deutsche Bank as part of his anti-growth coalition, but its chief economist, Sanjay Raja, was very clear this morning that the UK has particular characteristics that are making this crisis worse. He said, “you’ve got a sidelined fiscal watchdog, you’ve got the lack of a medium-term fiscal plan, one of the largest unfunded tax cuts and package of measures since the early 1970s, and it’s sort of the straw that broke the camel’s back.”
This is chaos that the Minister and his colleagues have deliberately created, and it is impacting people and businesses across these islands, so I ask him: will he bring more money to the devolved institutions to help them tackle the chaos that he and his colleagues have created? Will he commit to uprating benefits by inflation and giving more support to those in the asylum system and those on “no recourse to public funds”? Will he bring certainty to businesses that do not yet know what will happen at the end of the six-month reprieve, because those bills have not gone away?
The Glasgow Centre for Population Health published some research that attributed about 330,000 excess deaths since 2010 to austerity—the Tory austerity by the Minister and his colleagues over the past 12 years—so will he cancel any further cuts, because they cost Scotland and our neighbours far more than we can ever afford? Scotland did not want this, did not vote for this and cannot trust in the financial stability of the UK, never mind this Tory Government.
Order. I have the greatest respect for the hon. Lady, but can I just say that she knows the rules give her one minute, not one minute and 45 seconds or two minutes? Please, let us stick to the rules of the House.
The Scottish Government are of course receiving record levels of funding, and that will continue. The hon. Member asked about excess deaths. Well, I think the drug death record of the nationalist Government is, frankly, pretty terrible. She asked about the uprating to welfare. There is a statutory process that happens every year—every autumn—and that decision has not been taken. It will happen in the normal way, as it has been done for every year.
The hon. Member referenced the IMF’s growth forecast for next year. I have already pointed out that last year we had the highest growth in the G7 and this year we have the highest growth in the G7. If we take the three years together—last year, this year and next year—we will find that the UK, at 11.7% over those three years, still has the highest growth of any G7 country.
The hon. Member asked about institutions. The Chancellor and the Prime Minister have the highest regard for the OBR and the Bank of England. They are meeting both of those institutions regularly. She referenced the growth plan. Having a competitive tax system, supply-side reforms to unleash the productive potential of our economy and making our energy market function properly once again are essential prerequisites for growth, and I am proud that it is this Government who are promoting them.
I am disappointed at the shadow Chancellor, who is a very good economist. She is accusing the Government of causing problems for people’s mortgage rates, but my right hon. Friend will agree with me, I am sure, that one of the worst things that can hit any economy is a wage-price spiral as a result of huge inflation. Can he confirm to the House that the action the Government have taken to provide support to the economy and to provide this huge input in relation to energy prices will bring down headline inflation, and specifically make mortgage rates better than they would have been otherwise, which is totally the opposite of what the shadow Chancellor is saying?
My right hon. Friend, who of course has a very distinguished professional track record in financial services, is absolutely right. A range of independent forecasters have confirmed that the energy price guarantee will not only protect our constituents from high prices, but lower inflation by about 5% compared with where it would otherwise have been—a vital intervention. While we are on the subject of inflation, it is worth keeping in mind that inflation in many countries in continental Europe is considerably higher than it is in the United Kingdom. For example, in Germany it is 10.9% and in Holland it is 14%.
The Minister has made great play of supporting people with their energy bills, but businesses only get support until March. The Government also make great play of creating growth. Many of the businesses in my constituency, particularly hospitality businesses, with a guarantee on their energy bills only until March, are making decisions in the coming weeks about whether they will be able to stay open and continue to be employers. How does that help growth, and will he give them some guarantee from March onwards?
The hon. Lady raises questions about timeframes. Of course, the Labour proposal was only for six months for consumers and businesses, and I did not hear her criticising that. The consumer offer is for 24 months—for two years. In relation to businesses, she is quite that the business scheme is for six months, but the Government made a commitment back in September that within three months of September—so within two months of now—further plans would be brought forward to explain to businesses, charities and, indeed, the public sector how they will be handled after March next year. My right hon. Friend the Business Secretary will announce that to the House in the coming weeks.
Growing our tax revenues in a way that is sustainable in every sense of that word is clearly massively important to pay for all the things we deeply care about, but will my right hon. Friend reassure us that he does get the significance of Government borrowing costs and that he will make sure that His Majesty’s Government do nothing that pushes those up unnecessarily high compared with the United States and Germany?
Yes, my hon. Friend is making a very important and very reasonable point. I have said this already, but he mentions comparisons with other countries, and our two-year bond yield is about the same as that of the United States at the moment. However, we are mindful of the need to ensure reasonable borrowing costs, which of course means financial responsibility. Our debt-to-GDP ratio today is the second lowest in the G7. My right hon. Friend the Chancellor will be setting out in under three weeks’ time—on
Earlier today, the Treasury Committee was given evidence that was incredibly sobering. All five of the economic specialists agreed that the UK’s Budget has contributed—
Order. Can Andrew Selous come back and listen to another question? He should not just dash out.
As I was saying, earlier today we on the Treasury Committee heard evidence in which all five economists agreed that the UK’s Budget has contributed to the current economic turmoil. With the Prime Minister earlier stating that there were going to be no budget cuts, and further to the point from the Chair of the Treasury Committee, Mel Stride, does the Minister agree with Mohamed El-Erian, the chief economic adviser to Allianz, who said yesterday:
“I see no alternative but the government saying we will not cut taxes now”?
I thank the hon. Lady for her question. I have already set out how there have been global trends over the past six or nine months, with higher energy prices, higher inflation and a cycle of increasing interest rates around the globe. In particular, I set out how the monetary tightening in the United States, at 300 basis points over the past nine or 10 months, is one and a half times higher than the fiscal tightening in the United Kingdom, which has been 200 basis points over the same period.
