New Clause 2 - Assessment of impact of the Act on public finances and cost of living

Finance Bill – in a Public Bill Committee at 2:30 pm on 16 January 2024.

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“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of this Act on the following matters—

(a) public finances, and whether the UK Government is meeting its fiscal targets;

(b) the cost of living crisis on households across the UK; and

(c) lower income households.”—

This new clause would require the Chancellor to publish an assessment of the impact of the Act on public finances and the cost of living crisis.

Brought up, and read the First time.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Economy)

I beg to move, That the clause be read a Second time.

As the explanatory statement suggests, this is the opportunity for the Chancellor to publish an assessment of the impact of the Act on public finances and the cost of living crisis. The cold weather is really biting today across the nations of the UK, and people are having to turn up their heating to be able to simply survive. They are suffering already higher energy bills, boosted by the further 5% increase at the start of this month. The same families are struggling with soaring food costs, higher rents, higher mortgages and much more. The SNP’s issue with the Bill lies primarily in what has been omitted: help for those struggling families.

The UK Government seem determined to completely ignore the realities facing people across the UK. For example, just a few days ago, it was revealed that a quarter of a million children could be lifted out of poverty if the UK Government took the simple and humane step of scrapping the two-child limit, with an additional 850,000 children pulled out of deepening poverty if the policy was removed. In the absence of such measures, and many others to support people suffering from the cost of living crisis, such as the £400 energy rebate that we called for, we believe that it is incumbent on the UK Government to report on the measures that they are taking and how they are affecting the cost of living, particularly in relation to rising household costs.

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

I afraid that we are going to have yet another phase of respectful disagreement with the hon. Gentleman.

New clause 2 would require the Government to report on the likely impact of the measures in the Bill on public finances and the cost of living. Numerous Departments and Government bodies already have mechanisms in place to systematically monitor and evaluate the impact of Government policy on public finances and households across the UK. Those mechanisms are effective and ongoing, making the proposed new clause redundant.

It is the role of the Office for Budget Responsibility to produce official forecasts for the public finances twice a year, usually alongside a fiscal event. Those forecasts are produced independent of Ministers, objectively, transparently and impartially, as set out clearly by law. Furthermore, when considering specific pressures on the cost of living, mechanisms are already in place to assess the impact of Government policies on households’ personal finances. The Office for National Statistics plays a role in providing monthly updates through its “Cost of living latest insights” article, offering comprehensive data and showing trends.

In addition, our commitment extends to long-standing surveys and initiatives, including the family resources survey initiated in 1992; the living costs and food survey, which commenced in 2008; and the annual survey of hours and earnings, which has collected data since 1998. The Department for Work and Pensions also plays a crucial role with the annual publication of the “Households below average income” report, which monitors poverty and inequality trends across the UK, with emphasis on the wellbeing of the most vulnerable members of society.

Since 2010, His Majesty’s Treasury has published an “Impact on households” report at major fiscal events, to scrutinise the distributional impact of Government measures on personal finances across income groups. Distributional analysis published at the autumn statement 2023 shows that the typical household at any income level will see a net benefit in 2023-24 and 2024-25 following Government decisions made from autumn statement 2022 onwards. Low-income households will see the largest benefit as a percentage of income. Furthermore, looking across all tax, welfare and spending decisions made since the spending round 2019, the impact of Government action continues to be progressive, with the poorest households receiving the largest benefit as a percentage of income in 2024-25.

We believe that the mechanisms currently in place are effective in providing the necessary insights into the impact of the measures proposed in the Bill. In the light of those efforts and commitments, I urge the Committee to reject new clause 2.

Question put, That the clause be read a Second time.

Division number 2 Finance Bill — New Clause 2 - Assessment of impact of the Act on public finances and cost of living

Aye: 2 MPs

No: 9 MPs

Aye: A-Z by last name

No: A-Z by last name

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.