Oral Answers to Questions
Rachel Reeves Excerpts(2 days, 12 hours ago)
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Sarah Russell (Congleton) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
I thank my hon. Friend for her question. She is a proud supporter of everything in the Congleton constituency. This Government are committed to regional growth, with growth in all parts of the United Kingdom. That is why the Treasury has reformed the Green Book, looking at the value for money of different projects. It is also why, in Cheshire East, where my hon. Friend’s constituency is, we have put £47 million into local transport grant funding.
Sarah Russell
I thank the Chancellor for her answer. In my constituency, Dane Valley Community Energy, a marvellous group of volunteers, has raised hundreds of thousands of pounds for solar panels on schools and other local buildings, including Daneside theatre and Havannah primary school. Unfortunately, recent Government guidance has suspended applications in respect of solar panels for schools. Will the Chancellor look at that guidance and work with Ministers in other Departments to review that outcome?
Rachel Reeves
I thank my hon. Friend for drawing this issue to my attention. I agree that community projects such as solar panels are a fantastic opportunity to get down bills for schools so that they have more money to spend on teachers and on books. On my hon. Friend’s specific question about solar installations, there was a temporary pause in applications, but I am happy to confirm that the Department for Education has resumed approvals for solar panels on school sites. I would urge my hon. Friend to encourage the schools in her constituency to apply for the new projects in the normal way.
Anna Dixon (Shipley) (Lab)
Gareth Bacon (Orpington) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
The previous Government left a £22 billion black hole in the public finances, and in the Budget last year I had to take urgent action to ensure our public finances were on a firm footing and to properly fund our public services, including a £29 billion investment every year in our national health service. The Opposition cannot support more investment in our public services unless they support the tax changes to pay for it.
Wendy Morton
I am not convinced that that answer went anywhere near my question. Family businesses are the lifeblood of communities and constituencies such as mine. Last week, I met Family Business UK to discuss how the Government’s national insurance hike and restrictions to business property relief are forcing businesses to pause investment, think twice about taking on more staff and, in some cases, even to close their doors. Ahead of the Budget, will the Chancellor meet me and representatives from family businesses to seek ways in which the Government will work with, not against, these really key businesses?
Rachel Reeves
I thank the right hon. Lady for that question, and 43% of employers—almost 1 million—will pay no employer national insurance this year. That is an increase because of the changes we made to the employment allowance. Over half of employers with NIC liabilities will see no change, or will gain overall, and businesses can employ younger people—those aged under 21 and apprentices under 25—without NICs. However, the Conservatives must decide whether they will stick with this change to national insurance. If they are not going to, they will have to admit that they will not be able to put the money into the national health service.
Joe Robertson
According to the British Retail Consortium, the Chancellor’s last Budget caused a £7 billion cost to retail, leading to shop closures, declining high streets and job losses. If the Chancellor will not acknowledge the damage she has caused, how will she go about rectifying it? Can I recommend that she starts with the 100% business rate relief put forward by the shadow Chancellor?
Rachel Reeves
I thank the hon. Gentleman for that question. In his own constituency in the Isle of Wight, the six-monthly waiting list figures show that 5% fewer people are waiting for 18 weeks or longer. That is only possible because of the money we put into the NHS because of the tax changes we made. On retail sales and the impact on shops, retail sales have increased for the last four months in a row, with the most recent numbers for August and September outpacing expectations.
Gareth Bacon
It was always blindingly obvious that increasing employer national insurance would lead to an increase in business costs, which would lead to higher prices hitting working people directly, and to rises in inflation. Sure enough, inflation has risen steadily under this Government, and it is now at almost twice its recommended level. At the last Budget, we were told it was necessary to raise taxes on businesses by £25 billion to pay for the NHS, and large amounts of money have indeed been paid to unionised workers, but just yesterday the Office for National Statistics announced that NHS productivity had fallen by 1.5% since Labour took office. Can the Chancellor explain what exactly my Orpington businesses are paying more tax for?
Rachel Reeves
In the hon. Gentleman’s constituency, the number of people waiting more than 18 weeks for an appointment has also fallen. That is exactly what that money is being used for. He needs to be clear, and so do those on the Opposition Front Bench: if they want to reverse the increase to national insurance, they must also accept that there will be less money for our national health service. That is a choice, and it would be interesting to hear whether it is the Opposition’s choice.
Catherine West (Hornsey and Friern Barnet) (Lab)
On 6 December, Small Business Saturday will have us all out in our constituencies supporting small businesses. Following the announcement this morning about the need to enhance productivity, what measures will the Treasury be introducing to assist small businesses in the current tough climate?
Rachel Reeves
My hon. Friend is a strong champion for people in Hornsey and Wood Green, including small businesses. Last year at the Budget, we set out the principles in the consultation on business rates reform. Our principle is to make it easier for small businesses and high street businesses, while making sure that the online retail giants pay their fair share of tax. We will be setting out more information on our reformed business rate system to help our high streets and help our small businesses on 26 November.
Bill Esterson (Sefton Central) (Lab)
The Conservative party gave us austerity, Brexit and Liz Truss, including high interest rates and high inflation. This Government, so far, have delivered the highest growth in the G7, five interest rate cuts and record high levels of investment. Is it not the truth that the Conservative party, over 14 years, was the reason businesses were struggling?
Connor Naismith (Crewe and Nantwich) (Lab)
Opposition Members spend a lot of time complaining about the difficult decisions taken by this Labour Government, so I wonder whether the Chancellor can remind them what we have been able to do for public services and infrastructure as a result of this Government’s revenue-raising policies.
Rachel Reeves
That is exactly the case. The tax changes we made at the Budget last year enabled us to put £29 billion extra a year into the NHS, but also to roll out free school meals and free breakfast clubs for young people. That is the difference this Government are making. On capital spending, because of the changes I made to our fiscal rules, we are able to invest £120 billion more on our energy security, our digital infrastructure and new homes through our industrial strategy. That is the difference that this Labour Government are making.
Daisy Cooper (St Albans) (LD)
Analysis by UKHospitality suggests that more than half the job losses in the UK since last year’s Budget have come from its sector. That is further evidence that the jobs tax has been bad for growth and bad for job opportunities. We Liberal Democrats have set out fairer ways of raising revenue and going for growth, so rather than the Government suggesting that we have not done so, can I instead ask them: will they use the Budget to consult on a new lower national insurance contribution band to create opportunities for part-time workers, especially in hospitality?
Rachel Reeves
We increased the employment allowance at the Budget last year. That is, rightly, agnostic between part-time and full-time workers. That is why 865,000 businesses will not be paying national insurance at all this year—an increase to help our smallest businesses. Employment is up 358,000 so far this year; that is very different from the picture that the hon. Lady just tried to set out.
