Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what steps they are taking to monitor and mitigate the impact of potential recessionary pressures on household finances and consumer confidence.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
According to the latest data from the Office for National Statistics, economic output contracted in Q3 and Q4 of 2023. Consumer confidence has since strengthened, and in January 2024 it reached its highest level since January 2022.
The OBR has forecast growth in each year of its November 2023 forecast, and confirmed that the combined impact of the Autumn Statement and Spring budget policies provides a permanent 0.5% increase in the level of potential output by the end of the forecast.
Since 2022, the government has demonstrated its commitment to supporting the most vulnerable by providing one of the largest support packages in Europe. Support for households to help with the cost of living is worth £104 billion over 2022-23 to 2024-25, or £3,700 per household on average.
The government continues to monitor developments in the economy and consider the implications for its policies.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to recent figures released by the Office for National Statistics on 13 February, what steps they are taking to address factors contributing to the recent slowing down of job vacancies and employment growth.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
At the Autumn Statement, the government announced a new Back to Work Plan worth over £2.5 billion to expand employment support for the long-term sick and disabled, and the long-term unemployed. These groups face some of the biggest barriers to entering the labour market, and the government is committed to helping them look for and stay in work, if they are able. The Back to Work Plan builds on the landmark £7 billion employment package from Spring Budget 2023. The OBR judge that the combined impacts of the Spring Budget 2023 and Autumn Statement 2023 policy measures will increase the number of people in employment by around 200,000, permanently increasing the size of the economy.
More broadly, a growing economy gives businesses the confidence to invest and hire, creating opportunities for better-paid jobs and to spread opportunity across the country. The government is delivering long-term growth with ambitious policies at successive fiscal events, including making full expensing permanent, a tax cut to companies of over £10bn a year. According to the OBR, the combined impact of Autumn Statement and Spring Budget policies in 2023 are expected to permanently increase the size of the economy by 0.5% by the end of the forecast. Other forecasters, including the Bank of England and the IMF, agree that growth in the UK will strengthen over the next few years.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, following the revision of the rules agreed by Brussels on derivatives trading, what assessment they have made on the impact this will have on the UK's financial services market.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The UK has one of the world’s most robust regulatory regimes for central counterparties, and the government has taken forward work to further strengthen that regime, given our commitment to high regulatory standards.
It is an international norm for jurisdictions to rely on each other’s market infrastructure. The government therefore sees no reason of substance why the UK cannot or should not continue to provide clearing services for countries in the EU and around the world.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of (1) current consumer spending, and (2) the declining inflation, on the economy.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Household consumption is the largest component of expenditure in the economy, accounting for around 60% of GDP. In Q3 2023, household consumption was 0.8% higher than in the same quarter of 2022, while consumer confidence reached a two-year high in January 2024. In the Office for Budget Responsibility’s (OBR) November 2023 forecast, consumption was forecast to grow by 0.5% in 2024.
Inflation has more than halved, but it remains a challenge. Inflation reduces real incomes, creates uncertainty, and threatens our growth outlook so it’s essential that the government continues with its efforts to drive it down and not fuel it further.
The OBR are the government’s official forecaster. They will update their economy forecast, including an assessment of changes in consumption and inflation, on 6 March.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the role of reduced mortgage rates in the recent increase in house prices.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The path to lower interest rates is through low inflation, and the Government is fully committed to supporting the Bank of England to get inflation back down to the 2% target, including by keeping borrowing under control.
The pricing and availability of mortgages is ultimately a commercial decision for lenders, in which the Government does not intervene. But our plan to bring inflation down is working. Average offered mortgage rates on 2-year and 5-year fixed rates have fallen from their peak in Summer 2023.
The most comprehensive measure of average house prices in the UK is published by the Office for National Statistics. In November 2023 the average house price in the UK was assessed to be £285,000. That leaves average UK house prices 24% higher than their average level in 2019.
The Government continues to monitor developments in the housing market closely and consider the implications for its policies.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to reinstating VAT-free shopping for international visitors; and what assessment they have made of the impact that this would have on (1) tourism, (2) retail, (3) the hospitality sector, and (4) the overall economy.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Government analysis conducted in 2022 found that introducing a worldwide scheme could come at a fiscal cost of around £2 billion each year.
The government’s costings calculate the direct cost of the policy to the exchequer, taking into account behavioural effects. The wider economic impacts of the policy are considered by the OBR through the indirect effects process.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, following a request from the Northern Ireland Executive for increased funding from Britain, what steps they are taking, if any, to (1) review their current funding offer, and (2) negotiate a new offer.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The UK Government are providing the newly restored Northern Ireland Executive with a financial package worth over £3.3 billion to support a restored Executive with the immediate and unique challenges facing the people of Northern Ireland, and to provide the necessary tools to deliver long-term sustainability.
As committed to in the financial package, we will engage with the Northern Ireland Executive on a long-term fiscal framework for Northern Ireland.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of the recent fall in mortgage rates on the wider UK economy.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The path to lower interest rates is through low inflation, and the government is fully committed to supporting the Bank of England get inflation back down to the 2% target, including by keeping borrowing under control.
The pricing and availability of mortgages is ultimately a commercial decision for lenders, in which the Government does not intervene. But our plan to bring inflation down is working. Average offered mortgage rates on 2-year and 5-year fixed rates have also fallen from their peak in Summer 2023.
The Bank of England has outlined some of the links between interest rates, housing markets and wider economic activity in its November 2023 and February 2024 Monetary Policy Reports.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of research by GfK published on 26 January that UK consumer confidence in January rose to its highest level in two years; and what steps they are taking to sustain and build upon those findings.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
In January 2024, consumer confidence, as measured by GfK, reached its highest level since January 2022. January 2024 was the third consecutive month of improving consumer confidence across all five contributory sub-indices.
Consumer confidence is intrinsically linked to household finances and the broader economic outlook. To sustain consumer confidence, consumers need to feel assured that their government is taking the long-term decisions necessary to strengthen the economy and build a brighter future.
In January 2023, the Prime Minister set out three economic priorities: to halve inflation, grow the economy and reduce debt. The government is delivering on these objectives, with inflation more than halving to 4.0%, the economy proving resilient and on a path to long-term growth, and the latest OBR forecast showing debt falling as a share of GDP over the medium-term.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of public markets on the (1) valuing, and (2) supporting, of fintech.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The government is committed to ensuring the UK is one of the best places in the world to start and scale a fintech.
In 2023, UK fintech attracted $5.1 billion in capital funding, second only to the US and more than the next 28 European countries combined.
The UK’s vibrant and dynamic capital markets remain some of the strongest and deepest globally, delivering capital to support high growth and innovative businesses.
The government is taking forward an ambitious programme of reforms to boost UK competitiveness, including taking forward the recommendations from the Investment Research Review, delivering on the recommendations of Lord Hill and the Chancellor’s Mansion House and Edinburgh Reforms. These will provide greater flexibility for firms raising capital on UK markets.
The government and regulators have also taken forward the key recommendations of the 2021 Kalifa Review of UK Fintech. This includes the creation of a new Centre for Finance, Innovation, and Technology (CFIT) last year to tackle barriers to growth and accelerate the UK fintech sector, backed by £5 million of HM Treasury seed funding.