Loan Charge

John McDonnell Excerpts

Thursday 18th January 2024 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Like everyone else in the Chamber today, I have constituents who have been affected in a way that is incredibly distressing, so I understand completely the howls of outrage sounding across the House today. I want to deal with process, though.

Some hon. Members here took part in the debate in 2018. I would like people to read the speech made in that debate by my hon. Friend the Member for West Ham (Ms Brown). I was the shadow Chancellor then, and she was in my shadow Treasury team. Speaking from the Opposition Front Bench, she set out exactly case after case, as hon. Members have done today, but there was one additional case we drew on which has not been mentioned today—a case in which, because of cuts to local councils and elsewhere, staff had been laid off and then rehired on this basis by public bodies, which was particularly shocking.

Let me read the ministerial response that was given then, because I think we should learn from it. The then Economic Secretary said:

“Although…I have tremendous sympathy for those facing large tax bills, it is unfair to let people get away with not paying the tax they owe. There is support for people who have used the schemes and now find themselves in difficult situations, which require those affected to approach HMRC and bring the matter to a close.”—[Official Report, 20 November 2018; Vol. 649, c. 295WH.]

That was the ministerial response. I do not think we can tolerate a similar ministerial response today, because that led to immense human suffering, including, as some have said, some people losing their lives. Many of them did approach HMRC and they did try to negotiate deals, but there was no element of clemency and no understanding of the individual plight of those people. As a result, many of our constituents suffered badly.

I just want to move on and try to get some resolution. I hope that we and the Government can agree today on review. That review should be immediate and time-limited in months, not years. It should be truly independent, with its independence assured by the victims. It should propose a specific range of resolutions, which will have to include some element of compensation for what people have suffered. The review should look at where the compensation should come from. I think it should come not from from other taxpayers, but from a levy on those who promoted the schemes, and perhaps some elements of the finance and accountancy sector that were involved up to their necks, to be frank. That is my first point.

I also think that we need to review our own role in this, and in what has happened over time. I agree with the right hon. Member for Haltemprice and Howden (Sir David Davis) that not only should the Procedure Committee examine the House’s role, but the Public Accounts Committee should look into how we have arrived at current situation.

Let me give two examples of the background to all this. HMRC has come in for considerable criticism today, and I agree with much of it. What I say now is not in mitigation of HMRC’s role, but an attempt to gain some element of understanding of what has been going on there. HMRC is, rightly, under pressure from all of us, on both sides of the House, to tackle tax avoidance and evasion. Some of us have led campaigns over the last 20 years or so to try to get HMRC to work on that effectively, and I pay tribute to the Government for putting it under pressure to tackle the tax gap. They were the first Government to identify a tax gap of £38 billion, or whatever the amount is; I disagree with the figure, but at least we have a target to aim for. However, at the same time, over those 20 years, both parties have excelled in a Dutch auction to establish the extent to which HMRC’s staff levels can be cut.

I can understand a wish to reduce staffing, but there are better ways of doing it, and for a while the way in which it was done at HMRC was fairly brutal. That resulted in redundancy schemes whereby a whole wave, a generation, of expertise was lost, and it had an effect on the culture of HMRC. According to my understanding, HMRC looked for short cuts and a way of meeting the demand for it to tackle tax avoidance and evasion and the tax gap, and I think that this was one of the short cuts that it invented. In latter days, there would probably have been wiser heads in HMRC itself to suggest that this was not the route to go down because it would bring about more problems than solutions. However, a culture of secrecy and protectionism has developed in HMRC, and we need to understand that if we are to tackle this properly as an institutional failing.

Secondly, we need to look at the role that the House played. I have been going back to the year 2017, and trying to remember what was happening in the House at that time. Some Members will recall that there was not a normal process for the Finance Bill, because the right hon. Member for Maidenhead (Mrs May), who was then the Prime Minister, having assured us all that there would not be a general election—I think she assured us of that five times in the House—went for a walk in Wales, came back, and declared an election. So the finance measures were thrown into the wash-up procedure, which, as Members will know, means political parties sitting down to decide what measures are urgent and must be passed. It was agreed that the Finance Bill would go through in a single day, and as a result of that, this measure was introduced. I should like the Public Accounts Committee and others to look at how that process worked and how it did not work.

The right hon. Member for Haltemprice and Howden made an extremely valid point, which we made about every Finance Bill, or Budget Bill, that came forward. When the Government introduced the “no amendment to law” procedure, that tied the hands of the House when it came to what it could open up, what debates it could have and what amendments it could table. That was introduced by—

[Sir David Davis]

Hammond.

[John McDonnell]

Yes, by Lord Hammond. I think it was almost unprecedented. As I say, it tied the hands of the House, even when it came to further investigating issues relating to the Budget and Finance Bills.

I also think that we need to look at the process whereby Ministers and Opposition are able to question impact assessments and how they are developed, as well as the independence of those assessments. I still find it problematic that impact assessments are prepared largely by the Department and the ministerial team that are promoting the legislation involved, rather than its being done independently. Had there been an independent impact assessment in this case, and time for a proper debate and for amendment as well, the House would probably not have agreed to take this course. When I look back, I think that the implications should have been drawn to the attention of the whole House. The impression given was that this would be focused on a small number of “hard case” tax avoiders or evaders, and their scheme promoters.

[Sir David Davis]

I agree with nearly everything that the right hon. Gentleman is saying, but why can we not address it now? Why can we not go back and put it right?

[John McDonnell]

The point I am making is about enabling us to do that. I hope that some of the lessons being learned are learned not just by the whole House but by the Government as well, whichever party is in power. As soon as we introduce measures to fetter the role of individual Members of the House or the House as a whole, we open up the opportunity for mistakes to be made, because policies are not tested effectively in democratic debate in this Chamber.

I welcome the fact that reviews are to happen, but believe they should happen as a matter of urgency, if for no other reason than because I do not want to be here again in a few years’ time—we are now in 2024, and I do not want to be here again in 2026, 2027 or 2028—and find that we are in the same situation as we were in 2019. I do not want to find that more people have suffered and, worryingly, that more people may not be with us as a result of this because they have taken their own lives.

There is an element of urgency about rectifying this issue, and doing it with compassion and, in many instances, with clemency. That will enable us to focus properly on tackling tax avoidance and evasion, and also the institutional arrangements that exist to enable that to happen. We need to have a thorough debate in the House about our regulatory mechanisms, especially with regard to the accountancy and finance sector.