Maureen Burke (Glasgow North East) (Lab)
Dr Simon Opher (Stroud) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
May I first pay tribute to all those who responded to Saturday’s horrendous attack: the quick-thinking driver, the emergency services, and the heroic LNER staff member Samir Zitouni who bravely saved the lives of passengers?
The Government were elected to break a cycle of decline. We have returned the public finances to a firm footing, invested in Britain and begun to rebuild our economy. But times remain challenging: global uncertainty is dampening growth and increasing the cost of borrowing; while inflation remains too high and productivity too low. In the face of those challenges, my task is clear. At the Budget later this month, I will continue to build the strong foundations to secure Britain’s future, protect our NHS, reduce our national debt and improve the cost of living for a fairer, more prosperous Britain with an economy that works for everyone.
Rachel Reeves
It was good to see my hon. Friend and the engineering company Redler in Downing Street yesterday. On the issue about schools, as I said in answer to my hon. Friend the Member for Congleton (Sarah Russell), the scheme is now reopened. I have not had a look at the schools mentioned by my hon. Friend the Member for Stroud (Dr Opher). There may be some issues with maintained schools, but we are looking into that and are keen to work with him to ensure that schools in his constituency—indeed, schools in all hon. Members’ constituencies—can benefit from the scheme.
Richard Fuller (North Bedfordshire) (Con)
What is the Chancellor’s definition of “working people”?
Rachel Reeves
A working person is somebody who goes out every day to earn their income. They rely on prices that are affordable in the shops, low interest rates and taxes that are as low as possible, but also public services that work for them, like the NHS, where waiting lists have already come down by more than 200,000.
Richard Fuller
That is a very broad definition. Maybe the Chancellor should speak to the Prime Minister, the Transport Secretary, the Education Secretary and the Chancellor of the Duchy of Lancaster, who have all given different definitions of working people over the last 12 months. After last year’s Budget, the Chancellor said that she had wiped the slate clean, but that was not true, Chancellor, was it? She said that she would not be coming back with more taxes, but that was not true, Chancellor, was it? At the election, the Chancellor said that she would not raise taxes on working people, but that was not true either, was it, Chancellor? When will the Chancellor learn the truth that she is not a commentator on the country’s economic problems; she is the cause?
Rachel Reeves
When we came into office last year, there was a £22 billion black hole in the public finances. The reserve that is set out for genuine emergencies had already been spent four times over only three months into the financial year. That is the reality. We increased taxes in the Budget last year to stabilise the public finances and to put a much-needed injection of cash into our public services, principally our national health service. Since then, anyone can see the big challenges facing the world, as well as the productivity that never materialised under the past Government.
Several hon. Members rose—
Andy MacNae (Rossendale and Darwen) (Lab)
Rachel Reeves
I thank my hon. Friend for his question and for his campaigning work on this. At the spending review, I announced the changes to the Green Book and particularly our work on place-based business cases, looking at how spending can cumulatively benefit an area. We are rolling out the new Green Book with some test cases. I am determined that we get investment that is long overdue into our northern towns and cities.
Lewis Cocking (Broxbourne) (Con)
Adam Jogee (Newcastle-under-Lyme) (Lab)
Rachel Reeves
The NHS will remain free at the point of use for as long as there is a Labour Government. That is not something that Reform is able to promise. As usual, Reform does one thing and says another. In Kent, the party said that it would find efficiencies to keep down council tax, but it has not found a single one and that is why the 2 million people who live in Reform council areas will get a council tax rise next year.
Greg Smith (Mid Buckinghamshire) (Con)
Dame Harriett Baldwin (West Worcestershire) (Con)
The Chancellor justified at the Dispatch Box what a working person is. Will she reiterate at the Dispatch Box now what she said to the British public during the general election campaign, which is that her forthcoming Budget will not raise taxes on working people?
Tom Hayes (Bournemouth East) (Lab)
How will the Government help to fund the green infrastructure that we need, as through the coastal energy partnership that I helped to set up in Bournemouth, with Great British Energy taking on early stage project development and the National Wealth Fund making those critical long-term investments?
Valerie Vaz (Walsall and Bloxwich) (Lab)
Will the Chancellor update the House on how and when schools can apply for libraries for primaries funding, which she announced on 29 September?
Rachel Reeves
We have made a commitment that every single primary school in England will have a library by the end of this Parliament. The Department for Education will set out the process in due course, but any primary school without a library can rest assured that it will have one soon.
Tim Farron (Westmorland and Lonsdale) (LD)
Will the Chancellor consider in her Budget closing the loophole in small business rates relief that allows wealthy second homeowners to have their homes on the rental market for 72 nights a year and therefore avoid paying any tax whatsoever? My constituents working the minimum wage are having to subsidise them. That is not fair, is it?
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
I welcome our Government’s recent Typhoon deal with Türkiye, which will see the brilliant team at Rolls-Royce in Filton play a key role in engine production and maintenance. Will the Chancellor join me in congratulating them, our local small and medium-sized enterprises and others, and set out how integral she sees defence as an engine for growth?
Rachel Reeves
My hon. Friend is a solid defender of businesses and working people in her constituency. The defence industrial strategy is about supporting British industry as we—and other countries around the world—up what we spend on defence. We want British businesses and British workers to benefit from that investment.
Rupert Lowe (Great Yarmouth) (Ind)
Through freedom of information requests, Restore Britain has uncovered unpublished Treasury analysis breaking down contributions by ethnicity. Evidently the data exists, so will the Chancellor commit to going further by publishing the same analysis by nationality, so that we can see which groups are paying their way, and, more importantly, which groups are not?
Lloyd Hatton (South Dorset) (Lab)
On a more constructive note, for the past year I have been campaigning hard for Eden Portland to open in my constituency. If opened, it would be a world-class attraction, rejuvenating Portland, attracting investment, creating well-paid jobs and promoting our coast. The project is a success story waiting to happen, so will the Chancellor of the Exchequer continue to work with me, Dorset council and the team at Eden Portland to deliver that exciting project as soon as possible?
Rachel Reeves
I thank my hon. Friend again for raising the opportunities in Portland. As he knows, we are working closely with Dorset council, the project and him to bring that to fruition.
Chris Coghlan (Dorking and Horley) (LD)
The Chancellor knows that I agree with her that the use of public research and development is one of the most effective levers for economic growth, but it will not significantly increase over the entire five-year spending review period. If the Government are serious about economic growth, they must find a way to increase public research and development. Does she agree?