In relation to the hon. Lady’s questions about balancing the books over the medium term, the medium-term fiscal plan will set that out. We do intend to control public spending—[Hon. Members: “Ah!”] Well, just listen to the answer—for example, to stick within the spending review 2021 spending limits. I would point out to the House that those SR21 spending limits do see real-terms increases over the three years, but we are going to be sticking with iron discipline to those spending limits, not increasing them, and we will also show spending restraint in the years ahead. However, showing spending restraint is different from real-terms cuts.
It is very welcome that, a few minutes ago, the Chief Secretary said that the effect of the statement on
Can I just offer the Chief Secretary to the Treasury some gentle advice? If he refuses to accept that the fiscal event on
The Prime Minister said at Prime Minister’s questions that there would be no public spending cuts, yet we know that, as a result of the fiscal event and the unfunded tax cuts, there is a £60 billion gap between expenditure and the money coming in. If there are no public spending cuts, that leaves only the reversal of the tax cuts to balance the books, does it not?
I have explained in response to an earlier question that spending restraint is not the same as real-terms cuts. We do not plan real-terms cuts, but we do plan iron discipline when it comes to spending restraint. The answers to the hon. Lady’s questions will be set out in full at the fiscal statement, which will be accompanied by a full Office for Budget Responsibility scoring and a set of OBR forecasts. That is when all those questions will be answered very clearly.
The intervention of the Bank of England in both the gilt market and the corporate bond market has alarmed many in recent days. I would be interested in the view of the Chief Secretary to the Treasury on the Treasury’s assessment of the cost to the Treasury and the fiscal position following the interventions by the Bank of England in those markets.
I thank my hon. Friend for his question. It obviously depends on the prices at which the Bank and England buys and sells bonds or gilts in the market. It is worth observing that so far it has purchased considerably less by value of gilts than the limits that were set out originally. The volume of gilts that it has on its balance sheet is much less than the limits. On his question about fiscal cost, if there is any fiscal cost, that will depend entirely on market prices.
Two days before the Budget, a young constituent of mine hoped to buy her home through shared ownership. She was offered a mortgage at 4.28% interest by the Halifax. A day after the statement, the offer was withdrawn and a two-year fixed-rate deal has rocketed to 6.9%—that is £150 a month more overnight because of the Government’s unfunded giveaways to people on over 150 grand a year. What is the Minister’s advice to my constituent? Should she take the deal, or does he agree with the panel of experts at the Treasury Committee this morning that she should not go near it, because house prices are about to plummet?
I am obviously not going to offer individual financial advice to constituents. What I would say is that there are about 2,300 mortgage products currently on the market. We are keen as a Government to help first-time buyers, particularly younger ones in their 20s and 30s, which is why stamp duty is being cut for cheaper purchases. The stamp duty threshold for first-buyers has been raised, from memory, to £425,000, which particularly helps with putting together a deposit, which cannot be mortgage-funded. In addition, we want to help people with the broader cost of living pressures, which makes it easier to find money to fund mortgages. That is what the energy price guarantee is designed to do, and it is what lower tax rates in general are designed to do, including the tax reductions that the Labour party voted for yesterday. It is what the cost of living package is designed to do—the £37 billion. By helping with the cost of living in general, we are obviously making mortgage costs a little easier to meet.
Yesterday, the International Monetary Fund underlined the position of the UK economy as the fastest growing in the G7. Despite the noises off, it further stated that the recent fiscal changes would add further to growth projections. That is in addition to the record low unemployment data that has been highlighted this week. Does my right hon. Friend agree that further changes need to be made in terms of supply-side reforms, which will continue the momentum of a growing economy, resulting in real jobs in my constituency and across the country?
I am grateful to my right hon. Friend for mentioning the international comparisons again. The unemployment figure in the UK is 3.5%—inexplicably, Opposition Members have not asked about that—which is the lowest in my lifetime and compares favourably with that in France, where it is more than double, at 7.3%, and Italy, where it is 7.8%. Even in Canada, it is 5.2%, so our unemployment figures compare favourably internationally. As for the growth figures he asked about, if the three years are taken together, the figure is 11.7%, which heads the G7. That is nearly four times higher than Germany, at 3.9%, over double the figure for Japan, at 5.1%, and higher than the figures for France, Italy, Canada and the USA.
My right hon. Friend asked about supply-side reforms to help his constituents. He will hear a lot more about them in the coming weeks, both directly from Secretaries of State and from the Chancellor in the medium-term fiscal plan, to explain how we will get regulatory burdens off the back of businesses to help them to grow and create the jobs for his constituents that he rightly wants to see.
The mini-Budget fiasco has caused a material risk to the UK’s financial stability, and the Bank of England has said that $1 trillion could have been erased from UK pension fund investments if it had not stepped in after the mini-Budget turmoil. So the Minister needs to heed the advice of the Chairman of the Treasury Committee and others across the House, and junk the tax cuts in the Budget. They are unfunded and they are creating chaos in the markets. We need to restore confidence so that our constituents do not suffer. The Minister needs to stop being arrogant and take heed, listen to the expertise and take action.
Yesterday, I spoke with business leaders in my Crawley constituency. They welcomed both the near record low unemployment levels and the International Monetary Fund outlook of 3.6% growth. Does the Chief Secretary to the Treasury agree that that is a direct consequence of the policies that the Government are enacting?
