Joe Powell
Main Page: Joe Powell (Labour - Kensington and Bayswater)Department Debates - View all Joe Powell's debates with the HM Treasury
(2 days ago)
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Sir Mel Stride
My right hon. Friend is absolutely right. With the increasing Government debt to which this Government are constantly adding, and the higher interest rates for longer for which they are responsible because of their extravagant spending, we are spending about £100 billion a year on simply servicing that debt, which is twice what we spend on defence. That is not sustainable, and things will get worse under this Government.
Joe Powell (Kensington and Bayswater) (Lab)
Might the Chancellor elaborate on the national debt that the previous Government inherited in 2010, compared with what we inherited last year?
Sir Mel Stride
I would be delighted to talk the hon. Gentleman through that. The preceding Labour Government left this country with a deficit of 10.1%, or £160 billion a year, so clearly we had to get on top of that deficit. It is a simple fact of economic life that if a country is running a large deficit, its debt increases, but by the time of covid, we had largely settled that deficit. For the reasons that I gave a moment ago, of course we added to the debt and the deficit at that point, because we had to intervene to stabilise the economy. However, the inheritance that we received in 2010 was the start of that debt climbing. The hon. Gentleman should acquaint himself with the economic history.
What approach can this Government take in the autumn? They are not going to be saved by growth—that is for the birds. The OBR, the Bank of England and the International Monetary Fund have all downgraded growth, and the Office for National Statistics recently announced that for the second month in a row, we have had an economic contraction.
How else might the Chancellor make the numbers add up? Well, despite Ministers insisting that their commitment to the fiscal rules remains non-negotiable, there are reports of potential changes to the broader fiscal framework, including the early use of the flexibility of a 0.5% of GDP range for the current budget target, which would allow £12 billion to £13 billion of extra borrowing. However, that would be a breach of faith. There are similar reports that Ministers might move to just one OBR forecast a year, to avoid an embarrassing emergency Budget like the one we saw in March. However, that would completely abandon the commitment not to sideline the OBR, so when the Minister comes to the Dispatch Box will he reconfirm that the Government’s commitment to the fiscal rules also applies to the fiscal framework, and that we will continue to have two OBR forecasts per year?
The Government should be looking not for yet more borrowing, but to rein in spending. However, the welfare debacle shows that they are utterly incapable of doing that, so that leaves just taxes. The motion before us today simply asks the Minister to confirm the Chancellor’s commitment not to extend the freeze on tax thresholds. She specifically said in her Budget speech that such a move
“would hurt working people. It would take more money out of their payslips.”—[Official Report, 30 October 2025; Vol. 755, c. 821.]
When the Minister comes to the Dispatch Box, will he confirm that he, too, holds that position? Will he also rule out wealth taxes? We have already seen tens of thousands of people—high net worth individuals—leaving our country. I know that socialists may say, “Good riddance to them—they are wealthy”, but the Adam Smith Institute calculates that the tax forgone as a consequence of their departure is equal to the tax paid by around half a million people on average earnings. The Labour party has no plan to stem that exodus of talent and wealth creation.
Whatever decisions are taken in the autumn, they will be bad ones, and as nervous markets look on, they may prove disastrous. It may even be that this Government take us to a dark place; it is hoped not, but if history is any guide to the future, the lights are surely flashing red. Surely, too, the British people, those hard-working men and women up and down our country—the businesses, the entrepreneurs, the farmers who toil all hours, our charities, our hospices, our veterans, our elderly, and all those who embody the very best of all that our country can be—deserve answers about the promises made to them, and about whether their pay packets, their pensions and their savings are safe. Surely, they deserve better than this wretched, rotten and defunct Labour Government.
Joe Powell (Kensington and Bayswater) (Lab)
I congratulate the shadow Chancellor on securing a debate on this motion. When this Government came into office, they found Britain’s public finances vandalised, the economy wrecked, debts soaring, sky-high mortgages, a cost of living crisis that has touched every household in this country, and a mismanaged pandemic, rife with dodgy contracts and corruption. The Conservatives today pretend that they have discovered fiscal responsibility, but we all remember that they increased taxes 25 times in the last Parliament, and gifted us the reckless Liz Truss mini-Budget, which sent mortgages spiralling and tanked the markets.
No Government in living memory have had a worse economic inheritance than this one. The Conservatives have no credible economic plan for dealing with the debt, no credible plan for growth, and no credibility whatsoever with the British public. What they did to the public finances and the national debt even before the pandemic is unforgivable.
Mr Holden
Labour Members pretend that 2010 was year zero. In truth, in 2010 there was an annual deficit of 10% of GDP in Government spending, which meant that the Government were borrowing £1 for every £4 they were spending. Does the hon. Member not acknowledge, or understand, that that was a far worse economic inheritance than any Government have been offered since the second world war?