Rachel Reeves
We are increasing spending on research and development in real terms and in every year of this Parliament, for exactly the reasons that the hon. Gentleman mentions. But we are doing more than that: we are supporting start-up and scale-up businesses through our pensions reform, through the British Business Bank and through UK Export Finance. We are absolutely determined to ensure that the money that goes into R&D in this country turns into great businesses that stay in this country.
Sarah Smith (Hyndburn) (Lab)
Will the Chancellor join me in congratulating the great work of Red Hat, a catapult based in Hyndburn that has supported the safeguarding of over 300 jobs and the development of 46 new products? Will she meet me to consider the role of catapults in supporting economic growth in places such as Hyndburn?
Rachel Reeves
Catapults have been a big success in driving economic activity, especially in manufacturing and engineering, which are prevalent in all parts of the country, including in my hon. Friend’s constituency. It was a pleasure to visit Hyndburn with her last year. I look forward to having the opportunity to do so again.
Ben Obese-Jecty (Huntingdon) (Con)
In the past few weeks, I have visited two incredible local businesses: Saragusta Spirits, a local gin distillery, and Williams Family Wines, an award-winning winery. However, such entrepreneurial success is being hampered by small producer relief adding significant additional duty cost and preventing businesses from growing. With English viticulture and wines enjoying a surge in popularity, will the Chancellor consider extending small producer relief to drinks above 8.5% ABV, and if not, why not?
Adrian Ramsay (Waveney Valley) (Green)
This morning the Chancellor spoke of difficult decisions for everybody but the ultra-rich. With billionaire wealth soaring while living standards for most people fall, does she agree that it is time to double down on gross inequality in our country and tax extreme wealth fairly, so that we can tackle the cost of living crisis, end child poverty and invest in our public services?
Rachel Reeves
As the hon. Gentleman knows, that is not what I said in my speech this morning. In last year’s Budget we got rid of the non-dom tax status, we introduced VAT and business rates on private schools, we increased capital gains tax, we increased tax on private jets and we got rid of the carried interest—more than the Green party has ever done to reduce inequality in this country.
Terry Jermy (South West Norfolk) (Lab)
So often the farm is the very core of a rural economy. Could my hon. Friend confirm what assessment has been made about the impact of proposed changes to agricultural property relief on growth opportunities in rural areas and the viability of rural communities?
Regulation Action Plan
Rachel Reeves Excerpts(2 weeks, 2 days ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Improving regulation in the UK, ensuring that it enables growth and does not unduly hold back investment, is an essential part of this Government’s growth mission and delivering on the plan for change.
In March, the Government published an action plan which set out how we will overhaul the regulatory system so that it not only provides critical safeguards and protects consumers, but drives sustained economic growth across the country, is targeted and proportionate, transparent and predictable, and keeps pace with innovation. To achieve that vision, the Government committed to delivering a package of reforms over the course of the Parliament that focus on tackling the complexity and the burden of regulation, reducing uncertainty across the regulatory system and challenging risk aversion.
Six months after the action plan’s publication, the Government are setting out the tangible progress we have made to deliver on that vision and setting out a range of new reforms to the same end.
The Prime Minister committed to reduce the administrative burdens of regulation on business by 25% by the end of the Parliament. We have now established a baseline for the administrative burden of regulation on businesses of £22.4 billion a year, which means that the Government target is to reduce the annual administrative burden of regulation by £5.6 billion by the end of the Parliament.
Alongside establishing a baseline, the Government have already taken action to meet the target, identifying £1.5 billion of administrative burden savings, for example through the Planning and Infrastructure Bill which is expected to deliver £272 million in administrative savings by the end of the Parliament; the establishment of the national underground asset register which will deliver over £185 million in administrative savings per year; and reforms to the information which the Prudential Regulation Authority requires from financial services firms, which are saving businesses over £100 million per year in administrative burdens.
We have simplified and streamlined the regulatory landscape, including through significant reforms to the Financial Ombudsman Service; the Government intention to abolish Ofwat and merge the water regulation functions of four different bodies into a single water regulator following the Independent Water Commission report; and delivering legislation to establish the fair work agency through the Employment Rights Bill, consolidating the functions of the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and the director of Labour Market Enforcement into a single public body.
The Government have also taken targeted action to ensure regulatory frameworks and processes support economic growth. We have published the UK’s modern industrial strategy and set out targeted regulatory reforms across eight high-priority growth sectors, such as overhauling our planning system, reforming the money laundering regulations to make requirements for around 100,000 businesses more effective and proportionate, and through the current statutory review of the UK’s medicines and medical device regulatory framework which will support responsible innovation, benefiting patients, the NHS and the economy. We will also take advantage of the opportunities from improving our bilateral relationship with the EU to ease burdens on business.
Today the Government have published “Regulation Action Plan - Progress Update and Next Steps”, setting out how the Government are going further to realise the vision set out in the action plan. Key actions include:
Tackling complexity and the burden of regulation
The Secretary of State for Business and Trade has made a written ministerial statement regarding legislative changes the Department for Business and Trade will bring forward to reform corporate reporting requirements, aiming to save businesses an estimated £230 million annually in administrative costs.
HM Treasury will consolidate the anti-money laundering and counter-terrorist financing supervisory functions of 22 professional services supervisory bodies. The Financial Conduct Authority will assume responsibility for this. Reform of the UK’s AML/CTF supervision regime will strengthen the UK’s defences against illicit finance, support sustainable growth, and simplify a complex regulatory system.
Following a review announced as part of the regulation action plan and delivered through the Cabinet Office’s review of arm’s length bodies, the Secretary of State for Business and Trade intends to abolish the British Hallmarking Council and consolidate its functions alongside wider product regulation functions when parliamentary time allows.
Reducing uncertainty across our regulatory system
The Government will reform the growth duty so that the legal framework is clearer, more focused and ensures regulators must consider and promote growth. We will work with regulators to ensure they have clarity from Government regarding what growth means for them.
The Secretary of State for Business and Trade will lead efforts to strengthen regulator accountability by establishing a single regulator performance dashboard, using stakeholder feedback to support rigorous scrutiny of key performance indicators, and chairing a new regulators council to strengthen accountability and transparency across UK regulators.
Consistent with the objectives of the CMA’s own reforms, DBT will consult in the coming weeks on proposals to provide greater certainty for businesses on whether transactions will be subject to merger control; proposals to ensure remedies are regularly reviewed; as well as changes to how the CMA makes decisions in mergers and markets investigations. This includes replacing the CMA’s panel model for decision-making by replicating the Digital Markets Board Committee model, for both the CMA’s mergers and markets functions.
