Rachel Reeves
Main Page: Rachel Reeves (Labour - Leeds West and Pudsey)Department Debates - View all Rachel Reeves's debates with the HM Treasury
(1 day, 13 hours ago)
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Michael Wheeler (Worsley and Eccles) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are committed to improving living standards for people across the UK. Thanks to decisions I made in the Budget, the energy price cap reduced by £117 a year, on average, in April. We have extended the cut in fuel duty twice, and introduced an anti-profiteering framework to protect working people from unfair price rises during the Iran conflict.
Michael Wheeler
I strongly welcome the steps that the Government have taken to bring down my constituents’ energy bills from the start of this month. However, the effects of the war in Iran are now beginning to feed through into higher food prices. Pressures on oil and fertiliser costs are likely to intensify, and I am concerned about increases in the price of my constituents’ weekly shop at a time when their budgets are already strained. Will the Chancellor outline what steps the Government have taken to protect my constituents in Worsley and Eccles from rising food prices?
Rachel Reeves
My hon. Friend speaks powerfully on behalf of his constituents. The response of this Government during this conflict is, first, to try to de-escalate it. This is not a war that we started, and it is not a war that we joined. Unlike the Conservatives and Reform, we are working to de-escalate, not ramp up, the conflict, and that is the best way to keep prices down. As long as the conflict persists, we will do everything in our power to be both responsive and responsible in the national interest, which is why we are keeping energy bills down and why we have provided £53 million of support for people who need heating oil.
Jacob Collier (Burton and Uttoxeter) (Lab)
Jess Brown-Fuller (Chichester) (LD)
The Chancellor of the Exchequer (Rachel Reeves)
We are monitoring the situation and preparing for every eventuality. The International Monetary Fund expects the UK to be the fastest growing European G7 economy cumulatively over this year and next. A rapid de-escalation of the conflict remains the best way to protect consumers from rising bills. We continue to act on the cost of living, with £117 on average off energy bills from 1 April, £53 million to help with the cost of heating oil, and freezing both rail fares and prescription charges.
Zöe Franklin
I thank the Chancellor for her answer. The tensions in the middle east are pushing up energy and food prices, adding further pressure to households who are already struggling due to the cost of living. The Chief Secretary to the Prime Minister warned this weekend that families face “eight-plus months” of difficulty ahead. With the school holidays approaching in both the May half-term and the summer, many low-income families in my constituency of Guildford are asking how they will get through the summer. When I visited Holy Trinity school in my constituency last week, the children raised concerns too, which shows how deep the anxiety about this conflict is. What concrete support will the Government provide to protect the most vulnerable households from further cost pressures in the months ahead, especially if this conflict continues into the summer holidays?
Rachel Reeves
I welcome the hon. Lady’s question. Like her, I regularly see pupils and local teachers in my constituency. As she knows, from this month we have got rid of the two-child limit in universal credit, which is lifting 450,000 children out of poverty. We are also expanding free childcare for children aged between nine months and five years, helping parents in work with the costs of balancing family life with work life. In addition, we have taken £117 off energy bills, we are freezing rail fares and prescription charges, and we are helping people—particularly those in rural areas—with the cost of heating oil.
Sadik Al-Hassan
I am grateful to my right hon. Friend the Chancellor for her efforts in what are far from ideal circumstances. Attacks on energy infrastructure and the effective closure of the strait of Hormuz are having real consequences here at home. Baker Hughes employs more than 300 people in Nailsea in my constituency of North Somerset and is an essential energy technology provider. It is at the sharp end of this crisis. Can the Chancellor confirm what support the Government are providing to exposed companies like Baker Hughes, to secure energy supplies and rebuild damaged supply chains today, and invest in the infrastructure we will need to protect British consumers tomorrow?
Rachel Reeves
I thank my hon. Friend for his question. Baker Hughes, an important employer in his constituency, is a good example of how this conflict is affecting businesses and families here at home. As he knows, we have stepped in to defend our Gulf allies who have been attacked, unprovoked, by Iran. We are working with our allies in the Gulf, whom I speak to on a very regular basis, to ensure that we are not only defending them now but helping them to rebuild their infrastructure. Here in Britain, both the supercharger and the British industrial competitiveness scheme are helping businesses with the cost of their energy.