LIBOR Fixing: Conduct of Investigations

John McDonnell Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

The story that I will tell this evening starts with understandable public anger at the failure of both business and state during the 2008 financial crisis and the massive institutional failures to bring real villains to justice. The regulators, the US Department of Justice and the Serious Fraud Office rushed to assuage that anger and deliver convictions but failed to do the work necessary to properly fulfil their task. Instead, they effectively delegated investigation to the banks, allowing them to offer up middle-ranking scapegoats so that they could avoid prosecuting the directors of disaster who actually ran the banks.

While the real villains got off scot-free, the scapegoats, including some whistleblowers, faced coercion and injustice. Their lives were destroyed by a totally inadequate regulatory and judicial system. In British courts, critical evidence was concealed. In America, the DOJ used tactics that amounted to judicial blackmail. The result was serial miscarriage of justice: 37 people were prosecuted, 19 convicted and nine jailed simply for doing their jobs. Their prosecutions were prompted not by complaints from victims but by a political and tabloid firestorm. How did this happen? Most of the critical data and facts that I will cite come from a seven-year evidence-gathering exercise by Andrew Verity, the BBC’s economics correspondent, who will be publishing a book on the subject shortly. I am grateful to Mr Verity for sight of his work and data.

In 2010 to 2012, the LIBOR scandal first came to light. It was reported that bankers at major financial institutions had colluded to manipulate the London interbank offered rate—LIBOR. Many leading banks were implicated, including Deutsche Bank, Barclays, Citigroup, JPMorgan Chase, and the Royal Bank of Scotland. LIBOR is an index designed to measure the interest rate at which major banks are lending money to each other, covering 10 currencies and over several different terms. It is calculated daily using estimates submitted by major banks of the rate at which they could borrow money at approximately 11 am. LIBOR was used worldwide as a reference for financial instruments including commercial loans, mortgages and student loans. At its peak, it underpinned $350 trillion of financial instruments. Now, its reputation is shot, and it will be replaced next month by the secured overnight financing rate, which is calculated instead by the Federal Reserve—notably, not in London.

After the credit crunch, there were persistent rumours of banks submitting estimates below available market rates—the nickname for it is “lowballing”—and there is no doubt that that was happening. In late October 2008, not long after Lehman Brothers collapsed, Chase New York had been pressured by the Fed to offer loans at a time when no banks wanted to. The actual rate it offered was 4.68%, but on that day its dollar LIBOR submission was 3.25%. That was an enormous difference of 143 basis points—a basis point is one hundredth of 1%—but 3.25% was typical of the LIBOR submissions that day. Now, 1.43 percentage points, or 143 basis points, may seem tiny, but for a bank loan of £100 million such a difference means nearly £1.5 million less in interest—a serious market distortion, undoubtedly harmful, particularly to small banks. Many knew it was happening, but few could, at least publicly, say why.

Then, in early 2010, Gary Gensler, head of the US Commodity Futures Trading Commission, was played a recording of a conversation between two London employees of Barclays bank, Peter Johnson and his boss Mark Dearlove. Johnson was responsible for Barclays’ dollar LIBOR submissions. The conversation Gensler was hearing followed several others in which Johnson, known as PJ, complained that other banks’ submissions were way below the conceivable market rate. PJ had been resisting senior level instructions to lower Barclays’ rate to stay “in the pack” of other banks. Indeed, his honest submissions—honest submissions—sometimes embarrassed Barclays by making others think they were paying unusually high rates.

The first voice on the tape was Dearlove’s rather cut-glass diction. He said:

“The bottom line is you’re going to absolutely hate this...but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our LIBORs lower.”

Johnson protested:

“So I’ll push them below a realistic level of where I think I can get money?”

Dearlove came back:

“PJ, I’m on your side, 100 per cent…These guys don’t see it. They’re bent out of shape. They’re calling everyone from Diamond to Varley.”—

the senior directors—

“You and I agree it’s the wrong thing to do…These guys have just turned around and said, ‘Just do it’.”

What the whole recording revealed was two Barclays employees agreeing to rig LIBOR, albeit reluctantly and albeit instructed by the British state, through the top leadership of Barclays.

The LIBOR investigation began once Gensler at the CFTC heard that recording. He had a crime on his hands, as it were, but it was not bank directors and executives, or senior Bank of England and Whitehall officials who would be pursued. Prosecutors increasingly switched their focus away from the state-sponsored lowballing it discussed and towards something wholly different: requests from traders to LIBOR submitters for high or low settings that would protect their trading positions.

The regulators had outsourced their investigations to external lawyers hired by the banks themselves. Most of their evidence was collected by the bank investigators, particularly evidence passed from Barclays’ investigators to the CFTC, but those lawyers made fundamental errors. Most notably, for Barclays and UBS, they did not examine crucial documents, including the emails of senior executives—the real bosses. This was the first instance of a common theme: the scapegoating of low-ranking bankers by prosecutors, courts, directors and executives. Once the scandal became a news item, Barclays sacked low and middle-ranking employees like PJ who were involved. Their legal support was sharply cut off.

But not all faced the same treatment. Dearlove, for example, heavily supported by lawyers paid for by Barclays, pointed out that the instruction to lowball had come from the Bank of England and Whitehall. His case was immediately dropped like a dangerous hot potato, which it was. People at the top were attempting to shift the focus from lowballing to those skewing the rate to protect trading positions. But while submissions only changed by one or two basis points in response to trader requests, state-sponsored lowballing often meant understating LIBOR by 50, 100 or 150 basis points—comparatively enormous. That reflected a difference between the two practices that many failed to understand. Lowballing involved setting unambiguously and hugely inaccurate rates, but the so-called skewing only involved accommodating trader requests by selecting high or low rates from the tiny range of interest rates that banks were actually offering. Prosecutors mistakenly persuaded themselves there was only one accurate LIBOR rate each day, from which submitters should never deviate.

No such single rate existed. Banks could borrow at a small range of different rates, any of which could be described as accurate. With no rules about selecting from that range, submitters quite reasonably chose the accurate rates that helped their banks’ trading positions. This was not considered improper at the time, either by the submitters and the traders, or by the regulators and the central banks. It was normal trading practice that the LIBOR system was designed to accommodate.

However, the British courts later prosecuted low-ranking traders based on a sweeping ruling by the Court of Appeal that no commercial interest could ever be considered in LIBOR setting. The actions of those traders were then retrospectively declared illegal. Lives were destroyed because of the total misunderstanding of how LIBOR and business worked.

