Backing Business to Create Economic Growth
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The Secretary of State for Business and Trade (Peter Kyle)
Mr Speaker, I heard your call for decency and respect, and I hope those will be the watchwords for today’s debate.
My right hon. Friend the Chancellor is with her G7 colleagues today, so I am grateful for the opportunity to open the King’s Speech debate on backing British business to create economic growth. That is economic growth for a purpose: not simply to exceed the growth rate of other European members of the G7, which we achieved in the last year; not simply to have the highest growth rate in the G7, which we achieved in the last quarter; and not simply to deliver on the Government’s primary mission; but for the purpose of achieving greater social justice for all.
Economic growth is the surest path to higher living standards, improved public services and better quality of life for people up and down our country. We know that economic growth is the catalyst for new opportunities, the pathway to greater prosperity, and the vehicle for greater equality and security for working people. That is why it matters so much.
The growth figures published last week show that, despite the many international headwinds, the UK economy grew by 0.6% in the last quarter—the fastest growth among G7 countries. There is silence from the Opposition Benches. I would have thought that the party that champions Britain and calls for economic growth would be celebrating economic growth when they see it, but no: silence, silence, silence.
The situation is much better than the one we inherited, continuing to exceed the forecast of the doom-and-gloom mongers on the Opposition Benches and in the right-wing media, and even beating market expectations. When the Conservatives were in government, they and their strangely related first cousins, Reform, let down Britain’s economic future. Now, in opposition, they talk down Britain’s economic present. You can bet your bottom dollar that they will do so again today, ignoring the facts.
The facts are that the UK experienced the highest GDP growth among European countries in the G7 last year. Just today, the International Monetary Fund has upgraded the UK growth forecast, with the UK projected to have the fastest cumulative growth among European G7 economies over 2026 and 2027. None of this happened by accident, just like the damage done to the economy by the Tories did not happen by accident.
Alicia Kearns (Rutland and Stamford) (Con)
Does the Secretary of State not concede that GDP per capita is down? Can he tell me that a single one of his constituents, apart from those on welfare, feels better off under this Government?
Peter Kyle
The whole purpose of the debate is to emphasise that economic growth matters. In the last full year in which the Conservatives were in office, economic growth stood at 0.4%. In the first full year of this Government, it was 1.4%. The hon. Lady should be apologising for the state in which she left the economy, leaving us to pick up the pieces.
This growth has been driven by an activist, interventionist Government who back British business—a Government who are not afraid to roll up their sleeves and make the big calls when big times demand it. From Jaguar Land Rover in the west midlands to Ineos in Scotland, Agratas in the south-west, Tata Steel in Wales, and Harland & Wolff across the United Kingdom, we step in to invest, modernise and protect British industry when necessary. We step back by reducing unnecessary regulation when that is possible, and step up to modernise our critical national economic infrastructure where that is vital: supporting the third runway at Heathrow that the Conservative party curtailed; expanding the Oxford-Cambridge corridor where the Conservative party hesitated; backing Northern Powerhouse Rail which the Conservative party cancelled. This Government have confirmed £45 billion of funding for Northern Powerhouse Rail to upgrade lines east of the Pennines and to bring forward a brand-new route connecting Liverpool and Manchester.
Harriet Cross (Gordon and Buchan) (Con)
That was a great list, but what was missing from it was the oil and gas sector, and specifically the £17 billion of investment that was lost as a result of the Government not scrapping the energy profits levy and the £50 billion of investment lost because of their ban on new licences, and other hostile policies. Will the Secretary of State reflect on those, and on the damage that the Government are doing to growth not only in the north-east of Scotland but in the United Kingdom as a whole?
Peter Kyle
This Government have invested in industry up and down the country, from Agratas in the south-west, where we are investing in gigafactories, to Ineos in Scotland. We are investing in the industries that are keeping our country going, and we have put growth into the economy.
Gavin Robinson (Belfast East) (DUP)
The Secretary of State was kind enough to mention Harland & Wolff. Successive Governments have introduced a number of support measures, and have ensured that that company can thrive by itself. However, in taking at face value what the Secretary of State has said, does he recognise that if this Government continue to refuse to designate Programme Euston a defence project and open it to international tender, not only will they not support British business and yards like Harland & Wolff, but the project will be delayed by three years? If the Secretary of State wants to inject business growth and economic growth, he should designate it a UK defence project, and keep the work and the investment in the UK.