Jess Brown-Fuller
In my constituency, the owner of a haulage business—a vital industry that keeps our economy moving—has reported a 40% increase in the cost of diesel. It is at risk of going bust, while companies like BP are reporting record profits. Given that the impact of the conflict will be felt up to eight months after its conclusion, will the Chancellor please commit to cutting fuel duty, to keep my businesses and my residents on the road?
Rachel Reeves
Fuel duty was never lower at any point under the previous Conservative Government or, indeed, the Conservative-Liberal Democrat Government. We are keeping under review what happens from September, but it is important to note that in the first three months of this year, revenues from fuel duty were no higher than they were just a year ago.
With regard to the profits of energy companies, that is exactly why we extended the energy profits levy: to ensure that windfall profits could be taxed appropriately. BP and other oil and gas companies play a really important part in our energy mix, and our important British companies are representing our country in the US this week, but it is important that windfall profits are properly taxed, whether that is through the electricity generator levy or the energy profits levy.
Laura Kyrke-Smith (Aylesbury) (Lab)
I am grateful to the Chancellor for the work she is doing to protect us from the economic impacts of this war. One of my local farmers has been in touch about the impact on red diesel prices, which are up by around 70%, and fertiliser prices, and shared his nervousness about the affordability of going ahead and planting next year’s crops. Can the Chancellor outline what more she can do to protect our farmers, our food security and our food prices in light of these global challenges?
Rachel Reeves
When we froze fuel duty and extended that freeze, that also impacted red diesel. As we keep under review what happens to fuel duty, we will do the same for red diesel. I think there are two crucial issues. The first is protecting supply, which is why de-escalating this conflict—not ramping it up, as the Tories and Reform would do—is so important, so that we can reopen the strait of Hormuz. The second is prices and costs. That is why we have introduced the British industrial competitiveness scheme to help businesses with energy costs and the supercharger. BICS comes in from this year, and the supercharger is extended from this year, to help businesses impacted by this conflict.
Sir Jeremy Hunt (Godalming and Ash) (Con)
Given that national debt is around 95% of GDP and debt interest costs are nearly 4% of GDP, does the Chancellor agree that it would be irresponsible to fund any cost of living support by increasing borrowing? That would further drive up borrowing costs, choke off growth and saddle future generations with totally unfair debt.
Rachel Reeves
I congratulate the right hon. Gentleman on running his fourth London marathon this week for a cancer charity. I know that cause is dear to his heart. He makes an important point. I understand why people are calling for immediate support, but the previous Government’s untargeted support—I understand why the former Chancellor did what he did—cost more than £100 billion in total, I think, and it meant that interest rates, inflation and taxes have ended up being higher than they needed to be. We managed to reduce Government borrowing by £20 billion last year. The budget deficit is below 5% for the first time since 2019. Sticking to fiscal responsibility is not just good for the public purse; it is also good for ordinary families and businesses. I am determined that we do not go back to the high inflation, high interest rates and high taxes that would be the inevitable result if we had an untargeted response to this conflict.
Mr Paul Foster (South Ribble) (Lab)
Cost of living, cost of living, cost of living—those are the three words that my constituents in South Ribble and the small area of Chorley that I represent contact me about every single week. They do not contact me about the Westminster bubble and process. Will the Chancellor please assure me that she will stay laser-focused on delivering on the cost of living for the constituents of South Ribble and will not allow the noise and disruption from the Opposition to put her off?
Rachel Reeves
I thank my hon. Friend for standing up for the people of South Ribble and the issues that matter to them. Since the general election, there have been six cuts in interest rates, which is the best way to help people with the cost of living, especially if they have a mortgage. Before this conflict began, unemployment was falling, the economy was growing, the deficit was coming down and interest rates had gone down six times. I will continue to focus on the cost of living, because that is the thing that matters most to all our constituents.
Daisy Cooper (St Albans) (LD)
Australia, Italy, India and more have all slashed fuel duty in response to Trump’s idiotic war in Iran. We Liberal Democrats are calling for fuel duty to be cut by 12p per litre here. Last week, the Chancellor claimed that anyone calling for a cut in fuel duty was “economically illiterate”, because it would push up inflation. According to the Office for Budget Responsibility, the current 5p fuel duty cut has led to a 0.2% reduction in the rate of inflation. Does the Chancellor think that the OBR and all these other countries that are helping their citizens are economically illiterate, or does she accept that her Government might be in the wrong and that it is time to act?