The ruling was thoroughly and unambiguously contradicted by a ruling in the US appeal courts last year. Indeed, the Serious Fraud Office initially struggled to find any plausible legal basis on which to prosecute. The submitters could not be prosecuted under laws such as the Fraud Act 2006—that required victims, false statements such as inaccurate LIBORs and potential gains for the perpetrators. None of those existed, at least not for the trader requests.

The SFO instead chose the vaguer common law offence of conspiracy to defraud. That required proving only two things: there was “dishonesty” and an agreement had taken place. However, the lowballing ordered by bank executives seemed to meet all the requirements under the Fraud Act, as well as conspiracy to defraud. It seemed a clear instance of commercial influence over LIBOR submissions, and far larger in scale. But the SFO preferred bending the law to prosecute low-ranking employees rather than pursuing top-level executives. It had access to all the material that Mr Verity has obtained, which points to the top, but it did not pursue it. For years, it failed even to interview the key executives.

Many traders initially admitted wrongdoing to prosecutors—admissions that later hurt them at trial. Tom Hayes initially admitted dishonesty to the SFO, but that is no real indictment on his cause. A shadow hung over the proceedings that motivated many who co-operated: the prospect of extradition to the United States. If they were extradited, acquittal was near impossible. More than 90% of prosecutions in the US end in a plea bargain. Most of the rest are found guilty. In the US, white collar criminals who pleaded not guilty were threatened with up to 30 years in jail without early release or any other arrangement, alongside violent criminals and drug lords and in unpleasant conditions. A plea bargain that guarantees a reduced sentence to a couple of years in an open prison is irresistible by comparison.

It was a form of judicial blackmail that forced defendants to admit to things that they had not done. British defendants such as Tom Hayes wanted to avoid that at all costs, and the only way was to be prosecuted in Britain instead, which necessitated telling the SFO one crucial lie: he pleaded guilty to acting dishonestly. Hayes changed his mind and decided to fight the charge, only after realising how much he would need to falsely implicate others, and when the sheer absurdity of the charges against him became clear. But Hayes’ judge, who described the case as open and shut before the trial began, ruled that no commercial interest could ever be legally considered by submitters.

The Court of Appeal upheld that absurd ruling, providing the legal underpinnings for later convictions. If applied consistently, Barclays directors, Bank of England officials and the British Bankers Association would all have been implicated. They had all effectively instructed lowballing or misreporting. But the ruling has never been applied to those at the top. Instead, Hayes got a 14-year sentence—more than an average manslaughter sentence—for something previously considered normal practice.

The SFO approached other traders for testimony to buttress its case, but everyone had engaged in the same behaviour that Hayes was accused of, because they said it was normal commercial practice. But the SFO saw no reason to stop. Instead, it found John Ewan from the BBA and Saul Haydon Rowe to act as expert witnesses. They testified that derivatives traders could never request changes to LIBOR submissions. Yet, as the SFO knew, Rowe was not an expert on LIBOR. In another trial, Ewan would contradict himself by saying it was permissible to submit LIBORs within the market range for commercial reasons. That is not to mention the fact the BBA itself had encouraged banks to adjust LIBORs in the past. An abundance of evidence that would have shown that what Hayes was doing was normal, and permitted by regulators and central banks, was either suppressed or not disclosed.

The theme repeated itself throughout the trials: important evidence was withheld, and the evidence offered came from non-experts or people who knew about or had condoned the behaviour. The same would happen in trials relating to Euribor—the Euro equivalent of LIBOR. The founders of Euribor had written rules for submissions when they launched the benchmark, and were willing to testify that commercial influence was welcome, expected and allowed for, but the judge refused to hear the evidence and ruled it was impermissible for submissions to be influenced by trading positions.

Not everyone faced that kind of trial. A recent judgment in America casts doubt on every conviction that relied on sweeping rulings about commercial influence. In January 2022 a US Appeal Court ruled, in US v. Connolly and Black, that trader requests—the basis for every single conviction—were not illegal. That shatters the foundations underpinning the ruling by the UK Court of Appeal.

The ruling was made by the Appeal Court for the Second Circuit, the circuit that includes New York and that would have judged an enormous volume of alleged financial crime. That court had a very high degree of financial expertise and we should place significant weight on its expertise. The ruling makes Britain a global anomaly—the only place where traders were locked up for something wrongly and retrospectively declared illegal. Indeed, the French, German and Japanese authorities never considered trader requests a crime, and even refused British requests to extradite traders.

These miscarriages of justice are scandalous, but perhaps just as serious was the attempt by the British and American establishments to hide their involvement in similar behaviour and their failure to apply the law equally and fairly. At its worst, it involved potential perjury in key trials. At other points, it involved possibly misleading a Committee of this House.

In 2012, the then deputy governor of the Bank of England told the Treasury Committee he had learned of lowballing only in “the last few weeks”, yet there appears to be damning evidence that that was untrue, including meetings, phone calls and sworn testimony to US authorities. It was also claimed there were no Bank of England instructions to change LIBOR submissions, but evidence uncovered by Mr Verity suggests that is also untrue.

The explanation offered to the Committee, that a misunderstanding caused traders to believe the Bank had instructed lowballing, is undermined by evidence that bankers had already received instructions prior to that “misunderstanding”. If it was a misunderstanding, no attempt seems to have been made to rectify it. Moreover, the recording of Mark Dearlove and Peter Johnson that I quoted earlier was not shown to the Treasury Committee, despite Barclays knowing about it at the time. It was exposed only in 2017 by the BBC’s “Panorama”. If it had been shown, it would have thrown doubt on any denials about Government pressure.

Several people who could have contradicted evidence before the Committee were never called to give evidence, such as Mark Dearlove and Peter Johnson, the two people on that tape recording; traders and submitters, who could have revealed information about any instructions; and the senior Whitehall officials behind much of the pressure, including Gordon Brown’s policy chief and the second permanent secretary to the Treasury.

The response to the scandal was itself scandalous. Every part of that public response—the convictions, parliamentary investigations and decisions not to investigate—were, at best, extremely questionable. I intend to write to the Metropolitan police asking them to review the evidence in order to examine whether any perjury has occurred. I have already written to the Chair of the Treasury Committee and the Speaker to consider whether the House was misled, and whether a new inquiry is needed.