Peter Kyle
The right hon. Gentleman knows full well the commitment that I personally have to Northern Ireland and its economic success. All the issues related to national resilience are things that we have to consider at this moment in time, unlike any other moment in time in peacetime. They are issues that I look at very closely, and in the days and weeks ahead I shall be talking a great deal more about how we can support industry and business across Northern Ireland.
Jim Shannon (Strangford) (DUP)
I commend the Secretary of State for what he is saying. I know he is a regular visitor to Northern Ireland because he loves the country, and we appreciate that.
According to the Federation of Small Businesses in Northern Ireland, more than half the enterprises trading between Great Britain and Northern Ireland face severe friction, with more than a third halting trade entirely. Can the Secretary of State explain explicitly how the proposed regulating for growth Bill will help? I know he is committed to it, so let us hear what he has to say.
Peter Kyle
I have been aware of those issues from opposition into government. Of course, rebuilding the relationship with the European Union is also partly about smoothing that barrier across the Irish sea, and we will continue to do so.
We are building the critical national economic infrastructure that the Conservative party consistently failed to deliver, on runways, reservoirs and railways. Just as we are modernising Britain’s critical economic infrastructure, we are maximising Britain’s industrial strength by delivering our modern industrial strategy. Written for business with business, our strategy creates the right conditions for business to succeed. Since its publication, we have been tackling the high costs of energy. Our supercharger saves firms hundreds of millions of pounds every year, and our British industrial competitiveness scheme will help more than 10,000 eligible manufacturing businesses, saving them up to £40 per megawatt hour from next April. I am very aware of challenges faced by the ceramics sector; I will meet representatives of the sector tomorrow to discuss how the Government might be able to support it, and I hope to be able to say more about that very soon.
To cut the red tape that is holding back British businesses we are ending mandatory strategic reports for medium-sized companies and ending directors’ reports for businesses of all sizes, saving firms £230 million each and every year. We are stripping out unnecessary rules and regulations. Through the regulating for growth Bill, announced in the King’s Speech, we will create regulatory sandboxes—economic growth laboratories where innovators can trial cutting-edge technologies safely and speedily.
Whereas the Conservatives, with their destructive ideology of deliberate de-industrialisation—from monetarist Thatcherism to Brexit isolationism—drove British manufacturing businesses to the wall and destroyed the jobs that depend on them, this Government are determined to maximise the UK’s competitive advantage, not just through reindustrialisation, though that is necessary, but through new industrialisation in advanced manufacturing, clean energy, artificial intelligence and new technology. That is why we have rolled out new AI growth zones and confirmed the site of the UK’s first small modular reactor—a milestone in the journey to becoming a clean energy superpower.
Gregory Stafford (Farnham and Bordon) (Con)
The Secretary of State talks about deregulation, but does he not accept that adding 330 pages-worth of regulation in the Employment Rights Act 2025, at a cost of a billion pounds to the economy, is having the opposite effect? Youth unemployment in my constituency has gone up by 28% in just one year.
Peter Kyle
I am grateful to the hon. Gentleman for giving me the opportunity to point out that, in my Department, the overall net regulatory burden is reducing, not expanding. I will not stand in front of the Tories and apologise for giving new rights to workers that are fit for the age we are living in. Over their entire 14 years in office the Tories failed to make sure that people have protections and rights at work that are fit for the age we are living in. We can move forward with growth in the economy that takes forward businesses and the people who work in them. That is to be celebrated, not condemned like the Tories are doing.
John Glen (Salisbury) (Con)
The right hon. Gentleman is, quite reasonably, setting out his assertions about where he wants the Government to go, but does he not see the irony? After all the events of last week, the cost of borrowing in the UK is higher than that of many of our competitors, and all business leaders say they feel the instability. The right hon. Gentleman’s words will not ring very true for people who seriously wonder about the Government’s future direction, with putative leadership contenders talking about fundamental changes in direction and different fiscal rules.
Peter Kyle
The right hon. Member mentions irony; this is from the party that gave us the Liz Truss mini-Budget, which wreaked havoc on our economy. Mortgage rates went up for every mortgage holder across the country, with inflation peaking at 12%, yet the Conservatives talk about instability. The country still lives with the instability that they wreaked on it.
Our major expansion of DRIVE35 is channelling investment into batteries, electric motors and power electronics—part of the biggest Government investment in the British car industry since the second world war. “Invest”, “modernise” and “protect” are the watchwords for the new industrialisation of Britain through our biggest industries, our biggest sectors and our boldest companies.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
The Secretary of State talks about deregulation, but we have seen what that has led to in the finance sector, the banking sector and the water industry: consumers end up paying the price. The Secretary of State also talks about AI; speaking way back in 2014, Stephen Hawking cautioned:
“The development of full artificial intelligence could spell the end of the human race.”