Joe Powell
I thank the right hon. Gentleman for that intervention, because it is important to talk about debt. I was disappointed that the shadow Chancellor failed to acknowledge that the inheritance in 2024 was total national debt of close to 100% of GDP, which was up from 60% in 2010. The annual debt payments that the Government are having to make—as others have said, they are close to £100 billion, thanks to the Government’s economic inheritance—are 8.3% of total public spending. Imagine what we could do if we spent that money on the NHS, our schools, or fixing the housing crisis.
This goes much deeper than debt. The truth is that we inherited a sick economy, affecting living standards, wages and public services, and there was no plan for growth. The Conservatives left Britain with rising debt and flatlining growth, yet they oppose the very measures that the Government have taken to fix their mess.
Joy Morrissey
Just to correct the record, on the economy, we had the highest and fastest growth in the G7 when we lost the election. We handed the Government that highest growth. I know it is hard for Back-Bench Labour MPs to grapple with that, but it is a fact none the less.
Joe Powell
I thank the hon. Member for that intervention. Of course, the Conservatives tanked the economy, and when there is such a dramatic decline in growth, increasing it from a very low level to a slightly higher one is relatively straightforward. The economic growth figures for the first quarter of this year, as we know, are the highest in the G7.
The Government are trying to fix the mess, including through measures worth over £20 billion a year—measures aimed at repairing our public finances by addressing the black hole and investing in public services that were wrecked by austerity, poor management and wishful thinking. The Conservatives have a nerve to pretend that they would do things differently now. My constituents tell me the same. Indeed, a local resident, George, has been vociferous about the lack of a credible economic plan from the Conservative party, and will not stop sharing his views on the airwaves. Yes, even the former Chancellor of the Exchequer thinks that the Conservatives have no answers to the fiscal challenges that the country faces. There is plenty that George Osborne and I disagree on, but he is absolutely right on that.
At every turn, the Conservative party is backing the blockers and preventing a plan for economic growth, whether it is the Leader of the Opposition blocking new energy infrastructure in her own backyard or the shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), signing letters to delay vital transport infrastructure. It is no wonder that our economy has been held back for so long.
The other parties, too, have nothing to offer. Reform wants Liz Truss’s reckless economics all over again—the same failed experiment of unfunded tax cuts that crashed our economy and left our constituents paying the price. Meanwhile, the Liberal Democrats promise all the benefits of tough decisions with no way to pay for them. It is pure fantasy economics. I am glad that the Government have committed to not repeating those mistakes. It will fall on the Labour party to fix this mess, rebuild our economy and deliver the secure growth that Britain needs.
Nowhere is the cost of failure clearer than in the broken housing system. London boroughs now spend £4 million every single day on temporary accommodation —a massive waste of taxpayers’ money. The Conservatives also locked us into paying billions for over-inflated asylum hotel contracts. That is another egregious waste of taxpayer money that we inherited from them. That is the direct result of not planning for investment or for the long term; it is the price of short-termism and a failure to plan for the future.
Let us look at housing—one part of our plan. We have ambitious planning reforms to deliver the greatest impact on growth at no fiscal cost. We have the biggest investment in social and genuinely affordable homes in a generation. We have leasehold reform, protection for renters and a new decent homes standard, which are all opposed by the Conservative party.
This Government are making tough choices to raise revenue. The Conservatives talk about businesses; I meet businesses all the time, and I understand the pressures that they are under. They tell me that it is vital that NHS waiting lists fall, so that their employees can access the treatment that they need; that we have modern infrastructure in Britain, including transport and energy; that their staff can afford housing options; and that we agree an EU youth mobility scheme to support our hospitality industry.
Bradley Thomas (Bromsgrove) (Con)
When businesses in the hon. Gentleman’s constituency make people redundant, do those employers explain to his constituents that they have to do that for the good of the NHS?
Joe Powell
I am glad that business confidence is at a nine-year high—that is from an independent assessment. The decisions that the hon. Gentleman refers to are already making a difference. Does he oppose the 4 million extra NHS appointments that this Government have managed to secure so far; the three trade deals with the US, India and the EU—deals that the Conservative party failed to get over the line—the four interest rate cuts; the efforts to close the tax gap; the fact that wages have grown more in our first 10 months in office than under the last 10 years of the Conservative Government; the rise in the national minimum wage to support low-paid workers; and the expansion of free school meals to half a million children, which also lifts 100,000 out of poverty?
The motion before us offers no ideas and no credible plan. If the Conservative party were serious about economic growth and tax, it would do some reflecting on its record, apologise to the British people and get behind the Labour plan to get Britain’s economy booming again.
Bradley Thomas
I will not; I have been generous with interventions.
More than half of business owners nationally are planning to, or have made, further cuts to staff numbers in response to increased employer national insurance contributions. In May, 109,000 jobs were lost in a single month. When we tax jobs out of existence, the fiscal rules are not merely stretched; they are shattered. The Chancellor will have either to break her campaign promises and raise taxes, or admit that her rules are broken. Either way, it means that working families and working people across the country will pay the price.