[John McDonnell (Hayes and Harlington) (Lab)]

I thank the right hon. Gentleman for bringing this scandalous miscarriage of justice before the House. The House will have the opportunity to listen to Andy Verity when he comes to the Commons on 6 June, as well as some of those who were prosecuted. I suggest the right hon. Gentleman holds off from writing to the Metropolitan police until we confirm there will be a Select Committee inquiry. From the evidence available to us, it is clear that the House was misled, and I would not want a police inquiry to impede a House inquiry before we get the full evidence. We need an assurance from the Select Committee that it will seek Treasury officials, Treasury Ministers, Bank of England officials and all those regulatory bodies that were involved in this egregious miscarriage of justice, where people have suffered greatly as a result of what clearly appears to be not just the House being misled, but a conspiracy among them as well.

[Mr Davis]

This is not the first time that the right hon. Gentleman and I have worked together on a miscarriage of justice, and I will defer to his wisdom on this. Given that it has been a decade, I do not think that a three-month or six-month delay in writing to the Metropolitan police would necessarily be a bad thing. I am happy to wait until the conclusion of any Select Committee hearing and any report that might be produced. I will no doubt hear from the Select Committee Chairman in the coming weeks.

The former Lord Chancellor, Lord Mackay, who has seen this, has said that the whole affair presents a “serious challenge” to the “fairness of our system”, and that the question of law after the US judgment is more than worthy of consideration by the UK Supreme Court. Nine people were jailed for LIBOR rigging, and each one of those cases is a potential miscarriage of justice. Those people lost their careers, their reputations, their savings and their marriages. Their families’ lives were destroyed. Their cases demand a proper re-examination, preferably by the Supreme Court. The only other solution, as the right hon. Member for Hayes and Harlington (John McDonnell) said, is a fresh look at the entire affair. A fresh parliamentary inquiry, with the protection of parliamentary privilege, would help to ensure that the truth comes out and that British justice is finally applied equally to all.

Corporate Profit and Inflation

John McDonnell Excerpts

Tuesday 16th May 2023 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I want to try to take the argument on from the discussions that have taken place so far. My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) spoke about food, which is such a basic need. If we cannot control the supply and price of food, to be frank, we lose control of our overall economy and our society itself. The food increases that my hon. Friends have spoken about relate partly to short-term issues such as the breakdown of the supply chain post covid and the Ukraine war, and partly to two seemingly more permanent issues. The first is the impact of climate change, which is undoubtedly impacting the supply of food, and the second is the almost permanent installation into our economy of profiteering. That is why the Unite report, which introduced the concept of greedflation, is so important.

My hon. Friend cited several instances of greedflation, but food is a good example. There has been a 97% increase in supermarket profits, and a 255% increase in the profits of agribusinesses themselves. Unless we can develop policies to tackle climate change, including by accommodating to it in some areas, and get greedflation under control, these rises will be a permanent factor that will undermine the quality of life of all our constituents in the long term.

This debate is not just an exposition of the problems; it has to be a way for the Government and Opposition parties to talk about solutions to address the immediate problems and look at the long term. My hon. Friend the Member for Leeds East (Richard Burgon)—I congratulate him on securing this debate—mentioned some. The first is the need for immediate action, which must mean price controls. Price controls on basic foodstuffs have been introduced in this country in the past, particularly to deal with short-term problems. I do not think that permanent price controls are effective, but on a temporary basis—12 months, for example—they can be. Other countries, including Switzerland and Hungary, are already developing price controls, and France has introduced its own mechanisms for negotiating prices down on the basis of the expectation of price levels.

My view is that price controls are needed because of the urgent situation our constituents are facing. I think the Unite report said that there has been a 57% increase in the number of households that are restricting their food intake, and in which parents are choosing not to eat so their children can. Unless we can do something urgently to assist them, we will be inflicting human suffering on our society. To be frank, my generation has not seen that before; it is almost reminiscent of the ’30s.

Secondly, let us just talk about excess profits. I want to quote a senior Conservative Minister, who introduced excessive profit taxes across the whole of the economy. He said:

“At a time like this sacrifices should be equally borne. We are not prepared to see excessive profits”.—[Official Report, 11 March 1952; Vol. 497, c. 1289.]

He introduced a new levy, which was charged on the amount by which current profits exceed standard profits. That was Rab Butler in the 1950s, who introduced a model that we could draw upon now. It would extend across the whole economy and would expose and properly tax those who are exploiting the current economic situation.

The other issue is something I have raised in previous debates. During the banking crash—some of us were here at the time—we witnessed a shift in investment from the crashing mortgage economy. The crash at one point brought our banking system to a halt, and almost did something more fundamental, in terms of destroying confidence in the financial system. Money moved out of property, where prices were crashing, and into food speculation, and we saw rapid increases in food prices. In fact, in some areas of the globe, we even saw famine as a result.

Then, on a global basis, an agreement was reached and we inserted into the regulatory regime after the banking crash certain controls on food speculation—for example, how much food wealth could be owned by a particular speculator. The Government at the moment, in their Financial Services and Markets Bill, are removing those protections. Already food speculation is taking place and causing some of the profiteering that is happening, but we are inviting even further speculation, which I think in the short and medium term will result, in the same way it did after the banking crash of 2007-08, in people going hungry and famines occurring in parts of the world.

My final point is that if the Government are not willing to act so decisively with price controls, regulation of speculation or an excess profits tax, the minimum that we should ask for is an inquiry into the anti-competitive market practices taking place in certain sectors. I would like to start with the food sector. We are seeing this demand being met in the US now; an investigation is taking place into the anti-competitive market practices that are happening. The US is at the moment looking at the fertiliser and agricultural business sector. In this country, we need an investigation into the profiteering and greedflation in particular—that is the No. 1 issue—that is taking place in the food and agricultural sector.

We cannot stand by and watch people line their pockets and corporations make excessive profits while our people, in some of our constituencies, are actually starving—they are actually going hungry. That is why, in this period, special measures are needed. They are measures that we have used in the past, that people are using in other countries and that have proved to be effective. If nothing else, if they were even temporary measures, they would alleviate the situation that our constituents face. This is a matter of urgency. That is why I keep repeating time and again, in as many debates as I possibly can, the need for action.

I will just say this to my own party: this crisis of greed inflation, combined with the climate crisis, means that when we take over and go into government next year—as soon as possible, I hope—we will have to address this issue. We will have to have the radical solutions that need to be put forward; otherwise, we will not be fulfilling our historic mission of looking after working-class people in this country.