Why do the Government believe that deregulating AI is going to assist their growth mission? It will put consumers’ lives and the human race at risk.
Peter Kyle
The Government are investing in AI infrastructure, but also making sure that the regulatory and legislative landscape is up to date for the time we are living in. The hon. Gentleman wants to turn the clock back. The world is awash with AI technology. We cannot stop it coming to our country, but we can shape how it interacts with our economy and its people. That is why we are investing in the training of 7.5 million people throughout the economy, including a million students, to make sure we can seize the opportunities that AI presents but also protect people from the potential damage it could cause.
Not only are we creating the conditions for new industrialisation, but we are ambitious for the success of Britain’s small businesses. Our “Backing your Business” plan is one of the most generous packages of support rolled out by any Government, with new hospitality zones and reduced red tape for bars and cafés. We have brought in an £11 billion lending package to help small firms to grow internationally and take advantage of the trade agreements we have negotiated with India, South Korea and the United States. This may trigger the Opposition, but we are also going to deepen Britain’s trading relationship with the European Union, Britain’s most significant international marketplace. That is what our European partnership Bill is all about.
Vikki Slade (Mid Dorset and North Poole) (LD)
I welcome the deepening of the relationship with the EU and the measures on late payments, but the elephant in the room is that while the jobs tax exists, and the Government do not make the most of business rate changes in retail, hospitality and leisure, the benefit to small businesses is more than outweighed by the extra difficulties they face. Does the Secretary of State accept that there need to be changes on that front, even if we have to wait until the Budget for them?
Peter Kyle
Once again, the Lib Dems condemn every fundraising measure we have brought in to invest in our public services and get our country back on its feet, but they never say how they will pay for the alternative. They never say how they will raise the money themselves. I am not going to apologise for any of the measures. I will come in a moment to the investment we have made in small businesses and in hospitality, and I will give way to the hon. Lady again if she wants me to at the time, but will she please say what the alternative is from her perspective? The Lib Dems want to spend all the money in the world but they do not want to tell people how it is.
The lending commitment we have secured with the UK’s five leading banks will support Britain’s small businesses to succeed and prosper. Our business rates support package, worth £4.3 billion, will protect ratepayers from large overnight increases in bills. We have introduced permanently lower multipliers for retail, hospitality and leisure properties. That is worth nearly £1 billion a year and will benefit over three quarters of a million properties.
I know that many businesses, particularly in the hospitality and retail sectors, would like us to go further. I get that. They are impacted by changes in the shopping and social habits of their customers, as well as the financial and geopolitical pressures in the wider economy. We are absolutely aware of and attuned to that. However, the crocodile tears of the Conservatives about these industries are laughable and lamentable. Theirs is the party that urged us to join the costly military action in the Gulf, which will heap further pressure on hospitality and other sectors throughout the economy. It is not our war, but the Conservative party would make British businesses and consumers pay the price.
Ben Obese-Jecty (Huntingdon) (Con)
The Secretary of State mentions crocodile tears; what would he say to the hospitality businesses in my constituency that have been impacted by the rise in national insurance contributions, the minimum wage rise and the business rates that he just talked so effusively about? What message would he give to them as they struggle to deal with the outcome of the Budget?
Peter Kyle
Unfortunately, none of the Conservative Members was listening to what I just said in outlining the measures we are taking, and the admission that we get it and we are listening. Fundamentally and foundationally, what those businesses need is what every business in this country needs, which is a growing economy. In the last year the Conservatives were in office, growth was 0.4%, but in the first year in office of this Government, it was 1.4%. That is what every business needs across the country, and when it comes to specific sectors at specific moments in time, we are watching and attuned, and I am acting where necessary. When the right hon. Member for Central Devon (Sir Mel Stride) addresses the House, I am certain that on that and so much more he will display all the symptoms of the economic illiteracy and ideological incompetence that for too long have engulfed the Conservative party. By contrast, we are taking practical action to end these conditions.
We are bringing in new measures to tackle late payments. The small business protections (late payments) Bill will give the UK the strongest legal framework in the entire G7. Late payments cost the UK economy £11 billion a year, forcing the closure of 38 businesses every single day. For 14 years it was the same under the Conservatives, and they did nothing. The Bill tackles the scourge of late payments, brings in stronger powers for the Small Business Commissioner, sets out strict maximum payment terms of 60 days, and bans the deduction of retentions in construction contracts. The Federation of Small Businesses has said that tackling late payment is one of the biggest things the Government can do to help small businesses to grow. That is the difference that an activist, interventionist Labour Government can make.