Challenge risk aversion
The Government will ensure that the UK is ready to take advantage of the growth opportunities presented by the next generation of aerial vehicles, including by publishing an investor-focused commercial road map for launching private drone operations in the UK, and going further to remove friction within the regulatory environment.
The Department for Science, Innovation and Technology will bridge the gap between innovation in AI and regulation through consulting on establishing an AI growth lab—a pioneering cross-economy sandbox, enabling carefully supervised deployment of responsible AI applications that current regulation limits.
The Secretary of State for Business and Trade has also published unlocking business: reform driven by you, a business questionnaire to gather direct insight from firms on where regulation is creating unnecessary burdens.
These actions are grounded in what businesses say about the ways in which regulation is an obstacle to their success. That feedback is detailed in the 2024 Business Perceptions survey, published today by the Secretary of State for Business and Trade.
The Government will continue working with industry, regulators, and Parliament to ensure that the regulatory system protects consumers and supports competition, but also encourages new investment, innovation and growth.
The full regulation action plan progress update is available on gov.uk: https://www.gov.uk/government/publications/a-new-approach-to-ensure-regulators-and-regulation-support-growth
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Oral Answers to Questions
Rachel Reeves Excerpts(1 month, 4 weeks ago)
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Luke Akehurst (North Durham) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
Before I start, I quickly welcome my hon. and learned Friend the Member for Northampton North (Lucy Rigby) and my hon. Friend the Member for Chipping Barnet (Dan Tomlinson) to the team. I also congratulate my hon. Friend the Member for Ealing North (James Murray) on his new position as Chief Secretary to the Treasury.
In response to the questions, I want to be clear that the 10-year national infrastructure strategy is core to delivering this Government’s growth mission to boost living standards. The strategy will fund at least £725 billion of infrastructure over the next decade and transform how projects are planned and delivered, so that we do not have the cost and time overruns that we became so used to under the Conservatives.
Mr Rand
Working with colleagues in Greater Manchester, I have been proud to campaign for greater investment in our public transport infrastructure. The Government listened and delivered £2.5 billion of funding for the Bee Network, which will allow us to create the first fully integrated zero-emission public transport system. Will my right hon. Friend explain what that will mean for my constituents in terms of jobs, growth and connectivity?
Rachel Reeves
My hon. Friend is a proud champion of the people of Altrincham and Sale West. Investment through the transport for city regions fund will allow the Mayor of Greater Manchester, Andy Burnham, to invest in local priorities, creating jobs, better commutes, bigger labour markets and more opportunity across Greater Manchester. That includes investment in the fully electric Bee Network with zero-emission public transport by 2030, including the purchase of 1,000 new electric buses made in Rochdale, Northern Ireland and Scotland. That is in sharp contrast with the SNP Government, who buy their buses from China.
Douglas McAllister
Thanks to Labour’s fiscal rules, the Government have unlocked private investment in UK infrastructure and strengthened investor confidence. The 10-year infrastructure strategy will revitalise all parts of the country’s economy, including in Scotland and in my constituency of West Dunbartonshire. Does the Chancellor agree that the UK Labour Government have put Scotland at the heart of economic growth, with unprecedented support for Scottish industries, jobs and public services, in stark contrast to the SNP Scottish Government?
Rachel Reeves
My hon. Friend is a great champion for the people of West Dunbartonshire, and I know he is working very closely with the Ministry of Defence at the moment to secure defence investment in his constituency. During the summer, I had the opportunity to spend some time in Scotland, seeing the results of our infrastructure investments—in the defence sector, carbon capture and storage in Aberdeenshire, transport investment in Glasgow, the supercomputer, and RAF Lossiemouth—and how the trade deals are benefiting industries in Scotland, including Scotch whisky.
Luke Akehurst
Can the Chancellor outline the impact on economic growth in the north-east of England she expects from the record-breaking £1.85 billion spending package awarded earlier this year for transport infrastructure in the region?
Rachel Reeves
My hon. Friend has been a good advocate for his constituents. He and I, as well as the Labour Mayor Kim McGuinness, know that investing in roads, cycleways and the metro will make a real and practical difference. This builds on the £0.6 billion that the north-east is receiving through the city region sustainable transport settlement, of which £23 million has been earmarked for Durham. Of course, my hon. Friend’s constituents will also benefit from the wider economic benefits of extending the Tyne and Wear metro, linking Washington with Newcastle and Sunderland.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
In my view, Stone railway station is one of the most attractive and beautiful stations on the west coast main line. Sadly, though, its platforms are too short, meaning that inter-city trains cannot stop there. Would the Chancellor of the Exchequer be kind enough to speak with her Transport colleagues about what future options there are for Stone to benefit from the extension of platforms, which would improve its connectivity to not just Birmingham and Manchester, but also London?
Rachel Reeves
I thank the right hon. Gentleman for his question relating to his constituency. It is a shame that the Conservative party did not invest in extending those platforms when it was in power for 14 years. I am very happy to discuss with my colleagues at the Department for Transport how the his constituents can benefit from the extra £120 billion that this Government are putting into capital investment.
Munira Wilson (Twickenham) (LD)
Over the summer, Heathrow finally published its proposals for a third runway. It is very clear that a lot of supporting road and rail infrastructure will be needed if that expansion goes ahead. Could the Chancellor outline to the House what estimates her Department has made of the amount of public investment that will be needed? Heathrow execs have been clear that they are not going to fully fund it themselves.
Rachel Reeves
This Government back a third runway at Heathrow. We are a country that is open to global trade and investment—we have done three trade deals with countries around the world and have secured £120 billion of inward investment. Heathrow Airport Ltd and others have now put forward a bid to build the third runway, and have been very clear that they will be investing in the infrastructure to make that possible. I welcome investment into Britain, and I hope that parties all across the House will do the same.
Mr Andrew Snowden (Fylde) (Con)
If the Chancellor is looking for some quick-win infrastructure projects that will unlock economic growth, I recommend taking a look at a passing loop on the South Fylde line, which would better connect trains to employment and education sites through more reliable services. It would also act as a boost for the tourism industry on the Fylde coast; people across Lancashire—maybe from other great towns such as Chorley—like to visit Lytham St Annes and the Fylde coast, and would be able to do so on half-hourly rail services. Will the Chancellor take a look at that fantastic opportunity to boost economic growth in Lancashire and the Fylde?
Rachel Reeves
I have huge respect for the hon. Gentleman, and no one in this House would want to do anything to upset Mr Speaker. I am very happy to look at investment opportunities in the hon. Gentleman’s constituency and right across Lancashire, including just up the coast in Blackpool, where we put in significant investment at the spending review earlier this year to build the housing and infrastructure our country desperately needs.