[Sir Mark Hendrick (in the Chair)]

Now we move to the Front-Bench contributions. I call the spokesperson for the SNP.

--- Later in debate ---

[Andrew Griffith]

I stand corrected. I was being diligent and attentive, but I was clearly so taken by the force of the arguments made by the hon. Members that I missed that.

[John McDonnell]

Will the Minister explain the role that Putin played in ensuring that Tesco, Sainsbury’s and Asda increased their prices to such an extent that they have increased their profits by 97%?

[Andrew Griffith]

If the right hon. Member lets me make some progress, I will address precisely his point. Domestic inflation pressures have risen. The UK labour market has remained very tight, reflecting a real cost headwind to employers. There have been real challenges, as we saw in the labour figures today, in getting people off welfare and into work. That has pushed up the cost to firms, including Tesco and others, of producing goods, which has resulted in inflation. The UK is not alone, and I hope Members will reflect on and understand that. We are seeing high inflation in all major global economies. Food inflation in Germany is above 20%.

--- Later in debate ---

[Andrew Griffith]

I listened to the citations and I will go away and inform myself about them, but one can find a million citations in support of any argument, however spurious.

Let us get to the heart of food inflation. After reading the report from Unite the union earlier today, I went and did some research. I am keen to understand the level of alleged profiteering that we see, so I looked into costs at the Co-op, a mutual organisation that I believe supports many Opposition Members. I compared the alleged profiteering by our major supermarkets with what is happening in an organisation that I hope we can all agree—and join hands across the House—is not indulging in profiteering. The cost of four pints of milk at the Co-op is 20p more expensive than at Tesco. I have a wonderful chain of Co-operatives in my constituency and it serves our rural community magnificently, so I pay great tribute to the Co-op, but six eggs in the Co-op cost 35p more than at Tesco. The Co-op was retailing the same loaf of white bread for 56p more, and chicken breasts for £1.70 more, than Tesco. The Co-op is retailing butter, tea and Heinz baked beans for 40p more than Tesco—I would be very happy to give Hansard the details of this. I will stop at the emotive category of baby milk: an 800g pack of Cow & Gate baby powder retails for £10.50 at Tesco, but the same product retails for £11.50 at the Co-op.

I put it to you, Sir Mark, that we are seeing either a vibrant and competitive market in food retail—which includes the Co-operative mutual organisation, although its prices seem a little higher—or a level of anti-competitive practices. But if it is the latter—right hon. and hon. Members should be enormously careful about this—those anti-competitive practices and that profiteering extend to no less an organisation than the Co-operative mutual society, which supports Opposition Members. If any of them want to intervene on me, I would be very interested to hear their view of the Co-operative’s business practices.

[John McDonnell]

Let me explain this to the Minister. There is such a thing as the Co-op party, of which some people on this side of the House will be members, and there is such a thing as the Co-op store. The Co-op store is not related to the Labour party; it is a completely separate commercial entity. The Co-op party is separate completely, so there is no relationship between the Members here and the Co-op store, although some of them might shop at it.

[Sir Mark Hendrick (in the Chair)]

Order. John McDonnell has made a good point, but for clarification, as a Labour/Co-op MP—

Financial Services and Markets Bill

John McDonnell Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

Mr Deputy Speaker, I apologise for having spoken at some length—I wanted to engage with as many colleagues’ amendments as possible—but I hope I have provided a clear and reasonable explanation of the Government’s position and why we have taken it. I look forward to a constructive debate on the Bill.

[John McDonnell (Hayes and Harlington) (Lab)]

On a point of order, Mr Deputy Speaker. I do not wish to delay the debate, but in the Financial Times today there is an announcement that the Chancellor of the Exchequer will make a significant statement on Friday about the future of our financial services. There was no reference by the Minister to that statement. It looks as though the statement will be made outside the House, not to the House, because it is being made in Scotland on Friday. Could I ask for your intercession to remind the Government that major statements of this sort, and it is billed as the most significant statement in the last 20-odd years, should be made on the Floor of the House?

[Mr Deputy Speaker (Mr Nigel Evans)]

I am getting no indication that the Minister wants to comment on that, but the fact is that the Speaker has said time and again that he deprecates statements that should be made to the House first being made elsewhere, and I am sure the Minister will take that on board.

I call the shadow Minister.

--- Later in debate ---

[Harriett Baldwin]

Let me end by saying that personalised guidance would offer the Economic Secretary the chance to make his mark and help all our constituents to benefit from better financial information. I am very pleased that he has committed himself today to look into it with the utmost urgency.

[John McDonnell]

I entirely agree with what the hon. Member for West Worcestershire (Harriett Baldwin) has said, and I apologise for not signing her new clause; I wish I had.

I will be very brief, Madam Deputy Speaker. This is an appeal more than anything else. I am concerned about the way in which the Bill will undermine the constraints on commodity market speculation that were introduced during the financial crash of 2007-08. I was in the House before and during that crash. People remember that it was a banking crash based on the sub-prime housing market, but what is less discussed is what then happened with regard to commodity speculation. The funding shifted from housing to commodity and, in particular, food speculation, and we saw massive food price increases as a result. The price of wheat rose by 168% during that period, and the price of rice doubled. This was largely not to do with supply, which at that time was relatively stable; it was to do with commodity speculation.

We supported, on a cross-party basis, reforms to regulate the market. We gave the FCA the task of setting position limits. We also opened up the whole commodity market to greater transparency. I accept that there has been a watering-down of those regulations since then, particularly by the Trump Administration but also by signals from Ministers in the UK Government. That weakened regulation and weakened culture have opened the door to what is happening now, which is billions shifting into food commodity speculation. This is fuelling the cost of living crisis. It is not just about energy; it is now also about food prices, some of which have gone up by as much as 16%.

Of course, we cannot ignore Ukraine, climate change or the breakdown of supply chains with regard to covid, but another severe factor that is influencing this is commodity market volatility. Speculation is creating price rises, and this is making fortunes for individual speculators, but I have to say that the banks themselves are also making a killing at the moment.

I say this not as some kind of Cassandra—I was the first to raise Northern Rock in this Chamber, although others have claimed that too—but economists on both sides of the Atlantic are saying that this could be a systemic crisis unless we get to grips with it and accept that we need to strengthen, not weaken, regulation. One of the reasons I am concerned is that the Lighthouse report suggests that a lot of commodity investment is taking place by pension funds themselves. That could have an effect not only on prices but on the stability of people’s pensions.