Finally, let me turn to another example of the difference. The ghost of free market Thatcherism still haunts many of the industrial areas of this country. It can be seen in the scars of de-industrialisation still marking too many communities around our country. It is high time to exorcise the ghost of de-industrialisation. When I published the steel strategy last month, I told the House I would never hesitate to fight for British industry in defence of the national interest. The legislation we are bringing forward is proof positive of that commitment.
Tom Tugendhat (Tonbridge) (Con)
I am grateful to my right hon. Friend—forgive me, I should not call him that; he will be embarrassed. I am grateful to the right hon. Member for his point about the steel industry. Understandably, he has chosen to support one particular aspect of the industry, the steelmaker, but at the expense of and to the cost of every other part of the industry—the steel consumers. How will he balance that and what provision will he make for those who will see steel prices rises because of his intervention?
Peter Kyle
I have committed to invest in, modernise and protect the steel industry where I need to. Those are watchwords that I apply throughout the economy in highly volatile times. We are investing up to £2.5 billion to modernise and transform the steel sector, from blast furnaces to electric arc furnaces—those are the kinds of transformations we need to make. If I had invested that money but not also protected our sector, that would be pouring vast amounts of public money straight down the drain. In certain circumstances I have had to step in and use measures to protect the domestic British industry. I am not introducing measures for any products that are not manufactured in the UK. I am doing so wisely; I am doing so to protect and ensure that we can build and retain a steel industry that is fit for the future and sustainable.
We will move forward and ensure that, in an era of global instability, we have the key aspects of our supply chain that we need for our resilience as a nation—yes, in defence; yes, in industry; and yes, in all the money we are investing in infrastructure. We must reserve those capabilities. I am listening and engaging with all parts of the steel sector, and the manufacturers and businesses that depend on it. I am listening closely to them. If there are any impacts, I will of course engage with them to understand and see how it will be possible, where necessary, to provide support.
Ayoub Khan (Birmingham Perry Barr) (Ind)
Will the Secretary of State give way?
Peter Kyle
No, I am going to carry on. I appreciate Members’ kind offers to intervene again and again; I look forward to all their speeches.
The Steel Industry (Nationalisation) Bill will give us the authority to bring British Steel into public ownership, not as an ideological exercise but as a practical means of safeguarding the national interest. It will allow us to retain the Scunthorpe plant as a critical piece of our national infrastructure that is essential to British economic resilience. Britain has long been a proud steelmaking nation. Whatever I have to do to make it so, Britain will retain its capacity and capability to manufacture steel. That is my commitment to Members in this House and to the remaining steel communities of our country. The strength of that commitment can be measured in our determination to boost domestic steel production to ensure that 50% of the steel used here is made here.
Britain cannot make its way in the world as a services-only economy. We have to make our way—earn our way—to greater prosperity, equality, security and opportunity. We cannot do that by economic isolationism, neoliberalism, greater protectionism or a command economy. We cannot regulate our way to prosperity. We can achieve it only through practical and pragmatic policies that support British businesses to be profitable, to scale up, to create jobs and to grow. We have to end the outdated free-market ideologies, failed economic theories and siren voices that all but destroyed Britain’s manufacturing base and drove the British public towards Brexit. Britain’s future prosperity can be built only by business success. There is no other way, no shortcut, no easy option and no magic bullet—no matter how attractive and simplistic slogans and superficial soundbites may appear to some.
George Freeman (Mid Norfolk) (Con)
The Secretary of State is making a wonderful speech about the 1980s. While I agree with many of his points, the truth is that the country today has come a long way in all sorts of sectors, and I am proud to have done my bit to help that. On regulation, the Secretary of State agrees that leadership on regulating new industries, and having sandboxes and testbeds, is a great UK strength. He also wants us to get closer to the European market; is he worried that if we do, we may end up losing our competitive advantage in a number of areas where we could genuinely attract investment into new industries, such as agri-tech and gene editing?
Peter Kyle
To clarify, I am talking about how we recover from the scars of the 1980s, how we learn the lessons, and how we ensure that we never repeat mistakes that cause scars that endure for generations. To answer the hon. Gentleman directly, we will align with the European market only where that is in the national interest.
We cannot turn back the clock to build future success. The partnerships that this Government have built with businesses, local government and trade unions are delivering resilient growth and helping to build a stronger economy. They are building a fairer country, in which wages are up and public borrowing is down. There have been six interest rates cuts and 500,000 children are being lifted out of poverty. The FTSE 100 has reached historic highs, and the UK is raising more venture capital funding this year than France, Germany and the Netherlands combined.