Gareth Davies (Grantham and Bourne) (Con)
The Chancellor once claimed that she had a plan for fixing the foundations with infrastructure at the very heart. Now, through a consultation that the Government hoped nobody would notice, she has found a way to tax the foundations. By looking to impose a new levy on quarries, Labour could add billions of pounds more to the costs of infrastructure projects across the country. That cannot be right. Can the Chancellor please provide the construction industry—the very people who will grow our economy—with an assurance that this proposed builders tax will not go ahead?
Rachel Reeves
The Government are currently consulting on a landfill tax. It is a consultation, and it is open for comments from right across industry, but this Government are investing in infrastructure. Compared with the plans that we inherited, which would have seen capital investment fall as a share of GDP, we are instead putting an additional £120 billion in, as well as £70 billion through the National Wealth Fund. Crucially, that is leveraging in private sector investment in transport infrastructure, including roads, railways and airports, and digital infrastructure. We are growing the economy—a far cry from what the Conservatives did in their 14 wasted years.
Wendy Chamberlain (North East Fife) (LD)
Sir Desmond Swayne (New Forest West) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
We are investing in Britain’s future and putting in place the plans needed to get Britain building again after 14 years of Tory failure. Since the election, we have had five interest rate cuts, wages have risen more in the first 10 months of this Labour Government than they did in the first 10 years of the previous Conservative Government, and we are the fastest growing economy in the G7 in the first half of this year.
Rebecca Paul
I thank the Chancellor for that response. This year, interest on debt is expected to total £111 billion, which is 8.3% of total public spending. What are the Chancellor’s plans to rebuild confidence in the gilt market, and how confident is she that we will not be reliving the worst bits of the 1970s?
Rachel Reeves
The best way to make sure that we continue to have confidence in the gilt markets is to keep the Tories and Liz Truss as far away from running the economy as possible. We have brought stability back to the economy, and there have been five cuts in interest rates. This is in sharp contrast to the disaster of Liz Truss and the clown show that we witnessed at the Reform conference at the weekend. Those two parties would lose control of spending, and push up mortgage costs and inflation. They have done it before, and they would do it all over again.
Sir Desmond Swayne
So why does the Chancellor think that the United Kingdom is being charged more in interest even than Greece?
Rachel Reeves
The spread on our gilts over the central bank rate is lower in the UK than it is in Greece, so maybe the right hon. Gentleman should look again at his evidence. The truth is that we have had five cuts in interest rates since this Government came to office. We are paying high levels of interest on the debt, but the debt was accrued by the Conservative party, which destroyed our economy and public services all at once. We are fixing the mess that the Conservatives left.
Callum Anderson (Buckingham and Bletchley) (Lab)
The trust of financial markets depends not just on the policy of the Government today, but on whether we keep that trust tomorrow. The Opposition squandered that trust when they were in government by trying to push through tax cuts that they could not afford—that the UK could not afford. Does the Chancellor agree that Labour, too, has to resist the temptation to duck the tough choices on spending, which would not only risk economic stability but hold back growth?
Rachel Reeves
I very much agree with my hon. Friend. That is why we published the spending review earlier this year. The review set out plans for day-to-day spending for the next three years and capital spending for the next five. Everything in the review is fully funded and fully costed through the difficult decisions that we had to make in the Budget last year to increase taxes. At the same time, the deficit is expected to fall by 1 percentage point of GDP this year.
Bill Esterson (Sefton Central) (Lab)
Both the Conservatives and Reform want to repeat the medicine that Liz Truss inflicted on this country, pushing interest rates and mortgages through the roof. Is not the contrast that this Government have provided stability and confidence; that, as a result, we have record levels of private investment in this country; and that we are on the right track to rebuilding this country as a success story, which can be seen in the fact that we have the fastest growth in the G7 as well?
Rachel Reeves
The Office for Budget Responsibility forecasts that debt is going to fall during the course of this Parliament—something that never happened under the Conservative Government—and that the deficit as a share of GDP will fall by 1 percentage point this year. This is a Government who have a grip on the public finances and on public spending, because of the choices that we made. All those choices were opposed by all the Opposition parties.
Dave Doogan (Angus and Perthshire Glens) (SNP)
In the spring statement earlier this year, the Chancellor said that the responsible choice is to reduce our level of borrowing in the years ahead. That is a noble sentiment, which I applaud—if she was not trying to fix a watch with a hammer. This is the Chancellor that has seen UK debt interest now soar to a 27-year high, while annual debt interest is almost twice the cost of servicing the Ministry of Defence. Given her catastrophic first Budget, what reassurance has she got for Scottish businesses that things will not get even worse when she finally has her next Budget in the winter?
Rachel Reeves
I will not take any lectures from the SNP, which has put up taxes on ordinary working people in Scotland. The SNP Scottish Government had the biggest settlement since devolution in real terms at the spending review this year. That was only possible because of the tax changes that we made in the Budget. It is now up to the SNP Government to use that money wisely and to see waiting lists fall in Scotland in the way that they have in England and Wales. Waiting lists are still rising in Scotland—what does that say about their Government?
Chris Vince (Harlow) (Lab/Co-op)
Will the Chancellor remind us whether the national debt went up or down under the previous Government?
Rachel Reeves
Let me just check—oh yeah, it went through the roof! At the same time that our debt levels went up, we have seen our public services—whether that is our schools, our hospitals, our transport or our infrastructure—on their knees. The Conservative Government managed to destroy our public finances, our economy and our public services. What an achievement. That is why there are only 120 of them and they are sitting on the Opposition Benches—and they will be there for a long time to come.
Richard Fuller (North Bedfordshire) (Con)
UK long-term borrowing costs are now consistently above the range of G7 countries—something that did not occur at any time under previous coalition or Conservative Governments. It is because markets are pricing in the specific weakness of this Labour Government’s economic policies. The cost of that weakness means rising prices, lower investment and less money for public services in the long term. Having carpet-bombed the private sector with extra taxes, will the Chancellor rein back the splurge of unproductive public spending that she let rip last year?
Rachel Reeves
The only person that carpet bombed our economy was Liz Truss and the Conservative party. The hon. Gentleman supported Liz Truss in leadership contest and throughout her time—
Rachel Reeves
He says he did not, but he served in her Cabinet, so I will take no lectures from Conservative Members. The country will have heard what the Leader of the Opposition said today: she was talking down our economy in a desperate attempt to get attention. The truth is, as Members on the Opposition Benches know, that that is not serious and it is irresponsible. The only thing in Britain that needs a bail-out is the Tory party—from its failed leadership.