The Government will say, “Don’t worry, we’re not scrapping the limits. We’re handing over control to the trading floors.” That is madness in itself. The trading floors have an interest in attracting traders, and the lesson of history is that they cannot be relied upon to regulate themselves. They do not worry about the interests of the whole economy. That is the job of the Government and Parliament. Also, I see no rationale for scrapping the transparency element of MiFID II. I would love to know what possible justification there could be for undermining access to more transparent information, because the markets are already opaque and this would make them worse.

A final comment from me—you will note that I am well under time, Madam Deputy Speaker—is one that I have made before. The best writer on the banking crash of 1929-30 was J. K. Galbraith, who said that, yes, we would put institutions in place to protect against a repeat of that kind of crash but one of the most significant things would be memory; people would remember what had happened. Unfortunately, I fear that we are now replicating the circumstances of 2007-08 and undermining the very regulations that we as a House put in place to protect against the food speculation, the price increases and, I have to say, the starvation that occurred as a result of that crisis. I never want to see that again. I think this is a mistake by the Government, and I hope that they will think again. I also think we might be able to bring forward some amendments in the other House that will help the Government to move along a more constructive path than the one they are on at the moment.

[Chris Grayling (Epsom and Ewell) (Con)]

I rise to focus on new clause 24, tabled in my name and with the support of a number of Members on both sides of the House. It focuses on one of the great challenges of the moment, which is how we reverse the loss of habitats and forests around the world. Deforestation in South America, Asia and, to an increasing degree, in the northern parts of the world is a real crisis for our planet. It is appropriate that we are having this debate today, the day on which the biodiversity summit begins in Montreal. It is my hope that that summit will lead to a new international agreement on tackling habitat and biodiversity loss around the world.

New clause 24 focuses on taking the battle against illegal deforestation to the next step. This Government and this House took the first important step last year in the passage of the Environment Act 2021, which introduces a requirement for those dealing in potential forest risk products in the United Kingdom to have a due diligence process in place to ensure that they are not sourcing their products from areas of illegally deforested land. That was a substantial and very positive step, and I am pleased to see that the European Union has taken a similar step this week and is perhaps going slightly further in tackling the issue of forest risk products.

But a substantial area that remains untouched both here and in many countries around the world is the question of financial services investing, whether through equities, loans or bonds, in companies that source forest-risk products. We know from the work of organisations such as Global Witness that, over the years, there have been far too many examples of banks knowingly, or sometimes unknowingly, financing the activities of companies that purchase directly from those who are illegally deforesting areas of the Amazon, for example, for beef production or soya production.

We need to extend the work we have already done on forest-risk products, and those who directly deal in them, to the financial services sector and the banks that fund companies that have the potential to participate directly or indirectly, knowingly or unknowingly, in illegal deforestation.

I hope the Government will take this on board, and I am grateful to the shadow Minister, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), for her words of support. New clause 24 would replicate almost exactly what this House has already approved in the Environment Act 2021, translating it into a duty on the financial services sector to carry out similar due diligence to ensure that its work does not support illegal deforestation.

The reality is that these financial services businesses already do due diligence. No major institution simply lends or invests in a business without doing very careful due diligence on where it is putting its money, on the likely return on that investment and on the likely risks of that investment. New clause 24 would not ask them to do something wholly different from what they are already doing; it would simply require them to extend their due diligence into this area, which most institutions, at a senior level, would say is vital to all of us.

Energy (oil and gas) profits levy

John McDonnell Excerpts

Tuesday 22nd November 2022 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I will be relatively brief, not least because I have noticed that Ludmila Morris is in the Gallery. She recently retired after years of service as the head of the McMillan children’s nursery in my constituency, and I have invited her for tea.

It is important in this debate to reflect on what is actually happening outside this House. In the discussions so far—in the statement, in the debate yesterday and in some of the debate today—there has been little mention of wages. It is important that we understand why we are faced with the prospect of up to 1 million workers taking industrial action over the coming months. After the chaos of the last two months, the obvious aim of the Chancellor was to reassure the markets that, as he described it, the grown-ups were back in charge and that he had a plan to rebalance the budget. He especially wanted the markets to know that the Bank of England and the Government were marching in lockstep, as he put it. It is true: they are marching in lockstep, but the problem is that they now have a common agenda that combines austerity and increases in interest rates. This is pushing us ineluctably into a deepening recession.

We all hope that this will be a shallow and short-lived recession, but there are nevertheless large numbers of people out there who after 12 years of austerity just do not have the financial resilience left to avoid the hardship that this will inflict upon them. Part of that is about wages. I have listened to the various debates and heard the statistics being bandied about, but just for the record—because sometimes statistics cannot lie—wages today are lower than they were in 2007, and what is worrying me is that they are not forecast to reach 2007 levels again until 2028. That is 21 years of pay cuts.

The number of workers earning below the real living wage is expected to rise to 5.1 million next year. With inflation at 11.1%—I hope it is declining but we cannot be sure—we are experiencing the largest drop in living wages on record. Average wage rises in the private sector are 6.6%, but just 2.2% in the public sector. When the Chancellor spoke about nurses, he urged them to avoid taking industrial action, but we need to understand why they are even thinking about it. According to the TUC, nurses’ pay in real terms is £2,500 lower today than it was in 2010, so the Royal College of Nursing has asked for RPI plus 5%, which would meet inflation this year and restore some of the drop in wages that they have experienced.

I have been looking at the stats again, and what is interesting is that we think we are one of the richest nations on earth—the fifth or sixth biggest economy on the planet—but that wealth is not shared. By GDP per capita, we barely make the top 20 and we are below the average of the 19 countries in the euro and below the OECD average. As a result of that, people are suffering out there. I raised the issue of housing with the Chancellor last week. I always look at housing as the canary in the mine to judge how people are faring. When people budget, they usually prioritise keeping a roof over their head. The figures show that, last year, mortgage possession orders increased by just under 500% and landlord possession orders increased by more than 160%, which shows that people are on the edge. Unless wages increase, more will fall over that cliff edge.

The Chancellor made a great deal—we have heard it again today—about increases to NHS and school budgets, but it must surely dawn on Members that, if the wage settlements for nurses and teachers go anywhere near what they need and what they are asking for, those increases will be completely wiped out. Other departmental budgets fare even worse: they are expected to swallow inflation and wage cost increases in total.