Today is another day when the Government’s mismanagement of the economy is causing market turmoil, putting thousands of pensioners and mortgage holders at risk. Yesterday, the Governor of the Bank of England told pension funds to “sort it out” after announcing that the Bank’s emergency bond-buying scheme would close in two days. The Government have 48 hours to save pension funds. Will they call the Chancellor back from Washington, hold an emergency Cabinet meeting and deal with the pension crisis?
The Conservative party stands for low taxes, but also for fiscal responsibility and sound money. Given that the Prime Minister has just said that there will not be public sector spending cuts, may I ask the Chief Secretary to the Treasury whether the Government are considering deferring any of the tax measures recently announced by the Chancellor?
We do not plan to defer the tax measures, because we think that having an internationally competitive tax system is important, as it will help to encourage businesses and successful individuals to locate here in the United Kingdom, rather than anywhere else. I used to be technology Minister, and tech businesses can choose whether they locate here, in New York, San Francisco, Singapore, South Korea or anywhere else in the world. We want them to choose the United Kingdom, which is why competitive tax rates and the right regulatory environment are important.
Britain has embraced globalisation arguably more than other nations over the past couple of decades. About half of our GDP is subject to international headwinds, but the world is getting more dangerous, not less. The Minister mentioned Ukraine. May I suggest that any future fiscal statement is run by the National Security Council for comment and perhaps recommendations, which might include organising a United Nations safe haven around the port of Odesa, so that the grain ships can get out, helping to reduce the price of food and inflation in this country?
I thank my right hon. Friend for his suggestion about Odesa. I know that he is an expert in military matters and matters of international diplomacy, and that he has been to Ukraine in the past 12 months. I will pass his suggestion on to my colleagues.
I do not think that Ministers appreciate the gravity or urgency of the situation. We have a Prime Minister who committed to no spending cuts a few minutes ago, a Government still committed to tens of billions of pounds of unfunded tax cuts and the Bank of England withdrawing its special support on Friday. What are the Government doing to avoid a market crash this Friday?
The reason that, on the second day of the new Government’s term in office, we brought forward the energy price guarantee was to protect consumers and in effect lower inflation by 5% compared with where it would otherwise be. We legislated at pace yesterday to alleviate the burden of the national insurance increase, which Opposition Members enthusiastically voted for. In terms of markets, as I said, we are in regular contact with the Bank of England and have complete confidence in its ability to manage systemic financial stability.
The funds made available by the Bank of England to purchase gilts were described by the shadow Chancellor as taxpayers’ money. I find that confusing. My understanding—I am not an economist—is that those funds are not taxpayers’ money and that, in fact, the Bank of England may even make a profit from the actions that it takes on the markets. Different people will have different views about whether the Bank of England’s intervention is appropriate action, but does the Chief Secretary agree that it is completely wrong for the shadow Chancellor to describe those funds as taxpayers’ money?
It is not taxpayers’ money in the sense that the phrase suggests. There is a fiscal indemnity so that any profit or loss will end up flowing back to the Exchequer, but, as I said to my hon. Friend Bim Afolami, whether that is crystallised depends on market prices. I point out that the volume of gilts so far purchased is considerably less than the limits that were set out.
Covid supply-side disruption and the war in Ukraine have obviously added to inflation, as has monetary policy in the United States and our own high levels of borrowing, added to the rate of interest here in the UK. That has put real pressure on households across the United Kingdom. Despite the fact that the Government have responded by putting more money in people’s pockets through tax cuts and help with electricity bills, there is real public concern about the stability of our economy. Does the Chief Secretary accept that that is partly due to poor political decisions such as reducing the top rate of taxation, bad communication of his own strategy, open warfare on his own Benches and some of the careless remarks that we saw yesterday from the Governor of the Bank of England?
I think the Prime Minister said a couple of weeks ago that, with hindsight, some of the pitch rolling or preparation could have been better handled, but I think that the package of measures is in the interests of the country. In addressing the cost of living pressures that the right hon. Gentleman referred to, we are protecting our fellow citizens, our constituents, from what could have been £5,000, £6,000 or even £7,000 annual energy bills. That is important. We are alleviating the burden of taxation at what is a difficult time. We are making sure that the households most in need of assistance get additional assistance, amounting to £1,200 a year for the one third of households on lower incomes. All those are measures designed to protect our constituents and I am sure that he will join me in welcoming them.
Of course, I welcome the energy intervention and help for the lower paid. However, does my right hon. Friend agree that, just as it is important to grow the economy, it is important to grow society and that, if we believe in trickle-down theory, we should also have trickle-up economics? By that, I mean that we need to invest in education and skills. Will he confirm that education spending will increase in real terms and incorporate rises in wages—whatever they may finally be—for the teachers, support staff and many other people working in education?
I thank my right hon. Friend for his question. As Chairman of the Education Committee, he is a tireless campaigner for education and skills. I agree that the purpose of economic growth is to grow all parts of the economy, to help people across the entire income spectrum—rich and poor alike—and to ensure that the burden of taxation on those people is as light as it can be. That is why we have increased the minimum wage by such a large amount—from £5.93 an hour when Labour left office to £9.50 an hour today—and why we have lifted so many people on lower incomes completely out of taxation through increasing the income tax and national insurance thresholds to £12,570. All that disproportionately helps people on lower incomes.
We are seized of the importance of ensuring that education is properly funded. It is an investment in our country’s future and our children’s future, and I assure my right hon. Friend that that is very much at the front of our minds as we think about the fiscal plan.
Like many others, I have listened with disbelief to much of what the Chief Secretary has said. While we have been in the Chamber, the Bank of England has again linked the economic turmoil to the Government’s disastrous mini-Budget. Will he explain to us all and to the public why he is right and the Bank of England is wrong?