Jas Athwal (Ilford South) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
In the spending review, we put significant money into building more houses as part of our commitment to build 1.5 million homes during the course of this Parliament. The Planning and Infrastructure Bill is currently making its way through the House of Lords, but more than 600 amendments have been tabled to it, mainly by peers from Opposition parties. The Labour party and this Government back the builders, whereas the Opposition parties back the blockers. They are stopping young people getting on the housing ladder, stopping renewable energy being built and stopping the transport infrastructure that we desperately need to be built. Instead of opposing and tabling amendments, the Opposition parties should back that Bill so that we can get Britain building.
Jas Athwal
I have been banging the drum for some time now that Ilford is the best place to live, and with four Elizabeth line stations, that has never been more true than now. Barking and Dagenham council and Redbridge council are both capitalising on ambitious regeneration plans, like the developments at Billet Road and Padnall Lake. What are the Government doing to encourage businesses to seize on this investment by making investments of their own, backing Ilford, its community and its economy?
Rachel Reeves
I thank my hon. Friend for everything that he is doing to champion Ilford South and to bring more investment into his local community. It is great to have Labour councils working with a Labour Government to bring investment to local communities through housing and, crucially, through infrastructure—the schools and the doctors’ surgeries—that go alongside that new housing, so that we build not just homes but communities.
Mr Gregory Campbell (East Londonderry) (DUP)
As the Chancellor tries to cut through the bureaucratic red tape around planning outlines, can she undertake that, if successful over the course of the next six to 12 months, she will share that success with the other regions and nations in the United Kingdom, so that we can all benefit from simplified planning procedures, which will bring benefits for all our constituents?
Rachel Reeves
Over the summer, I had the opportunity to spend some time in Belfast, where I visited Thales, the defence manufacturer, and Studio Ulster, where I saw some of the fantastic work in the creative industries. I also had the opportunity to talk about some of the blockers to growth. We need to better reform our planning system, not just in England but in Northern Ireland and Scotland as well, so that we can get things built in Britain again. People are crying out for hope. Growth offers hope and investment offers hope, and that is what this Government offer too.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I welcome my right hon. Friend’s commitment to the hope of decent homes. In my constituency, children and families are leaving in droves and schools are closing because of a lack of properly affordable housing. She knows, as I do, that whatever we do in planning, without the skills that we need to build those homes, there will be a block there. Is she working with the new Secretary of State for Work and Pensions, who now has the skills brief, to ensure that we are investing in those skills and super-turbocharging the people who can help to build those homes?
Rachel Reeves
Just this September, new construction colleges have started opening around the country to train up the next generation of builders, plumbers and engineers, so that we can build both the housing infrastructure and the other infrastructure our country desperately needs. We have reformed the apprenticeship system, so that we can have more foundation apprenticeships for a shorter period of time to quickly get people the skills they need. Not requiring people to have a grade C or equivalent in maths and English to access an apprenticeship programme is also so important for young children who maybe did not get the grades they wanted in their GCSEs, but deserve a chance of a good apprenticeship and a job offering a decent wage.
Tim Farron (Westmorland and Lonsdale) (LD)
There is planning permission in this country for 900,000 properties that are as yet unbuilt, so maybe the issue is not that the planning laws are too restrictive but that they are not prescriptive enough. In my constituency, the average income needed to buy the average house is £71,000 a year—11 times the average income in my communities. Is it not right to ensure that, if the Chancellor changes planning law, we have to build more genuinely affordable homes in communities like ours, rather than giving developers carte blanche?
Rachel Reeves
That cannot be an excuse, though, for blocking developments and blocking people who own land from building more homes on that land. In the end, the simple law of supply and demand means that if we are not building homes, prices will continue to be unaffordable for the hon. Gentleman’s constituents. We are not allowing builders to build carte blanche and he absolutely knows that. We put the biggest investment into the affordable homes programme that has ever been seen, because it is important that the homes being built are affordable for families in his constituency and in mine. We must not just always block things, whether they be airports, housing or other infrastructure; we have got to back the builders.
James Wild (North West Norfolk) (Con)
The Government want to drive growth through house building, but even before the departure of the Deputy Prime Minister, they were predicted to miss the 1.5 million new homes target by half a million. How does the Chancellor and her team of tax raisers think a 3,000% hike in the builders tax, adding £28,000 to the cost of building a new home, will help to deliver the new homes that young people need? Rather than consult on it, why will she not rule out this damaging tax rise?
Rachel Reeves
I think Opposition Members will recognise that building companies have strongly welcomed the reforms we have made to get the country building, and they are very much against the Conservatives, the Liberal Democrats and others in the House of Lords opposing the Planning and Infrastructure Bill, which could have been given Royal Assent by now without that opposition. Instead of scaremongering about something that is being consulted on, the shadow Minister might want to get on and back the positive things that the Government are doing.
Finally, I pay tribute to the former Deputy Prime Minister, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), for the amazing work she did to get housing on the agenda to build the 1.5 million homes that this country desperately needs, and for being an inspiration for so many people from working-class backgrounds. I applaud her efforts and her work.
Patrick Hurley (Southport) (Lab)
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
Sorry, Mr Speaker, bear with me. [Laughter.] This Government are committed to growing the economy, and we were the fastest-growing economy in the G7 in the first half of this year. We have done three trade deals and cut interest rates five times—and I did not even need my notes to remember all that.
Steve Witherden
New polling by the Trades Union Congress shows that the public overwhelmingly support packages of taxes on wealth, on banks and on gambling companies. It also found that 74% of 2024 Labour voters who are now leaning towards Reform back those measures. Will the Chancellor commit to protecting working people from higher taxes on their income by ensuring that wealth pays its fair share, rather than imposing cuts and regressive measures?
Rachel Reeves
In the Budget last year, we got rid of the non-dom tax status, we put up capital gains tax, we started treating carried interest as income—not as capital gains—we introduced new taxes on private jets, we put VAT and business rates on private school fees and, of course, we changed the rules around agricultural property relief so that people who have farms worth more than £3 million will pay inheritance tax, although at half the rate that everybody else does. We took a number of measures last year to ensure that the wealthy pay their fair share.
Some countries around the world do have a wealth tax, but countries like Switzerland, for example, do not have inheritance tax. I think it would be a mistake to get rid of inheritance tax and replace it with an unproven tax without knowing what revenue it would bring in.
Mr Speaker
Order. I remind the shadow Minister that it is topicals for everybody.