A fortnight ago, the Government rejected calls to protect those whose only income is the state pension from paying income tax. This retirement tax will hit 1 million of our lowest-income pensioners. This is not wealth; they are modest, often meagre incomes relied upon to heat homes, buy food and see a doctor. One in five single pensioners has no other income beyond the state pension and basic benefits, yet to fill a fiscal hole that they have created, the Government resist the plea of their most vulnerable citizens.
Bradley Thomas
I will not give way; I have been generous in taking interventions.
As the Chancellor grows increasingly desperate to save the sinking ship of her fiscal rules, there is now rumour of a wealth tax to compound the Government’s contempt for not only working people, but industry leaders and innovators. That is not conjecture. Only last week, Lord Kinnock said that Labour should be “willing to explore” such disastrous measures. Let us be honest: a wealth tax really means a tax on hard-working people. It means an attack on pensions and on people who have done the right thing and want a sense of fairness, and anyone who has accrued anything will pay the price.
Mr Richard Holden (Basildon and Billericay) (Con)
The damage that this Labour Government have dealt to our economy is a real kick in the teeth for all those who voted for them last year—and for those who did not vote for them, but who wished them well and believed their words at the general election. Time and again, my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), and many others on this side of the House, warned that the new Labour Government’s priorities and promises on tax were not to be trusted, and that members of the public should take their words with a bucket of salt. The Labour party cried foul, diving to the ground like a premiership footballer screaming blue murder, but what has come to pass is far worse than many on this side of the House imagined it would be. For all the Government’s talk of fixing the foundations, I have been pained to watch the suffering, distress and anxiety that they have wilfully chosen to inflict on the British people. They have hammered the small businesses on which people rely for their jobs, through changes to business property relief, agricultural property relief, VAT and dual cab taxes, and through the business rate rises and the national insurance tax rise.
I cannot think of a policy as woefully constructed and as disastrously executed as the national insurance tax rise. This Government claim to have been elected on a platform of promoting growth, but they are choosing to boost growth by blowing up businesses. That is so inexplicable that it calls into question the Government’s ability to govern. The people hit hardest by the tax rises are those starting out in their first job, who will be hit by the thresholds, and part-time workers—often women—trying to get back into the labour market. It is among those groups that we see the highest rises in unemployment since the Budget.
It is because of the Government’s choice to raise taxes that businesses are cutting back on hiring staff. They are also making staff redundant, shelving expansion plans and closing their doors. I see that in my constituency, where unemployment is up by about a sixth in the 12 months since the general election. It is also because of that choice that inflation is up and growth is down, and because of choices made by the Labour party that this country will continue to miss out on investment opportunities and economic security.
That brings me to the people who will feel the impact most acutely. During the pandemic, we celebrated key workers—the care home workers, teachers and hospice workers who went out every day in horrendous conditions to do their job in a spirit of service. What kind of Labour Government would willingly choose to punish those who represent the heartbeat of the nation? Only recently, I heard from a woman in my constituency who runs a small childcare business, which she kept going during the pandemic. She wrote to tell me that because of the tax rise, she has had to cut back her assistants’ hours and turn away parents. On the one side, the Government pretend that wages are increasing, but on the other, employers are being forced to cut hours, so people are no better off. It is happening in every constituency up and down the country, and that is the real cost of this Government’s choice.
The national insurance tax rise means less money for schools and teachers, for hospices and their staff, and for the healthcare workers who were applauded during covid—those operating in the most difficult circumstances. It is a fundamental disgrace that the Labour Government, who are always so keen to paint themselves as the kinder, more cuddly, and more friendly party, have made the catastrophic choice to balance the books and fix their failures on the back of essential workers and volunteers. The Government are raising taxes on hospices, which they are supposed to stand up for.
Joe Powell
I thank the right hon. Gentleman for his defence of teachers. I am sure that he welcomes the pay rise for teachers of 5% last year and 4.4% this year, funded by the Budget.
Mr Holden
The hon. Gentleman may shake his head, but he should look at the statistics. Schools in my constituency and his will cut support staff and teaching assistants as a result of the black hole that his Government have created for their workers.
It is particularly pernicious that the Government are raising taxes on hospices. I visited St Luke’s hospice in my constituency at the weekend. It is having to raise hundreds of thousands of pounds a year more—money that would be going towards care for the most vulnerable at the end of their life—to pay for a tax rise that Labour Members will today vote to maintain, while Conservative Members say that it should be removed.
My hon. Friends and I will always raise these issues, as we have the issues for farmers and our food security, or the mind-boggling plans to drive away wealth creators to fill up the Treasury’s coffers, and we will continue to do that in opposition. We are asking the Government to listen to us, because we want the Government to change course and do the right thing. Bizarrely, we do not actually want the Government to drive the country off the edge of a cliff.