This Government faced enormous challenges on taking office, and the conflict in the Gulf presents us with even greater challenges. Despite that, we are making progress. It will take time for the benefits of progress to be sufficiently seen and properly felt. The recent election results show that. The only sure route to proving the benefits of change is growing the economy, and the only certain way to grow the economy is through British business success. Our task is to create the right conditions for Britain’s businesses to invest, succeed, and win in an increasingly competitive global marketplace. We have made a start, and we will see this through to the finish.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
In the face of the local election results last week, it is undeniable that what we have done so far is not enough. The long tail of austerity means that we have so much more to do. People see a world moving at a rate of knots and are frustrated at this Government’s slow pace of change. We live in a world where we can order almost anything we want in the morning and have it delivered later that same day. For consumers, satisfaction is now almost instantaneous. That is in complete contrast to Government, where improvements are seen as slow. The expectations and the challenge that we face are there for all to see.
What does the King’s Speech do to address what I consider to be the holy trinity of what good Labour Governments do: jobs, homes and health? First, there are two pieces of legislation on homes. The social housing renewal Bill will alter the right to buy by increasing the eligibility requirement by 10 years, amending percentage discounts to better align with new maximum discounts and exempting newly built social housing from the right to buy for 35 years.
This area is like so many other Thatcher legacies. The sugar rush felt in the short term by those able to buy their home at a substantial discount has long been replaced by a broken social housing market in which people living in identical properties next to each other can pay massively differently rents. It is a market in which the taxpayer often subsidises inflated rents through housing benefit and millions of young people who might once have seen a council home as their natural route into adulthood have the option forever denied to them. We can see where the logic of right to buy takes us. Between April 2012 and March 2025, 133,000 social homes were sold, but only 51,000 were replaced. With 1.3 million people on council house waiting lists, the problem is obvious for all to see.
Secondly on housing, the long-awaited draft commonhold and leasehold reform Bill will bring us closer to ending the feudal leasehold system. It will finally ban the use of leasehold for new build flats, it will place a cap on ground rents, and it will create a new legal framework for commonhold. There is huge demand for this to be done as soon as possible, and I know the Minister is going as fast as he safely can, but he also needs to tackle rip-off estate management fees—he has to stop that model in its tracks. If we are determined to tackle the cost of living crisis, that is one obvious and indefensible practice that we can end.
Alongside addressing the problems that people face now, the Government must take steps to address the problems that are coming down the track. I believe that the unwritten social contract that if a person works hard and plays by the rules, they can expect a good standard of living in return, is disintegrating and under real threat. Across this country, economic growth no longer translates to better outcomes in life, something that is only set to continue with the increase in AI in the workplace and developments in automation. Graduate roles have already been hit—graduate vacancies have fallen by more than one third this year—and that trend will only continue and diffuse across other areas of the labour market. Young people are therefore growing up and entering a world of work that is detached from previous norms, and we are nowhere near ready for the resulting changes that we will see in the next decade. The state needs to be ready to respond to those shifts, to ensure that not only those entering the workforce, but those who are already in it and those who are displaced, are properly skilled for the needs of the future labour market.
That future labour market has to include significantly more manufacturing roles, as the Secretary of State acknowledged in his speech. The more we can make ourselves, the more insulated we will be from the inevitable disruption that AI is going to cause to jobs, particularly in the service sector, but it will also better protect us from the global supply chain shocks that we are far too exposed to at the moment. The moves to protect UK steel are the right first step in recognising that we need to do much more to protect our manufacturing base. I am not proposing that we nationalise everything—I will leave that for other people to do—but my visit to the local Vauxhall car plant last week was a clear lesson in how we need to sharpen up across the whole of Government to protect manufacturing, and the UK automotive sector in particular. The decision on employee car ownership schemes in the last Budget was welcome, as is support for energy costs next year, but of course, the industry would like that support to be much sooner and much stronger than what is proposed.
There are a number of factors challenging the automotive sector, but the biggest one and the one over which the Government have the most control is the ZEV mandate. There has been huge investment in the Ellesmere Port plant so that it can manufacture electric vehicles, and I believe that most of the UK automotive sector is supportive of an electric future. However, the reality is that the current level of sales is nowhere near where it needs to be in order to hit the ZEV mandate, and that gap is only going to get bigger each year. We need to be clear that this is not just a case of “Oh, well, we aren’t going to hit the target.” Every sale short of that target has direct financial consequences for UK manufacturers.