Rachel Reeves
While the Leader of the Opposition is talking down the British economy, we are setting our sights on growing the economy and making working people better off. No, we will not be taking any advice from the Leader of the Opposition, who was part of a Government who crashed the economy, sending mortgage rates spiralling and putting pensions in peril.
Richard Fuller
I fear that the Chancellor’s dismissive response fails to acknowledge either the serious state of public finances or the serious difficulties of her own position. Having extended economic uncertainty until just before Christmas, will the Chancellor at least confirm that the November Budget will include savings from welfare reform?
Rachel Reeves
In the Universal Credit Act 2025, which passed before the summer recess, we reformed the universal credit system to reduce the gap between what people on the health element and those on the standard element got. That reform will help more people into work, as well as the £1 billion package of measures to help people—particularly those who have been long-term unemployed—get back to work. [Interruption.] The hon. Member for North West Norfolk (James Wild) says that that is spending. Actually, getting people into work and paying taxes, as well as paying less on benefits, is good for the economy and good for those people who get back into work.
Lauren Edwards (Rochester and Strood) (Lab)
Helena Dollimore (Hastings and Rye) (Lab/Co-op)
Rachel Reeves
I thank my hon. Friend for the work that she is doing to help grow the economy in all parts of the country, including Kent and Sussex. The Government have made significant commitments on the expansion of international rail services, and we are working closely with the German and Swiss Governments on direct links between our countries. Work is under way to understand the prospects for expansion of the number of services on the channel tunnel rail link. I absolutely agree that new opportunities at Ashford and Ebbsfleet have huge potential to help grow the economy, giving more opportunities for people in those communities to access good jobs and other leisure opportunities.
Cameron Thomas (Tewkesbury) (LD)
Rachel Reeves
I absolutely recognise that businesses face challenges, but they also have lower borrowing costs because of the five cuts in interest rates, which the Bank of England was able to make because of the stability that we have returned to the economy. It would be good to have a bit more honesty from political parties. If they oppose the national insurance increase, then they oppose the extra money for the national health service. If they stood up and said that, they might get a little more respect and credibility.
Tim Roca (Macclesfield) (Lab)
Rachel Reeves
My hon. Friend is a proud advocate for his constituents in Macclesfield and is doing great work to bring more investment into the local area. Life sciences is one of the eight sectors that this Government, as part of our modern industrial strategy, are championing. That is why we put record investment into research and development in the spending review earlier this year, and why we are supporting our universities to help create more spinouts to ensure that we can have more home-grown British businesses, as well as backing the big businesses, such as AstraZeneca, that operate in his constituency.
Mr Will Forster (Woking) (LD)
Rachel Reeves
There is a consultation going on and I welcome the hon. Gentleman and others feeding into that. However, if he is serious about backing the builders and not the blockers, why do the Liberal Democrats fail to support the Planning and Infrastructure Bill, both here and in the other House?
Kim Johnson (Liverpool Riverside) (Lab)
As the sixth richest economy in the world, we should not have 4.5 million children living in poverty. The former Prime Minister Gordon Brown has proposed raising £3 billion by looking at reforming gambling taxation. Will the Chancellor consider undertaking those reforms so that we can end the epidemic of child poverty?
Government’s Economic Strategy
Rachel Reeves Excerpts(2 months ago)
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The Chancellor of the Exchequer (Rachel Reeves)
Today I can inform the House that I have asked the Office for Budget Responsibility to prepare an economic and fiscal forecast for publication on 26 November 2025, which will be accompanied by the annual Budget.
This is in line with my commitment to deliver one major fiscal event a year, to give families and businesses the stability and certainty they need and, in turn, to support the Government’s growth mission.
[HCWS902]
Fiscal Risks and Sustainability Report
Rachel Reeves Excerpts(3 months, 4 weeks ago)
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The Chancellor of the Exchequer (Rachel Reeves)
At the Budget last October, and again in the spring, I made the necessary choices to fix the foundations of our economy, to put the public finances on a sustainable path and to support growth. The 2025 spending review delivered on this strategy, underpinning fiscal plans with firm spending plans, and providing the certainty and stability essential for growth. These spending plans are only possible because of the decisions taken in the autumn to raise taxes, and the changes to the fiscal rules.
The Office for Budget Responsibility’s 2025 Fiscal Risks and Sustainability Report (FRS), which has been laid today—CP 1343—is an important part of the Government’s effective fiscal risk management framework. The report fulfils the OBR’s obligation, set out in the charter for budget responsibility, to examine and report on the sustainability of, and risks to, the public finances. This year’s report examines climate change, the public sector balance sheet, and pensions.
The OBR notes in the FRS that the Government’s reforms to improve the fiscal framework have strengthened fiscal policy making and reduced fiscal risks. This includes legislating for the fiscal lock to ensure that no Government can announce fiscally significant measures without being subject to an independent assessment by the OBR, as well as introducing extended departmental spending planning horizons by committing to hold an SR every two calendar years, setting departmental expenditure limits for a minimum of three years of the five-year forecast period. The Government also introduced robust new fiscal rules that embed stability.
The FRS also highlights that recent global shocks have resulted in greater uncertainty and fiscal pressures amid a shifting international landscape. The Government recognise these challenges, which is why we have acted decisively to strengthen our partnerships and grow the economy, including through recent trade deals with the US, the EU and India. National security is the first duty of the Government, and we have responsibly responded by committing to increase spending on defence to 2.6% from 2027, funded from reductions in the official development assistance budget, with an ambition to reach 3% in the next Parliament.
Making Britain a clean energy superpower, which will be achieved through delivering home-grown clean power by 2030 and accelerating to net zero, is a key mission in the Government’s plan for change. Building on previous analysis, the 2025 FRS offers an assessment of the fiscal risks posed by climate change and the transition to net zero, concluding that the UK faces increasing costs from climate-related damage. The Government recognise this, which is why SR 2025 allocates £9.4 billion to carbon capture, usage and storage over the SR period and invests more than £8.3 billion in home-grown clean power through Great British Energy and Great British Energy-Nuclear. We will set out further details in the updated carbon budget and growth delivery plan in October. The Government are also investing more than £4.2 billion over three years, from 2026-27 to 2028-29, to build and maintain flood defences.
The OBR also highlights the risks associated with the public sector balance sheet, which is why it is more important than ever to have a robust fiscal framework that addresses long-term challenges and provides greater transparency of the public finances. That is why the Government announced the financial transaction control framework at the autumn Budget 2024, ensuring that investments generate either a financial return or a clear benefit for taxpayers, and committed to publishing an annual report on the performance of the Government’s financial assets.