Rachel Reeves
Last time she stood up in the Chamber, the hon. Lady said that she wanted a 10p cut in fuel duty; now it is a 12p cut. What she has failed to explain is how on earth she is going to pay for any of those policies. As a former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), has just explained, untargeted support will result in higher inflation, higher interest rates and higher taxes, which would hurt people in St Albans and around the country rather than helping them with the cost of living.
I support what the Liberal Democrats say about opposing the war in Iran—that is our policy—but they appear to be the only people on the planet who think that a war in the middle east is somehow good for the Treasury coffers. I would not be surprised if in their next manifesto they said they would commit themselves to closing the strait of Hormuz for good. It is not good economic policy, and I am afraid that that says a lot about the Liberal Democrats’ policies.
Dave Doogan (Angus and Perthshire Glens) (SNP)
Leigh Ingham (Stafford) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
We are reforming Government procurement rules so that we can buy more that is made in this country, and we have already changed the rules on steel, shipbuilding, energy infrastructure and artificial intelligence. But I do not just want big companies to be able to get contracts; I want to help smaller businesses and charities to access Government procurement. The Government are the biggest buyer of goods and services in the economy, and I want more of that money to be spent here in Britain.
Leigh Ingham
I thank the Chancellor for her answer. In Stafford, world-class manufacturers such as GE Vernova are producing the technology that powers our national grid, yet for far too long these British employers have not had money given to them through British Government contracts. I therefore warmly welcome the Government’s commitment to reform public sector procurement to grow British industry, British skills and British jobs. Can the Chancellor tell us how this new approach will ensure that Government spending reaches manufacturers and businesses in constituencies like Stafford and towns across our country, so that when the taxpayer spends, Britain builds?
Rachel Reeves
I am slightly disappointed that my hon. Friend did not mention that today is Staffordshire Day; Staffordshire oatcakes are available for Members from both sides of the House in the Tea Room. On the wider issue, we do need to buy, make and sell more in Britain, with more contracts going to firms in Staffordshire—not just for their brilliant oatcakes, but for their ceramics.
Rachel Reeves
Conservative Members cheer, but they did not use any of those freedoms. It is this Government who are doing everything we can to buy, make and sell more in Britain. One of the best ways in which we can grow our economy is to work more closely with our friends, trading partners and neighbours in the European Union—whether through rejoining Erasmus, through playing our full part in Horizon or through a deal for our food and farming sector so that we can export the great stuff that we make here in Britain into the EU as well as to so many other areas. That is why we are determined to rebuild that relationship with the European Union.
Peter Fortune (Bromley and Biggin Hill) (Con)
Iqbal Mohamed (Dewsbury and Batley) (Ind)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are taking action to tackle child poverty, by removing the two-child limit and by expanding free school meals and breakfast clubs, including the seven breakfast clubs already rolled out in the Dewsbury and Batley constituency. As a result, 550,000 children will be lifted out of poverty in this Parliament: the biggest reduction in child poverty in any Parliament ever.
Iqbal Mohamed
In my constituency, 44.4% of children are living in poverty, according to the latest Government figures. Yet Oxfam reports that just 56 billionaires in the UK now hold more wealth than 27 million people combined in our country, and their wealth rose on average by more than £230 million each last year. Does the Chancellor accept that child poverty is not inevitable but the result of political choices about who this Government want to protect? Can she explain how the child poverty taskforce can succeed without the Treasury being willing to pursue far more fair and equitable wealth distribution, through closing tax loopholes, taxing wealth and not just income, and preventing—
Rachel Reeves
Child poverty is absolutely not inevitable, which why we are lifting 550,000 children out of poverty. It is always Labour Governments who lift children out of poverty and Tory Governments who put children back into poverty. The numbers the hon. Gentleman refers to are appalling: 44% of children should not be growing up in poverty in Dewsbury and Batley. We have made the changes we have made to lift those children out of poverty and to give all of them a decent start in life.