I want the House to understand the situation people face. The energy cap is being lifted to £3,000, tax thresholds are being frozen, which will draw more people into tax, and mortgages and rents are rocketing. Many more people are asking how they will get by in this coming period. There is a growing atmosphere of frustration and, for those in in-work poverty, a growing atmosphere of absolute desperation, which is why increasing numbers of people feel they have little option but to demand a pay increase that at least matches the rate of inflation. If that means a pay offer is rejected, many of them feel they have no other option but to support industrial action. As we know, people do not take industrial action lightly.

If NHS managers, headteachers and other public service leaders try to accommodate inflation-proofed wage settlements in their existing budgets, the inevitable result will be cuts in services. Any of us who visits an A&E department anywhere in the country will see how stretched the NHS is at the moment, and how dangerous any further cuts would be. Ask any headteacher about their school’s budget, and they will say that, after 12 years of austerity—no matter what has been said today about increases—job cuts are the only remaining method to balance their budget if they are to meet pay demands.

It has been calculated that £100 billion of central Government support has been taken away from local government over the last 12 years due to central Government decisions. We now have a situation where local authorities, Tory and Labour alike, are basically saying that they are on the edge of bankruptcy and that there is no way they can accommodate increased wages to match inflation.

My simple message is that what is missing from this Budget, and has almost not been debated, is the Government’s inability or lack of willingness to inflation-proof wages in this coming period. That will almost inevitably result in escalating industrial action, which I will support because I do not know what else people can do to try to secure a pay deal that lifts some out of poverty and protects others from dropping into poverty.

The Budget also demonstrates that there seems to be a deep failure in Government to comprehend the consequences of the last 12 years. As we have heard in today’s debate, one consequence is that more and more people are on the edge and, unless there is some support, particularly on wages and benefits, they will be pushed over that edge. For the first time since the 1930s, a UN rapporteur on the state of this country is talking about destitution. So we need an alternative programme for government, which is being developed by those on the Labour Benches at least. We need a longer-term plan, rather than short-term decision making, one based on redistributive taxation that will fund our public services and address the poverty and inequality that scar our society. We need a programme for securing stable, long-term investment in our infrastructure, but also in our people, so we can mobilise our whole economy to tackle the challenges we face of poverty and inequality, and the rising challenge of climate change. I was hoping to hear that from this Budget. That has not happened. I have to agree that the only way that debate will seriously happen in the coming months is if we have a general election.

Autumn Statement

John McDonnell Excerpts

Thursday 17th November 2022 Commons Chamber

[Jeremy Hunt]

My hon. Friend is right that the increases in the budget for HS2 are disappointing, but a strong economy needs to have consistency of purpose, and that means saying we will make sure that we are a better connected country. The lack of those connections is one of the fundamental reasons for the differences in wealth between north and south, which we are so committed to addressing. There is a bigger issue about the way that we do infrastructure projects: it takes too long, and the budgets therefore get out of control. We are just not very good at it, and we have to sort it out.

[John McDonnell (Hayes and Harlington) (Lab)]

May I take the Chancellor back to the housing issue? Housing is often the canary in the mine when assessing how people are faring in difficult circumstances. Last year, there was a 500% increase in mortgage repossession orders and a 160% increase in repossession orders from private landlords. Will the Chancellor come back with a package of measures that will assist people in getting through this housing crisis? It could include the issue that was raised earlier with regard to benefit caps. Mayors across the country are also asking for rent control powers, and we may need a mortgage interest assistance package as we go through this period.

[Jeremy Hunt]

I listen carefully to what the right hon. Gentleman says. Despite our political differences, I respect the fact that he is concentrating on a very difficult issue. Local housing allowance rates for 2023-24 will be maintained at the elevated rates agreed for 2020-21. I will continue, as the economic situation deteriorates, to monitor carefully the issues around mortgage repossessions. I have already had a number of discussions internally in the Treasury, and as necessary, I will come back to this House with further measures.

Public Sector Pay: Proposed Strike Action

John McDonnell Excerpts

Tuesday 1st November 2022 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

Thank you, Sir Edward. I congratulate my hon. Friend the Member for Cynon Valley (Beth Winter) on securing the debate. I want to talk specifically about the industrial action taking place in north-west London.

Industrial action across the country is about weekly and daily pay. In my constituency and elsewhere, there are real issues in north-west London around the payment of sick pay. I also welcome the Barnet Unison members to the Gallery today. They are now on their 11th day of all-out strike action. This is the only dispute of all-out action that Unison has endorsed and supported in the union’s recent history. The workers—the Unison members—are employed by Barnet Homes group, an organisation completely owned and managed by Barnet Council. By the way, it is managed by a CEO on an annual wage of £202,000, with bonuses on top.

The dispute is about a low-paid worker who was injured at work, but Barnet Homes refused to pay the first week of sick pay. That was an outrage. People were furious about the treatment of this worker, so his colleagues decided to seek negotiations to respond, to see whether they could get an appropriate response from the management. Management refused and made offers that were completely unacceptable, some of them nonsensical. The workers consulted, discussed, balloted and came out for industrial action, not just for one day but for all-out action.

Hon. Members here who have been on industrial action will know the consequences of that for individual incomes, particularly for low-paid workers. It is an act of courage. I want to pay tribute to the Unison members here today for the courage they have shown in taking action to protect a vulnerable colleague.

I will say this: the message from here today and across the House is that the council and Barnet Homes need to get back round the negotiating table, with a serious settlement to this dispute. I also want to say to Barnet Homes, “Start respecting your workers. Start respecting what they do.” I express my solidarity with the Unison strikers today. If this debate does nothing else, I hope it shames Barnet Homes and the council, if necessary, into settling this dispute.

The disputes taking place at the moment are about not just pay on a daily basis, but terms and conditions of employment, and issues such as the payment of sick pay. So many working people are on the edge, hit by 10% inflation—or 14%, on foodstuffs. In our area of north-west London, house prices and rents are unaffordable for ordinary working people on an average wage. On that basis, I place my solidarity—the solidarity of the whole Chamber, I hope—on the record in support of the Barnet strikers.

Stamp Duty Land Tax (Reduction) Bill

John McDonnell Excerpts

2nd reading
Monday 24th October 2022 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I will be extremely brief and fulfil my commitment to the shadow Secretary of State for Levelling Up. The reason I rise to speak is that I met a group of constituents at the weekend and I said that I would use this debate to identify and explain the situation that they are facing in my constituency. I have listened to the Minister and to the sentiments that she put forward, which are well intentioned in many ways but do not reflect the reality of what my constituents are facing at the moment.