As I have explained before, we are in a global cycle of interest rate increases and there has been global dollar strength. We have taken action in the energy intervention and in the growth plan to protect our constituents, get our economy growing and build on our record as the fastest growing G7 economy last year, this year and over the three-year period as a whole.
The whole world is facing a global inflation crisis, and the US, Germany and other countries are facing a worse situation. That is why I believe that the best way to deal with the situation is to get more people into better-quality jobs. I have already hosted two job fairs in Rother Valley and will have another one Friday week at Wales High School. I am pleased to see that 680 more people are in work this year than last year, and 40 more people are in work than were last month. Does my right hon. Friend agree that the most important thing is to get people into good-quality paying jobs and that the Government always stand by working people?
Absolutely. I completely agree with my hon. Friend, whose work on jobs fairs is extremely commendable. The way out of poverty and to create prosperity is to get people into good jobs and see rising wages. That is how we will combat poverty. That is why it is so welcome that unemployment is at a 48-year low.
With the greatest respect, the Chief Secretary to the Treasury does not seem to be inhabiting the same planet as the rest of us. It is clear to anyone that the Government’s half-baked mini-Budget, sidelining of the Office for Budget Responsibility and lack of authority have caused chaos in the markets, and households are already paying the price. Should the Government not just accept that they could do something in the national interest to change that by reversing their disastrous mini-Budget that has sent us into chaos and calling a general election now so that the country can decide how they want to get out of this crisis?
The hon. Member calls for a reversal of the growth plan, yet she voted in favour of its largest measure just last night. She talks about sidelining the OBR, yet it will be fully scoring the medium-term fiscal plan on
Today, the Chief Secretary has made much mention of spending and pay restraint. During the cost of living crisis, the Government have repeatedly told workers that they must accept pay restraint to keep inflation in check while plotting to make further swingeing cuts to public services. Why do the pay restraint and cuts not apply to bankers, too? Is this not the same old Tory ideology of austerity for the oppressed many and luxury for the privileged few?
If I may respectfully say so, that is nonsense. The tax reductions, including those that the hon. Gentleman voted for last night, apply to everybody in work earning more than £12,570 a year. The national insurance cut and the cut to the basic rate of income tax are tax cuts for everybody, rich and poor alike. The increases in the threshold disproportionately benefit people on lower incomes, and the people on the very lowest incomes now do not pay any national insurance or tax at all. Again, the significant increases that we have seen in the national minimum wage from £5.93 an hour under Labour to £9.50 an hour now most benefit people on low incomes. The Government stand on the side of people on lower wages but doing the right thing by working.
The Joseph Rowntree Foundation has commented on reports that the Government plan to increase benefits only in line with earnings instead of CPI September inflation, stating that this would amount to the biggest
“permanent deliberate real-terms cut to the basic rate of benefits” ever made in a single year. Can the Chief Secretary assure my frightened constituents today that, first, these reports are not true and, secondly, that he will uprate benefits in line with CPI inflation in September?
I have already explained, as I think I said yesterday, that there is a statutory process that happens every single year when these decisions get taken. No decision has been taken on the question yet; indeed, the September CPI figure, which is relevant, has not even been published yet. When the decisions are taken, Ministers will of course have regard to the cost of living pressures and high inflation that we and many other countries are experiencing, although of course the energy intervention will make that inflation lower than it would otherwise be. We also, of course, must pay due regard to hard-working taxpayers who ultimately have to pay the benefit bills, and we will take all of that into account when we make the decisions.
Following the Government’s pretty disastrous mini-Budget, the hedge fund manager and Tory donor Crispin Odey is said to have made millions from shorting the pound. It has also been suggested that the Chancellor met Crispin Odey for lunch in the weeks running up to the mini-Budget. Is that true and, if so, what did they discuss?
I would like to ask the Chief Secretary about unemployment. How can he possibly crow about unemployment when there are fewer people in work than before the pandemic and when rates of inactivity because of long-term sickness are through the roof?
I think having the lowest unemployment in my lifetime and having lower unemployment than comparable countries such as France and Italy is something that we can be proud of as a country. Of course, we are committed to working with people who have long-term sickness, working through the NHS and with work coaches at the Department for Work and Pensions to find ways to enable them to return to the workforce. Of course we are going to work with them, but ultimately having the lowest unemployment rate in my lifetime is something we should be proud of.
Listening to the Minister, I wonder what colour the sky is in his world. He talks about the energy price guarantee protecting families from energy bills of up to £6,000 a year, but as a direct result of the Government’s mini-Budget families in my North Durham constituency now face a mortgage increase of £6,000 a year not just this year but in future years as well. He can blame international markets when it comes to energy, but is he actually going to admit that the mini-Budget has led to those families paying £6,000 a year extra, if not more in some cases, and what is his advice to them?
The right hon. Gentleman can say no and not want to hear it, but I will just tell him again. In the United States, in the last nine months, there has been a 3% increase in the federal reserve base rate. In that same period, the Bank of England base rate increase has been only 2%. It has gone up by one and half times more in the United States compared with the United Kingdom. We do understand that there are cost of living pressures and that is why we have stepped in with the energy price guarantee to protect families in his constituency and mine from the £5,000 or £6,000 bills that they would otherwise have faced. That is why we are alleviating the tax burden on their shoulders and why we will ensure that the economy grows.
A few weeks ago, the Welsh Government warned that they face a shortfall of some £4 billion to their three-year funding settlement as a result of rising inflation. Will the Minister confirm that the Treasury will consider, in the statement at the end of the month, providing additional funding support to help mitigate the impact of inflation on the budget for public services in Wales?