Andrew Pakes (Peterborough) (Lab/Co-op)
One of the worst legacies of the previous Government is that 43% of children growing up in Peterborough are living in poverty. Nearly 10,000 children will be affected by the lifting of the child cap in Peterborough alone. Will the Chancellor assure me that, while we have made huge progress, we will keep a razor-like focus on child poverty as we deal with the cost of living crisis and the fallout from the war in Iran?
Rachel Reeves
The fact that some 10,000 children in one constituency have been lifted out of poverty, by just one of the policy changes we have made to reduce child poverty, shows the difference that this Labour Government are making. Combined with the breakfast clubs, the free school meals, the extension of childcare, the Renters’ Rights Act 2025 and the building of new homes, the Government are set to deliver the biggest ever reduction in child poverty in one Parliament.
Warinder Juss (Wolverhampton West) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
First of all, I offer my deepest condolences following the tragic death of two young children in my hon. Friend’s constituency. This will be an incredibly distressing time for the whole community and the thoughts of the whole House are with them.
We recognise that everyday living costs remain too high, which is why we are supporting households with their energy bills, and why we have frozen prescription charges for a second year in a row and rail fares for the first time in 30 years. It is also why we have lifted the national living wage and the national minimum wage, so people on low pay can see their money go further.
Warinder Juss
I thank the Chancellor for her condolences. I was at the site of the tragedy on Sunday laying flowers. It is very upsetting for everyone in my constituency.
One of my favourite places for lunch is the Pomegranate Café, together with the Central Community Shop, in my constituency. It is a community-based social enterprise partnership founded by the Good Shepherd charity, the Wolves Foundation and the Labour-controlled city of Wolverhampton council. It provides affordable food, and all the profits from the café are donated to the Good Shepherd’s free-to-access services—supporting its work to end homelessness, assist recovery, provide access to services around training and employability, and provide meaningful pathways out of poverty in Wolverhampton. Will the Chancellor please join me in congratulating everyone involved with the Pomegranate Café—
Rachel Reeves
I thank my hon. Friend for raising the excellent work city of Wolverhampton council is doing to help people with the cost of living, in particular the most vulnerable people in our society. The measures we are taking to reduce child poverty, and to increase the basic state pension and the new state pension, combined with what we are doing with Pride in Place, including in Whitmore Reans and Dunstall Hill in his constituency, will improve outcomes for people in Wolverhampton West and around the country.
Catherine Fookes (Monmouthshire) (Lab)
Cat Smith (Lancaster and Wyre) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
We are on the right path with the right economic plan. Unemployment is down, the economy is growing, interest rates have been cut six times, and last year Government borrowing was lower than it was the year before and is set to fall by more than in any other G7 economy.
At the same time, the Government are acting responsibly on the world stage. This is a war that we did not start, we did not enter, and we are working with our international allies to de-escalate. Our focus is on protecting family finances, supporting businesses and taking care with the public purse to improve Britain’s economic resilience. That is the right plan for our country.
Cat Smith
I thank the Chancellor for her work to lift the two-child benefit cap, which was cruelly brought in by the Conservative Government. Does she agree that that is not only morally the right thing to do, but economically good news for the 1,690 families in Lancaster and Wyre who will have more money in their pockets to spend in our local economy in Lancashire—unlike the super-rich, who would have just taken it to offshore tax havens?
Rachel Reeves
Just a couple of weeks ago, I hosted an event in Downing Street where I met people who are benefiting from the change in the two-child limit and people who had campaigned for that change. Mums told me that they were going to use the money to pay for their kids to go to after-school clubs with their friends, swimming lessons that they could not afford before, or a new school coat rather than a second-hand one. That is the difference that this money is making to families up and down the country. I am proud to be the Chancellor who has scrapped the two-child limit.
Sir Mel Stride (Central Devon) (Con)
In response to the question from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) on borrowing, the right hon. Lady suggested that she was following a strict deficit reduction plan. I think she made reference to a reduction in the deficit of £20 billion year on year—but, of course, it is easy to reduce something if you pump it up recklessly in the first place. Could she tell the House how much more borrowing this Government will undertake across this Parliament compared with the plans that she inherited from the last Government?