Looking around the world, we see that most countries that have put in place sales targets for electric vehicles have had to row back from them in light of the evidence that uptake just is not where it was predicted to be. We need to bring the review forward and make the decision now that the escalation of targets under the ZEV mandate needs to be turned off. This is not something to be looked at in the abstract, on a graph in the corridors of Whitehall; it needs to be looked at in the context of the cold reality of consumer choice and the importance of protecting UK manufacturing. Let us not lose good manufacturing jobs in pursuit of the unattainable—all that will do is supercharge the Chinese automotive sector. That is not going to help the planet as much as we would like, and it certainly is not going to help this country. We have a great tradition of building vehicles in this country, and we want to be at the vanguard of taking the industry into the future, but let us do it in a sustainable way that protects and builds on what we have.
We need to do more to support UK manufacturing through procurement. I was delighted recently to take a Royal Mail delivery van made in Ellesmere Port for a spin, with permission from the owner. That electric van, made down the road, is delivering mail to my constituents. We need to see much more of that, and we need to encourage UK companies to buy from the UK. Every part of the public sector should be required to buy British. Every council, every hospital and every school should seek to maximise that, because every taxpayer pound spent on UK goods goes back into our economy. We can do a lot without legislation, but we need to pursue it with great zeal.
This is all about levelling the playing field, because more needs to be done. When people see barber shops and vape shops proliferate on their high streets, they know that something is not right, as there simply is not the market to sustain them all. When they see some shut down, perhaps for selling illicit goods or for illegal working, it confirms their suspicions that they are not competing with legitimate businesses. When we see them reopen a few months later, perhaps under a different name, people see a system struggling to cope with the scale of organised crime infecting our high streets.
The time for which a shop can be closed for breaching the law will be doubled, but let us also go after the landlords for, at best, failing to do due diligence, and at worst for being complicit in illegal activity. We can do more to support our small businesses on the high street and get the level playing field that we desperately need.
We also need a level playing field in how we treat people at work. We have to accept that bogus self-employment is a business model based on denying workers basic protections at work, and it is absolutely the wrong direction for this country. We promised in our manifesto that we would tackle this, so we should get on with it.
On a related note, the proposed strengthening of the growth duty, which will apparently reduce unnecessary risk aversion, is misguided. Good businesses want their staff to work in safe environments, and they want them to be treated well. This so-called unnecessary risk aversion, referred to in documents that the Government have produced, is an illusion—a straw man—and it has been used to put up with other shortcomings.
We face many challenges. I think we are on the right track, but we need to go much further and much faster. The public are telling us that they need to see results. We are now two years into this Government, and as much as the news cycle is hyper-focused on personality, the King’s Speech is all about policy. It is about how we shape a better future and show voters that they were right to put their trust in the Labour party to deliver for them.
Everyone here knows the perils that lie ahead if we are not bold enough, if we are not determined enough and if we do not use the time that we have to deliver real change. We are nearing the halfway point of this Parliament and, while progress has been made, it is abundantly clear that we need to go much further if we are to show that we have the power to transform the lives of ordinary people in this country.
The clock is ticking. Incrementalism will not cut it. We now need a response that rises to the urgent challenges that our country faces, so let us go out there and do it.
Sir Desmond Swayne
Irrespective of who was responsible, the question is: what is happening now? The reality is that we are facing a danger, notwithstanding the investment of time we are putting into scrutinising the Government’s programme, that it will not remain the Government’s programme for very much longer, such are the very different priorities of those who are lining up to take the Prime Minister’s job.
When the Prime Minister warned his party last week that unleashing a leadership election would bring about chaos, he was quite right, but that chaos also comes with a cost. Such is their horror at the prospect of those lining up to take the Prime Minister’s job, the markets that fund our gargantuan and growing appetite for borrowing are charging a risk premium higher than was charged for the Truss regime, and higher than is charged for Greece when it seeks to borrow. I am not a particular fan of the current Prime Minister, but I urge Labour Members—and, indeed, the voters of Makerfield, who will apparently have a rather more significant input in the settling of this matter—to take account of Hilaire Belloc’s cautionary verses, and, in particular, the tale of poor Jim, who ran away from nurse and was eaten by a lion:
“And always keep a-hold of Nurse
For fear of finding something worse.”
His Majesty told us that the legislative programme would include a Bill to strengthen our relationship with the European Union, but it is far from clear what that actually means. Do the Prime Minister’s red lines—no return to a customs union, or to free movement, or to the single market—still hold firm, and do they hold firm in the view of those who have expressed a much more enthusiastic agenda for returning to closeness with the European Union, among those candidates who are lining up behind him, seeking his job? Labour said in its manifesto that it was going to make Brexit work, but it has made it the excuse for the lacklustre performance of the British economy.