Public expenditure both in Wales and across the United Kingdom stands at record levels. It has never been higher. In relation to extra funding, we are going to have iron discipline when it comes to public spending so the spending plan set out at the comprehensive spending review 2021, covering this current financial year and the next two, contains the limits we are going to stick to with discipline because it is important that we make the numbers add up.
A few minutes ago, in answer to Bim Afolami, the Chief Secretary said that the costs to the Treasury of the Bank of England’s intervention was not known because it depends on pricing, which I would imagine is fairly blindingly obvious even to him. Does that mean that the Treasury has made no assessment of that cost? If they have, what is it?
It depends on market prices, as I say. Lacking any clairvoyance about where prices may move in the future, it is not possible to make an assessment not knowing where prices will be in a fast-moving market. I repeat that the volume of gilt purchases by the Bank of England have so far been a great deal below the ceiling that was set out.
The Resolution Foundation’s chief exec, Torsten Bell, told the Treasury Committee this morning, “This is what happens when you are not paying attention.” He said that the Government’s proposals would not have been a good idea at any time but, “You definitely shouldn’t be doing it in the current climate.” Our constituents need the Government to pay attention. Where is the plan to stabilise the economy now and stem the ongoing damage the mini-Budget continues to cause?
I would like to dare the Minister to come to Newcastle and explain to my constituents, who are worried about their mortgage payments, their pensions, their benefits payments, their public services, their businesses and the cost of their supermarket shop, that this Government are fiscally responsible. They would laugh in his face, which is what the markets are doing. Why cannot he accept that the only way to address this crisis, made in Downing Street, is to withdrawal the fiscal mini-Budget and put in place something credible, costed and competent?
Once again, the hon. Lady calls for the withdrawal of the growth plan, yet she voted last night for the biggest measure contained in it. I would be quite happy to explain to anyone, whether in Newcastle, in her constituency, or in Croydon, south London, in mine, that we are protecting people from energy price rises, that we have plans to keep our record growth levels going, that we are cutting taxes on working people and that we have a plan to get the economy going. I would be happy to go anywhere in the country and explain that.
I imagine that constituents in the hon. Lady’s constituency, as much as in mine, are pleased that they will not face energy bills of £6,000 or £7,000 this winter, which the growth plan delivered on. I do not agree with the analysis she read out from Mr Krugman, or Dr Krugman—[Interruption.] Professor Krugman; I am happy to stand corrected. This growth plan will ensure that we continue with our G7-leading levels of growth.
The £60 billion of borrowing for the energy guarantee is to paid back by bill payers, not the oil and gas producers who are making record profits on the back of the public’s misery. That is not fair. Will the Minister consider raising not a temporary windfall tax but the basic tax rate for oil and gas producers, which in the UK is the lowest in the entire world? If he raised it even to the global average, he would raise an addition £13.4 billion every single year.
I will make a couple of points. Extraction companies already pay about double the rate of corporation tax that other companies pay. In addition, we have imposed the energy profits levy, through which the rate of taxation on their profits increases to 65%. That is a pretty significant rate of tax, even by Labour party standards, and it will raise about £23 billion over the relevant three-year period. The hon. Member will also have seen the announcement from my right hon. Friend the Business Secretary yesterday on ensuring that renewable companies provide energy to our constituents at reasonable prices. The suggestion that no contribution is being made by the energy sector in the circumstances is, frankly, not accurate.
The Minister quoted IMF analysis but curiously not the part where it warns that rising prices will be worse in the UK, noting that the Government’s tax cuts will “complicate the fight” against soaring prices, and where it expects higher prices to last longer in the UK than elsewhere. What is his analysis in relation to food prices and tackling food poverty in the next two years?
The energy intervention will make sure that inflation in this country is about 5% lower than it otherwise would be. That is not a Government forecast, but the consensus of independent forecasters. Also, the inflation rate in the United Kingdom is lower than in some other countries, including Germany and Holland.
No matter what the Minister has said today, the sums do not add up—that is a fact. The Government have lost control of the situation and shown a level of incompetence that has rarely been seen in British politics. As a result, we have seen increased anxiety and even terror about the cost of living and energy bills, as well as mortgages. On pensions, can the Minister give an absolute guarantee and assurance that people do not need to worry about the future of their pensions?
If the hon. Member is asking about the state pension, the Prime Minister has been clear that we stand by the triple lock. If he is asking about the private pension system, yes, I have complete confidence in the Bank of England’s responsibilities around financial stability. On his first comment, I think that having the lowest unemployment rate for 48 years and the highest economic growth in the G7 is something we should all be happy about.
As well as mortgage costs, the cost of lending to businesses is going up. UK Finance said that small businesses have £240 billion in outstanding debt. What assessment have the Chancellor and his Department made of the impact that the rise in borrowing costs will have on businesses’ ability to invest, and what will the Minister do about it?
We are very mindful of the impact that rising global interest rates have on businesses. That is one reason why we will keep corporation tax at 19% rather than increase it to 25%. What I do not know is whether the Labour party support that.
“The Prime Minister says she is unashamedly pro-growth and pro-business, but our local dry cleaner was in tears this morning at the news that their energy bill has gone up more than four-fold. They say they get it but they really don’t.”
What does the Minister have to say to my constituent and thousands more of my constituents who are simply terrified about how they will sustain their businesses or keep a roof over their heads in the context of the self-inflicted chaos and harm to our economy that his Government are causing?
On the energy bills for the dry cleaner in the hon. Member’s constituency, she must be aware that the whole world has been experiencing the energy price crisis as a result of Putin’s illegal invasion. That is driving energy prices higher. The dry cleaner should be the recipient of the business energy guarantee scheme in relation to their bill. It should not see bills rising as high as she suggested, so if she writes to the Secretary of State for Business, Energy and Industrial Strategy or to me about that case, I will be very happy to look into it to make sure that the business—like businesses in all our constituencies—is being properly protected.