We have a housing crisis in my constituency, with overcrowding on a level we have not seen in maybe decades. We have homelessness, and there is no longer access to housing via council housing because our council housing stock has mainly been sold off. I do not think any new council houses have been constructed directly by the council.

The problem we face is that wage levels, after 12 years of austerity, mean that most of my constituents, particularly the young ones, are nowhere near striking distance of being able to purchase their own home, despite everything we have done, working with the financial sector, to encourage them to do so. Many people living in the rented sector and hoping to purchase their own home are seeing their wages devoured by the rents they have to pay. They cannot save up for a deposit, and when they look at mortgage rates, particularly after what has happened over the past few weeks, they have no hope of being able to cover mortgage costs.

Frankly, this Bill is no help whatsoever to my constituents. It is interesting to look at who it does help. When the former Chancellor, and soon-to-be Prime Minister, introduced similar measures during the pandemic, they benefited corporate landlords and the banks. I have 4,000 new properties being built in my constituency, and most of them will go to corporate landlords. Many will go to people moving from outside the area because of the Elizabeth line, and few will benefit local families or local young people.

We are seeing a boom in private landlordism in my constituency, where the buy-to-let property experience is one of high rents, poor maintenance and harassment by landlords, who are often completely unregulated. The Minister and the Government have said much about the Bill helping first-time buyers and about the doubling of the threshold benefiting all, but the Bill will largely benefit landlords and the banks that lend to them. As the hon. Member for Westmorland and Lonsdale (Tim Farron) mentioned, the Bill will also benefit second home purchasers.

I find it extraordinary that incorporated landlords can still offset 100% of their mortgage interest against profits. Between 1990 and 2020, we saw 41,700 landlords incorporate themselves in order to benefit from what is actually a tax-avoidance scheme. My hon. Friend the Member for Ealing North (James Murray) mentioned the cost of this programme in the previous debate. On the estimate made on the day of the mini-Budget a few weeks ago, the cost is £1.655 billion. I find it hard to see how this is compatible with what the new Chancellor is saying about a new wave of austerity having to be forced upon us because of the mismanagement of the economy in recent weeks.

The Opposition will oppose this Bill, and I fully agree. This is not the time for such a measure. We could assist first-time buyers to get on the housing ladder through housing supply and reducing overall property costs. If the Government insist on proceeding with this Bill, we could protect the first-time buyer measures by paying for them through an excess profits tax on the landlords and banks that are profiting from the Government’s measures.

Finally, I repay the debt I owe my constituents from the weekend by saying that this Bill will not help people in my constituency. We need a new council house programme, a reduction in interest rates and investment in housing on a scale never seen before. We need housing that is accessible and affordable to all. Otherwise, I will have more homeless people, more people living in overcrowded properties and, yes, more people sleeping in beds in sheds trying to survive the next winter.

I plead with the Government to drop the Bill. I hope the incoming Prime Minister will not see this as a priority and that at next week’s Budget we will have a more rational debate about housing policy.

--- Later in debate ---

[John McDonnell]

Will the Minister look at the issue of the 100% offset that incorporated landlords now have against profits?

[Richard Fuller]

Of course I am happy to look at all suggestions, including the one the right hon. Gentleman has made.

This measure will mean that around 43% of transactions each year pay no stamp duty whatever, which will help to support the housing market. I say to both Opposition spokesmen—the hon. Members for Ealing North and for Hampstead and Kilburn—that as result of this measure first-time buyers in their constituencies who would not have qualified for zero stamp duty will now qualify, and Labour will today be voting against that. I would also say to the right hon. Member for Wolverhampton South East (Mr McFadden) and the hon. Member for Leeds West (Rachel Reeves), the shadow Chancellor, who are not in their places, that the average mover buying the average house in their constituencies would not have qualified for zero-rate stamp duty land tax before this measure, and Labour will again be voting against that tax cut today.

This measure will boost labour mobility, support hundreds of thousands of jobs and businesses, increase transactions to boost the property industry, and continue the Government’s record of supporting people, including younger people, into home ownership. For those reasons, I commend the Bill to the House.

Question put, That the Bill be now read a Second time.

Economic Update

John McDonnell Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

I look forward to lots of useful advice from my right hon. Friend’s inner accountant in the months and years ahead, and I will certainly bear his points in mind. The issue with the revised scheme that we want to announce for the energy price guarantee is that, while I think most people agree with the logic of targeting support where it is needed the most, we need a scheme which works practically, and it is not particularly easy to design that kind of scheme. We are going to do as much work as we can, and we will announce what we are going to do as soon as we can; but we will certainly bear in mind the points that my right hon. Friend has made.

[John McDonnell (Hayes and Harlington) (Lab)]

The backdrop to today’s statement is not just the chaos of the last fortnight. It is also the report of three weeks ago which demonstrated that, as a result of austerity, there have been more than 300,000 excess deaths. May I ask the Chancellor to recognise, during his preparations for 31 October, that, unless he increases benefits by at least the rate of inflation, there will be more excess deaths and suffering?

[Jeremy Hunt]

The right hon. Gentleman will know, because I have said it many times today, that I am not making firm commitments on any individual elements of tax and spending, but I hope he is reassured by the fact that I have been very clear about the values through which we will take those decisions.

The Growth Plan

John McDonnell Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

I am very grateful to my right hon. Friend for pointing out that the scale of the intervention is unprecedented and that millions and millions of people and businesses will be helped by what the Government are doing. I thank her very much for that.

[John McDonnell (Hayes and Harlington) (Lab)]

The cut to the 45p rate benefits the richest 1% in our society. When that is combined with lifting the cap on bonuses and the Chancellor’s attack on those on universal credit, does he not realise that this is the most socially divisive Budget in a generation? Has he not looked at the history of engineered booms of this sort? In the 1960s, the dash for growth created catastrophe in our economy; the Barber boom of the 1970s created unemployment; and the Lawson boom eventually created chaos. The only benefit that each of those three engineered booms had was that they resulted in the fall of a Tory Government.

[Kwasi Kwarteng]

All I remember is the financial crash of 2008, which the right hon. Gentleman’s party presided over and managed to engineer. I would also mention that the 40p rate was the rate for 20 years, and it was the one adopted by his party when it was successful and used to win elections.