There is a measure of cakeism going on whereby Ministers, including the Secretary of State, tell us how wonderfully they have been doing. They have delivered the fastest economic growth in the G7, much faster than the countries that the Secretary of State identified in the European Union. They have delivered a reduction in inflation. They have delivered—
Sir Desmond Swayne
Quite right: interest rate reductions. They have done all these wonderful things, but at the same time they languish because we are not a member of the European Union. We have heard that criticism several times already today: we would be doing so much better if we were a member of the European Union. The reality is, however, that the European Union is not doing as well as Ministers are trumpeting that we are doing.
The Chief Secretary to the Treasury (Lucy Rigby)
It is a pleasure to close today’s King’s Speech debate on behalf of the Government. I am grateful to Members for their contributions, including the Business Secretary for his excellent opening speech and the shadow Business Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), for her kind words—although I note that I did not qualify as a “beam of light”, nor others on the Government side. I speak on behalf of the whole House when I say that whichever part of that £5 million charitable donation the right hon. Member for Newark (Robert Jenrick)—he is not here, unfortunately —spent on his amateur dramatics course, he ought to ask for his money back.
Two years ago, the Chancellor stood at this Dispatch Box following the first King’s Speech of this Labour Government. She committed to rejecting the failed economic approach of the 14 years prior and to charting a different economic course, reinvigorating our economy after years of chronic under-investment, austerity and poor productivity, and the only Parliament in recorded history when living standards actually got worse. The Chancellor committed to charting a different course so that our economy delivers for people right across this country.
As a result of that approach, interest rates have been cut six times since the general election. In March, the spring forecast showed inflation coming down, as the right hon. Member for New Forest West (Sir Desmond Swayne) was good enough to highlight, and real wages continuing to rise. Last week, ONS data showed borrowing falling by around £20 billion compared with the year before. Importantly, economic growth accelerated sharply in the first quarter of this year, rising to 0.6%, despite the Iran war. Of course, today we have had the IMF upgrade to growth this year as well.
I am afraid I have to correct the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), and the hon. Member for Rutland and Stamford (Alicia Kearns), because GDP per capita is up too. These things are the result of the fiscally responsible choices that this Government have made, and it is responsibility for a clear purpose. That same purpose will always be at the heart of who we are as a Labour party: improving the lives of working people right across the country.
We increased the national living wage and the national minimum wage. We have frozen prescription costs, and we have frozen rail fares for the first time in 30 years. We have scrapped the two-child benefit cap, lifting 450,000 children out of poverty. We are helping parents to save up to £8,000 a year with our expansion of Government-funded childcare, free breakfast clubs, and the new school uniform cap on branded items. Those things are helping millions of families across the country.
The conflict in the middle east is putting pressure on energy markets and creating renewed fragility in trade and supply chains. The Conservative party and Reform would have raced into that costly war—the Leader of the Opposition was clear about that at the time—with damaging consequences for both our national security and our economy. [Interruption.] Conservative Members are shaking their heads and saying it is not true, but one of two things must be true: either the Leader of the Opposition said that she wanted to take us into the conflict and she meant it, in which case she has catastrophically poor judgment, or she said that she wanted to take us into the conflict but did not mean it, in which case she is deeply confused and Conservative Members have more things to worry about than catastrophically poor judgment.
By contrast, the Prime Minister made the right decision to keep us out of that conflict. Because of his decision, and because of the action we have taken to stabilise the economy over the past two years, Britain today is in a stronger position to withstand the uncertainty and insecurity in the global economy.
As well as immediate support with the cost of living, we must also create the conditions for shared prosperity. That means more jobs, businesses expanding and investing, and people in every community and part of our country having greater security and more of their own money to spend. That is what a Labour growth agenda means. The Chancellor has been clear that she wants to ensure that that growth is stable and resilient. Why? Because that means people secure in their jobs and households secure in their finances and, in our increasingly uncertain world, it means that families the length and breadth of Britain will be more confident and hopeful about what the future holds.
All that is the basis on which the pro-growth legislation set out in the Gracious Speech is being delivered. That begins with legislation to reform and modernise regulation, to ensure that rules are proportionate to risk, and that businesses are able to expand and grow to the benefit of our economy as a whole.
I am grateful to the right hon. Member for Salisbury (John Glen) for his constructive comments about our enhancing financial services Bill. I confirm that the Bill will maintain the UK’s competitive edge by enabling the sector to support businesses of all sizes to invest and grow, including credit unions, with reforms to the common bond. We will ensure that regulation ensures more lending to small businesses, and we will give Government the power to take action on in-person banking services.