The energy price guarantee still means increases in costs for consumers. We know that disabled people already face higher costs, and the only support that thousands of unpaid carers receive from the Government is carer’s allowance. In many cases, that means that they have been excluded from cost of living support. In addition, carer’s allowance is effectively means-tested due to the earnings cap, meaning that carers cannot seek work, as the Chief Secretary seems very keen for them to. Will he commit to ensuring that we review the carer’s allowance situation and, if not, that we provide further support to carers, who do such valuable work?
The hon. Lady is right that despite the energy price guarantee—the decisive intervention that has protected our constituents from £5,000 or £6,000 bills—bills this year are higher still than they were last year. That is why we have made the £37 billion intervention, which, for people on lower incomes, amounts to £1,200 a year. There is more money on top of that for people with disabilities for the reason that she mentions. As for reviewing various components of disability and caring benefits, those will get reviewed in the normal way along with the other benefits. The Minister with responsibility for welfare and the Chancellor of the Exchequer will lay all that out in the coming weeks.
I, too, am really concerned about the oversight of our pensions industry. When was the last stress test to see whether these funds had sufficient liquidity to cope with market turbulence, and can the Minister explain in simple terms the regulation of pension funds right now? Our country needs pension stability, not ongoing, home-grown financial crises.
We have excellent regulators overseeing our financial system and pensions in particular, whether we are talking about the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority or the Pensions Regulator. They are all rightly independent, but all of us in Government and Parliament can have every confidence that they are making sure that our system is operating safely and securely.
The Minister said that the Government were being fiscally responsible. I am no expert, but fiscal responsibility does not usually result in the market and the wider UK economy being set ablaze in what can only be described as a bin fire. With the pound in freefall, pension funds on the brink, unfunded tax cuts for the rich, mortgage payments up by hundreds of pounds and the UK’s financial institutions—barring the Institute of Economic Affairs, obviously—utterly undermined, the Government are waiting another six weeks to show their working. That is not fiscally responsible; it is chaos theory-IEA style. Will the poorest pay for this or will benefits be uprated in line with inflation—yes or no?
The hon. Member was obviously not listening to my previous answers in which I said that the decision has not been taken and the CPI figure, which is a critical input into the decision, has not even been published yet. I also explained how interest rates around the world are rising—they have risen more in the US than they have here—and how the dollar has been strong against a number of currencies. Its strengthening against the euro has been only about 3% higher so far this year than it has against sterling, so I do not accept the hon. Member’s characterisation at all. As for fiscal responsibility, we have the second lowest debt-to-GDP ratio in the G7. The Chancellor said that we will get the debt-to-GDP ratio falling over the medium term. Brendan O’Hara has less than three weeks to wait, if he can contain himself, before the medium-term fiscal plan is set out in full.
A local teacher and her partner wrote to me last week. Once their fixed-rate mortgage comes to an end, their mortgage will rise by £9,000 a year; that is an extra £750 a month. They are terrified and cannot sleep because they do not have that sort of money spare. I have listened to the Minister’s answers, but given that the IMF’s Tobias Adrian said yesterday that the announcements on
We have every sympathy with people who are struggling. That is why we have the energy price guarantee. It is why we have had the £37 billion intervention. It is why we are cutting taxes, particularly for people on lower incomes. It is why the minimum wage increased by so much a few months ago. It is why we have increased the national insurance threshold to help people.
On interest rates, I have explained more than once this afternoon that there is a global cycle that has been going on for about nine months. So far in this calendar year, interest rates in the United States, a comparable economy, have increased one and a half times as much as in the UK: by 300 basis points, compared with 200 basis points. It is very important that the House keeps that context in mind.
Yesterday, when I asked the Chancellor, he could not tell me how private pension schemes will be protected since the Bank of England has confirmed that it is ending its refinancing scheme. The Pensions Regulator has a responsibility to ensure that pension schemes are viable. However, in the current economic situation, without making demands on employers and workers, those pension schemes will collapse. How is the Chief Secretary going to respond?
I have to say that the speculation in which the hon. Lady is engaging is slightly reckless, if that is perhaps not too strong a word. We have extremely capable regulators: the Bank of England, the Prudential Regulation Authority, the Pensions Regulator and others. Their responsibility is to make sure that our financial system, including pensions, is safe and secure for our constituents. The Government have complete confidence in our regulators, and I think the House should as well.
There has been growth since the mini-Budget: a growth in people stopping me on the street in Putney, Roehampton and Southfields to say how worried they are about their bills and rising mortgage costs. I met estate agents in Putney this week; they say that the stamp duty change will make absolutely no difference to the housing crisis in Putney. What does the Chief Secretary say to families who are looking at a £500 increase in the cost of their mortgage as a result of this failed strategy, or at having that cost passed on to them if they are renting?
When the hon. Lady was stopped in the street, I presume that she explained the points about global interest rates increasing. When her constituents asked about energy prices, I presume that she explained to them that this Government took decisive action on our third day in office to protect our constituents from bills that could have gone up to £5,000 or £6,000 a year. I presume that she also explained that the Labour party’s plan was good only for six months, but the plan that we have put in place lasts for two years.
We have seen the crash of the pound. We have seen mortgage prices going through the roof. We are seeing the cost of living across the country getting out of control. There has been economic chaos since this new Tory Government took over from the last Tory Government. May I ask the Chief Secretary: on a scale of one to 10, how well does he think it is going?