Rachel Reeves
To start with, let us remember that the plans we inherited from the last Government would have seen fuel duty go up straightaway; the plans that we inherited from the last Government would not have seen £29 billion of investment a year in our NHS; and the plans that we inherited from the last Government would have seen business rates for our high street businesses—our retail, hospitality and leisure businesses—go up straightaway. We did make the decision to change that inheritance because we thought it was the right thing to do, and we still do. The International Monetary Fund confirmed that we have the fastest rate of fiscal consolidation of any country in the G7, and our borrowing as a share of GDP fell to 4.3% in the last financial year and is due to fall in every single year of this Parliament. This is the first time that our deficit has been lower than 5% since 2019.
Sir Mel Stride
The right hon. Lady does not seem to know how much additional borrowing this Government are undertaking compared with the plans of the last Government, so I will tell her: it is one quarter of a trillion pounds of additional borrowing across this Parliament. The truth is that this Chancellor is addicted to borrowing, which means, compared with what otherwise would be the case—she said exactly this, in terms, in the answer to my right hon. Friend the Member for Godalming and Ash—higher borrowing costs, higher inflation, higher interest rates and more sluggish growth, doesn’t it?
Rachel Reeves
What the right hon. Gentleman is basically admitting is that he would have gone ahead with the increases in fuel duty and business rates, and that he would take that money out of our national health service. We made those changes on the mandate that we got at the election, and at the same time we are reducing the budget deficit so that, for the first time in six years, it is now below 5% of GDP. As a result, the Bank of England has cut interest rates six times, helping all our constituents with their mortgages. This is very different from the hikes in mortgages that we saw under the previous Tory Government.
Yuan Yang (Earley and Woodley) (Lab)
Rachel Reeves
As my hon. Friend knows from sitting on the Treasury Committee, this Government have already taken action to reduce the cost of living and to bear down on inflation with the changes around energy prices, fuel duty, prescription charges and rail fares. I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector. That is why we have already introduced the Renters’ Rights Act 2025. People who have mortgages have seen cuts in their mortgage rates since we came into office, and we will also do everything we can to help people in the private rented sector too, because we must ensure that this conflict in the middle east does not result in our constituents being poorer.
Antonia Bance (Tipton and Wednesbury) (Lab)
Rachel Reeves
I thank my hon. Friend for that question. While other parties—specifically Reform and the Conservatives—wanted us to enter this war, we stayed out of it, and are working to de-escalate the conflict and reopen the strait of Hormuz. The economy was growing, interest rates were coming down and inflation was falling. As a result, every month since I have become Chancellor, wages have risen by more than inflation, easing the cost of living pressures that the previous Government oversaw.
Olly Glover (Didcot and Wantage) (LD)
Chris Bloore (Redditch) (Lab)
Rachel Reeves
My hon. Friend is absolutely right that although Reform-led Worcestershire council said that it would cut taxes, it has instead put them up. That is why I urge people in Redditch and across the country to vote Labour on 7 May.
Sarah Olney (Richmond Park) (LD)
Tom Rutland (East Worthing and Shoreham) (Lab)
Rachel Reeves
The oil and gas sector will play an important part in our energy mix for many years to come, and we need to support it, as we are doing through tiebacks, for example. But it is important that the energy profits levy remains in place for now, because during this conflict we will be able to capture the profits made in the UK through the windfall tax. The Conservatives and Reform oppose this tax, which would just mean even higher profits for oil and gas companies. As my hon. Friend knows, we are also delinking gas and electricity prices by increasing the electricity generator levy, so that no energy company can make excess profits because of the conflict.
Chris Coghlan (Dorking and Horley) (LD)
Rachel Reeves
I thank my hon. Friend for all his campaigning in this area. I also pay tribute to the trade union USDAW, its former general secretary Paddy Lillis, and its current general secretary Joanne Thomas, for all their work in this area. Strengthening statutory sick pay is part of our commitment to implement our plan to make work pay, ensuring that the safety net of sick pay is available to those who need it from day one.
Shockat Adam (Leicester South) (Ind)
Leicester South has a home ownership rate of just over 40%—nearly 23 points below the national average—in a city where the average house costs 8.5 times average local earnings. My young constituents work very hard and save responsibly to get on to the housing ladder, yet the tax system offers them absolutely nothing, while incorporated landlords deduct full mortgage interest through a company structure. Canada and Nordic countries are offering targeted tax relief for first-time buyers. Has the Chancellor considered introducing a similar relief here to ensure that young people are supported by the tax system, not left behind?