As many Members highlighted, the small business protections (late payments) Bill will tackle the scourge of late payments which, as my hon. Friend the Member for North West Leicestershire (Amanda Hack) wrote in her dissertation some years ago, cost the UK economy £11 billion each year and lead to the closure of 38 UK businesses every day.
We must also build resilience to protect our critical infrastructure. Steel is strategically important to our economy, which is why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depends on the site. It is why we are now bringing forward legislation to give us options to protect Britain’s steelmaking capability.
We have already announced major energy investments, including for the UK’s first ever small modular reactor in Anglesey and the next generation of nuclear submarines in Inverclyde. Our nuclear regulation Bill will modernise the way new nuclear projects are regulated so that we can deliver safe, secure and affordable nuclear power and infrastructure sooner, while maintaining strong environmental protections. Unlike a number of the Opposition parties, including the Greens and the SNP, this Government recognise the importance of new nuclear for our energy security, our climate security and our economic security.
My hon. Friend the Member for Bristol East (Kerry McCarthy) asked about the voluntary carbon consultation. The Government have published a summary of responses and a formal Government response will be published over the summer.
As Members have noted, we must improve connectivity and boost trade to unlock growth. Labour has been saying for years that far too many parts of Britain lack basic and reliable transport connections, and all the many positive economic benefits that flow from that. Some of these points were echoed by Members, including the hon. Member for North Shropshire (Helen Morgan). Northern Powerhouse Rail will help to build a northern economy that reaches its full potential. Backed by up to £45 billion of Government support, the new route will drive jobs and investment across a single, well-connected northern growth corridor. We are also taking steps to protect and grow the freight industry.
On the points raised by my hon. Friend the Member for Brent East (Dawn Butler) and by the hon. Member for St Albans (Daisy Cooper) about the overnight visitor levy, the levy is a key means by which we are delivering our manifesto commitment to devolve new revenue-raising powers. Revenues from the levy will support local economic growth and mayors will make decisions, informed by local consultation, about how revenues should best be invested in their region.
Britain will work closely with those who share our values and interests, which means a closer and more constructive relationship with Europe. That is why we are bringing forward the European partnership Bill.
Tom Tugendhat
I am delighted to hear that we will be working more closely with the European Union. As the hon. and learned Lady may know, my wife, being French, will be particularly pleased about that, but what will that mean for the agreement we have struck with the Pacific nations in the comprehensive and progressive agreement for trans-Pacific partnership, or the deal that we did with the Australians? Will the hon. and learned Lady be cancelling those deals as she focuses on the European Union, or will she be staying out of the customs union and the single market, and therefore being focused much more on being a rule taker? I am interested to hear her response.
Lucy Rigby
The right hon. Gentleman’s wife, and potentially he himself, will be pleased to know that those two things are entirely compatible. We will have to cancel absolutely nothing at all. The key point is that where it is in our national interest to align with EU regulation, the Bill will enable us to do so.
I want to address some specific points that were raised about Northern Ireland. The Government have worked closely with devolved Governments to design the Bill. The application of the agreements we are making alongside the Windsor framework will sweep away the majority of regulatory barriers for businesses moving agrifood goods.
Jim Allister
If the Minister is truly interested in sweeping away some of the barriers of the Irish sea border, in circumstances where sanitary and phytosanitary rules are being aligned, would the natural and proper constitutional move not be to take back control of the SPS system in Northern Ireland, instead of leaving it under the jurisdiction of the EU? If we are going to do a deal, let it be for the whole United Kingdom, so that the whole United Kingdom aligns, if that is what the Government think, instead of leaving Northern Ireland exclusively subject to the laws that the EU makes.
Lucy Rigby
As I said, the Government have worked closely with devolved Governments in the design of the Bill and we will continue to do that.
To conclude, the pro-growth legislation set out in the Gracious Speech will drive this country forwards. The Conservatives had 14 years to deliver their legacy, which left our economy weaker, left people poorer and, most of all, left our country smaller in stature. This Government are undoing that legacy and our pro-growth legislation will allow us to accelerate the change that the country deserves to see.
Our approach of a productive, active, agile state will ensure that we generate growth and lift living standards for people right across this country, not just for a few people and postcodes, but everywhere, because we value the contribution of the whole of Britain. The Bills in the King’s Speech are the path to a stronger and fairer future, and I commend the King’s Speech to the House.
Ordered, That the debate be now adjourned.—(Jake Richards.)
Debate to be resumed tomorrow.