Small businesses across my constituency are watching the news with utter dread. They have just about survived the pandemic, the Brexit uncertainty and the collapse of the tourist trade in London, which really affects my constituency—we normally have more than 3 million people going through Waterloo station alone. The spiralling costs, combined with the recession, will wipe out any existing benefits or support from the Government. These businesses simply do not have six months. The Chief Secretary has gone on and on about growth, but does he agree that growth will happen only if these businesses survive the winter?
That is why we have offered the energy price guarantee to businesses as well as to consumers, and why we are keeping corporation tax low at 19% rather than putting it up. Of course, that helps businesses of all sizes: any business making £50,000 a year or more in profit will benefit from the freeze in corporation tax. We do not yet know, as far as I am aware, whether the Labour party supports that position. The shadow Chancellor is sitting impassively, not giving any indication whether she supports lower taxes; I think the House would love to hear at some point what her views are.
Those are the things that we are doing to help businesses. Last night, we voted—the Labour party voted for it as well—to reduce the national insurance burden on businesses. That is the plan that we have to help businesses, and I am very proud to stand behind it.
I am very pleased to hear that the Chief Secretary has confidence in the Bank of England. The media are now reporting, for the seventh time, that the Bank of England has clearly linked the mini-Budget or UK-specific factors to the turmoil in the bond market. That includes, in the past hour, the Governor speaking to camera and to a room full of the world’s top banking chief executive officers in the US. Can the Chief Secretary explain to me why the Governor of the Bank of England is wrong and why he himself is right?
Obviously I am not in Washington and have not heard those comments. I am not going to speculate about what the Bank of England Governor may have said. We are working closely with the Bank of England Governor and other regulatory authorities to make sure that we navigate these globally volatile markets successfully, but in the long term what matters is continuing to grow our economy. That is what the Government’s plan will do.
The energy price guarantee is doing some heavy lifting today, so let us look at it in more detail. Energy Action Scotland has produced analysis in the past couple of days that shows that the average bill in Scotland will be not £2,500, but £3,300, and that for someone who lives in a rural area it will be in excess of £4,200. What message does the Chief Secretary have for people living in energy-rich Scotland, where we produce six times more gas than we use and almost all our electricity comes from renewables?
Well, if the nationalist Administration in Scotland were willing to support more natural gas and oil extraction or indeed nuclear power generation, that would help the energy situation. Renewable energy use in the United Kingdom has increased from, I think, 7% to 42% over the past 12 years, which is very welcome. The energy price guarantee has protected families and businesses across the United Kingdom from bills that could have been £6,000 or £7,000 higher, which is a huge amount. The hon. Gentleman has not mentioned the £37 billion intervention, which particularly helps people on lower incomes, giving them an extra £1,200 a year to support them with bills. The fact that we are in such an economically successful Union means that we can offer things like the energy price guarantee and the £37 billion energy intervention.
It does not get more serious than this Tory-led crisis made in Downing Street. Only yesterday, a mortgage adviser in my constituency contacted me about offers that he is redoing for customers with increases of £300 to £500 a month. People are desperate for stability, but rates are changing by the day.
Commentators have said that sidelining the OBR in the recent mini-Budget and not having its assessment created more uncertainty. Does the Chief Secretary agree that sidelining the OBR was not helpful and was a mistake? Can we have a guarantee that it will not be sidelined on
When the new Government came into office there was a need to act urgently on the energy price guarantee, and to alleviate the extra national insurance burden, which the hon. Gentleman’s constituents and mine are paying right now, but—thanks to yesterday’s vote—will not be paying from
The OBR will be fully scoring the medium-term fiscal plan on
The Chief Secretary will be aware of the stress on mortgage holders as they have watched deals being withdrawn with the prospect of steep rises ahead. What assurances can he give them that the Government will act to undo the damage done and to ensure that mortgages remain attainable and affordable for homeowners?
When I checked, there were about 2,300 mortgages available. Obviously the global cycle of increasing interest rates is affecting people in the United Kingdom, as it is affecting people around the world, including in the United States of America, as I set out earlier. We are trying to make sure that other cost of living pressures are mitigated as far as possible through things like the energy price guarantee, reductions in the burden of taxation and the plan to continue economic growth.
A constituent has written to me to say that she and her partner are being priced out of the private rented sector. They recently secured a mortgage for a shared ownership flat, but the mortgage offer has now been withdrawn. She is desperately worried for herself, for her partner and for their young son, who attends a local school. She says that the Government’s mini-Budget has destroyed their dream. Will the Chief Secretary apologise to my constituent? Can he tell her what she should do and how the Government will end this mayhem that they have caused?
The Government are keen to help everyone, including the hon. Lady’s constituent, to get on to the housing ladder: that is something we strongly support. I have already explained about the global interest rate increase cycle that countries around the world are experiencing, but we are doing everything we can to help, and I believe that the Secretary of State for Levelling Up, Housing and Communities will be laying out some plans relating to house building in the coming weeks. We have already reduced stamp duty for first-time buyers—stamp duty is a particularly challenging element of buying a first home, because it cannot be funded by a mortgage—and the Government will continue to do everything they can to support people who are trying to get on to the housing ladder.
This is the question that my constituents want me to ask the Government: why is the Chancellor experimenting with their lives, putting their homes and pensions at risk, to test out his fancy economics? The Chancellor and the Prime Minister have no mandate to take the gamble that they are taking, so will the Chief Secretary urge his colleagues to ditch their disastrous Budget and put their new plans to the people in a general election?
If the hon. Gentleman thinks it was all so disastrous, perhaps he could explain why he voted for it last night. The real gamble is having taxes that are too high. The real gamble is not having a plan for growth. This Government have a plan for growth; the Labour party has no plan.
Will the Minister outline the specific help that is available to the working poor? They face not simply energy increases but mortgage increases, and increases in the cost of diesel and petrol just to get to work to actually earn some money, and the price of groceries is 15% higher. While those people’s top-line income does not qualify them for universal credit, the present circumstances must surely call for assistance. Will the Minister tell me and the House where that help will come from?
We certainly do stand with the working poor. That is why we have increased the thresholds to ensure that people on lower incomes pay very little income tax and national insurance. It is why we froze petrol duty, and, indeed, cut it by 5p earlier this year. It is why we have increased the national minimum wage by such a large amount, from just £5.93 an hour under the last Labour Government to £9.50 an hour today. So we do stand on the side of the working poor, and I will certainly continue to work with the hon. Gentleman to ensure that his constituents are looked after and protected in the years ahead.
Given that the UK Government, in the run-up to their fiscal statement, chose to ignore warnings from anti-poverty campaigners about the devastating impact that a lack of targeted support for lower-income households would have on those households, will the Chancellor now be making some sort of assessment of the impact that that will have on levels of poverty in the UK?
I dispute the claim that there was no targeting. I have already pointed out that the minimum wage has risen hugely under this Conservative Government, from £5.93 an hour to £9.50 an hour. When we made the first energy intervention this year with the £37 billion package, that was targeted: it was targeted, rightly, at people on lower incomes, so that those on the lower one-third of incomes received £1,200 per annum, and people with disabilities, and some pensioners, received even more than that.
Hard-working families are paying the price for this Government’s reckless kamikaze Budget. Hundreds of families in my constituency depend on universal credit while being in full-time work. According to a recent Survacion poll, 38% of them fear being made homeless next year while 34% fear having to resort to food banks next year. Given that the Government have just committed themselves to no spending cuts, will the Minister also make a commitment to ensuring that benefits are uprated to keep up with inflation, so that those most in need in my constituency and throughout the country will not be forced from their homes and left to go hungry?
As I have said, no decisions have yet been taken; that will happen in the normal way in the coming weeks. I have already explained how the minimum wage has gone up and how we have alleviated the burden of taxation on people on lower incomes, but ultimately what will help the hon. Gentleman’s constituents is ensuring that we have a growing economy so that everyone’s wages can go up, which is why we have a growth plan. I think the hon. Gentleman and his constituents can take comfort from, and be happy about, the fact that we have the lowest unemployment for 48 years and the highest growth in the G7. However, we would like to go further to help his constituents, and that is why we have a growth plan.
My son currently pays £612 a month for his mortgage. Next year, when his fixed rate comes to an end, he will be paying at least £1,300 a month. My daughter, a hard-working junior doctor, cannot even look at buying a property on her salary of £23,000 a year. The stamp duty cut is no help to her.
What this Government are doing is not hypothetical; it is real, and it is affecting people like my son and daughter. The U-turns, tax cuts for the richest and a failed Budget are all signs of a Government who are out of ideas. Will the Chief Secretary tell me why any person in the UK should listen to a single thing they say?
As I have already explained repeatedly, there is a global increase in interest rates, and as I have also pointed out, the increase in base rates in the United States this calendar year has been 1.5 times higher than the base rate increase in the United Kingdom. We know that people are facing pressures, for the reason that the hon. Lady set out, and also because of energy prices. That is why we have helped with the energy price guarantee. It is why we have put £37 billion towards helping people. It is why we are alleviating the tax burden on people on lower incomes, and it is why we have a growth plan. That is what we are doing to deal with these global pressures, and our plan is designed to help people exactly like the hon. Lady’s children.
I thought you were going to say “Last but not least”, Madam Deputy Speaker, but thank you.
According to figures published in connection with the mini-Budget, not implementing the corporation tax increase is predicted to cost the Treasury more than £2 billion in this financial year alone, and in subsequent years £12 billion, £17 billion, £18 billion and £19 billion: £68 billion in total. We can split hairs about whether or not that is a tax cut, but is not the reality that the Treasury’s own figures show that cosying up to business has created a £68 billion black hole?
I thought you were going to say that you had saved the best till last, Madam Deputy Speaker.
It is important to have internationally competitive rates of corporation tax. Keeping it at 19% is not just for big businesses; it is for smaller businesses too, because any business with profits of over £50,000 will benefit. Many of these businesses have a choice about where to locate. They do not have to locate in the United Kingdom, but could go to America, to Geneva, Singapore or South Korea. Many of them are internationally mobile. We want them to choose to locate in the United Kingdom and to invest in the United Kingdom—including, of course, Scotland—and that is why we are maintaining a competitive rate of corporation tax. We still do not know what those in the Labour party think about this, because they will not tell us.
“I have raised before at the Dispatch Box the fact that the UK Government chose to sideline the Acorn carbon capture and storage project in the north-east of Scotland. The Scottish Government have refused to provide financing either.”
“That is why I am announcing today that we stand ready with up to £80 million of funding to help the Scottish Cluster continue and accelerate the deployment of carbon capture technology.”
May I seek your esteemed guidance, Madam Deputy Speaker, on how we can ensure that the record reflects the reality?
I thank the hon. Gentleman for giving me notice that he intended to make that point of order. He will know, as the House knows, that it is not for the Chair to make any comment on the content of what hon. Members say here in the Chamber. I am guessing that the hon. Gentleman is suggesting that what was said today directly contradicted something that was said some weeks ago. Is that the basic point?
I can only say to the hon. Gentleman that every Member who speaks in this House is responsible for the veracity of what they say, and I am sure that if the record requires to be corrected, the people concerned will go ahead and correct it.
I should have checked this with the hon. Gentleman: did he give notice to the Members whom he has quoted?
I am grateful to him for doing that. I know that he normally does things properly.