The FRS also examines the potential fiscal risks from the UK’s pensions system, noting the challenges presented by an ageing population. The final report of the pensions investment review was published in May, setting out the Government’s plans to drive investment and higher returns through large defined-contribution schemes and reforming the local government pension scheme to improve sustainability and support regional growth. However, further work is required to tackle systemic issues and inequality. The next phase of the pensions review will focus on the adequacy of pensions outcomes.
The changing structure of the pensions market is affecting demand for gilts from the sector, and the Government have therefore adjusted the maturity split of gilt issuance to account for this trend, with the proportion of long-dated gilt issuance reduced materially over recent years. The Government continue to monitor market trends.
I would like to thank the OBR for its efforts in producing this report. The Government are required to respond to the FRS within a year.
[HCWS788]
Oral Answers to Questions
Rachel Reeves Excerpts(4 months ago)
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Rachael Maskell (York Central) (Lab/Co-op)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are committed to ensuring that there are fewer sick and disabled people in poverty by helping them into work and getting them off NHS waiting lists. That is why at the spring statement we announced the largest investment in employment support in at least a generation. The Government have already taken action to tackle poverty, including with the fair repayment rate, which lowers the cap on deductions in universal credit, and we have increased the national living wage by 6.7%. Beyond that, we are investing to reduce poverty by expanding free school meals and investing in a £1 billion settlement for crisis support. We will set out our child poverty strategy in the autumn. We have invested £29 billion in reducing NHS waiting lists, and since we took office there are 385,000 more people in work.
Rachael Maskell
Many disabled people are really struggling right now. We know that three in 10 are living in poverty, as I can see in my York constituency, but I was particularly taken aback by the Women’s Budget Group report, which highlighted that three quarters of the people who will lose their personal independence payment and carer’s allowance are women. How will the Chancellor ensure that when fiscal decisions are made, we look in particular at the intersectionality between women, disabled people and other protected characteristics to ensure that they are not pushed further into poverty?
Rachel Reeves
My hon. Friend will know that nobody currently receiving personal independence payments will see any reduction in the support they get. In terms of supporting women into work, recognising some of the intersectionalities she mentioned, the Government have increased the national living wage by 6.7%—sadly, it is still too often women who are paid the lowest wages—and our Employment Rights Bill will offer more security and dignity in work. We are also rolling out more childcare, including new nurseries at primary schools, and my right hon. Friend the Business and Trade Secretary will today make a statement announcing the launch of a review of parental leave, which could benefit all working parents, but particularly mums.
Tim Farron (Westmorland and Lonsdale) (LD)
Does the Chancellor accept that cancer is a major driver of poverty? That is not only because people who are ill cannot work during their treatment, but because sometimes people who are happily cured find that they have collateral damage that means they cannot work at a full level throughout the rest of their life. Does she recognise that radiotherapy plays a huge part in making sure that people are cured and then able to be productive in society? Given that the international average for people with cancer having radiotherapy is 53%, while in the UK it is only 36%, will she look at the economic advantages of investing in radiotherapy?
Rachel Reeves
In the spending review, we invested an additional £29 billion every year for day-to-day spending in the national health service, as well as a record uplift in capital spending in the NHS so that there is more money for the equipment to do that vital work, including in cancer treatments, which the hon. Gentleman mentioned. In our first year in office we have delivered 4 million additional appointments in the NHS and reduced waiting lists by 250,000. That is only possible because of the decisions we took in the Budget last year—those included increasing taxes on non-doms, as well as the increase in national insurance contributions—which have gone into funding our national health service.
David Baines (St Helens North) (Lab)
St Helens is ranked as the 26th most deprived area nationally, and that poverty has an impact on health and sickness from pre-birth to old age. As a country, we spend more on crisis intervention and less on early intervention after 14 years of the Tories. Will the Chancellor please assure me and people in St Helens North that this Government will do all they can to properly fund councils and health services to help more people live longer, healthier lives?
Rachel Reeves
That is a really important point. Our Prime Minister is absolutely committed to early intervention to stop the costs of crisis emerging later on. Later this week, on the anniversary of Labour’s creation of the health service, my right hon. Friend the Secretary of State for Health and Social Care will publish the 10-year health plan, which will focus on ensuring that young people especially, and particularly those in some of our most deprived communities, are not let down and have a healthy start in life. Across the whole of Government, we are determined to achieve that.
Pete Wishart (Perth and Kinross-shire) (SNP)
Today’s disastrous welfare debacle was all down to the Chancellor’s obsessive pursuit to stick to the grotesque Tory fiscal rules. Yet 150,000 people could still be saved from poverty if all the Scottish Labour MPs joined those prepared to vote down the Universal Credit and Personal Independence Payment Bill. Does she agree that if Scottish Labour MPs go through the lobby to support the Bill, they would be as well not bothering standing again?
Rachel Reeves
This Government changed the fiscal rules at the Budget last year with a stability rule, so that for the first time we pay for day-to-day spending through tax receipts, and an investment rule, which enables us to invest in the things that will help grow the economy, such as energy infrastructure, defence spending and transport and digital infrastructure. As a result, in the Budget and then in this year’s spring statement, we unlocked £300 billion more to spend during the course of this Parliament, including the record settlement for the Scottish Government. It is now up to the Scottish Government to spend that money wisely and to try to reduce waiting lists in Scotland, as we have done in England and, indeed, in Wales.
James Wild (North West Norfolk) (Con)
First, it was a humiliating reversal of the Chancellor’s winter fuel cuts. Now, welfare cuts that she rushed to meet her fiscal rules have been shredded, leaving unfunded spending to pay for. In October, the Chancellor said that extending the freeze in income tax thresholds
“would hurt working people. It would take more money out of their payslips”—[Official Report, 30 October 2024; Vol. 755, c. 821.]
Does she stand by the commitment to end that freeze from 2028—yes or no?
Rachel Reeves
It was the hon. Member’s Government, when they were on this side of the House, who froze those allowances, taking more money out of the pockets of working people. Despite that, they left a £22 billion black hole in the public finances. I will take no lessons from Conservative party, which has opposed everything that is needed to invest in our public services. We are in the mess we are in because of the damage that it caused.
Ruth Jones (Newport West and Islwyn) (Lab)
Euan Stainbank (Falkirk) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
The Government recognise the critical contribution that transport makes to our growth mission. The Government increased the capital envelope by over £100 billion at the autumn Budget last year, and by a further £13 billion at the spring statement. Taken together, that represents a big increase in capital investment. As a result, the transport capital budget, excluding High Speed 2, will increase by 1.9% per year in real terms over the spending review period. That investment will improve connectivity in our towns, cities and villages, reduce journey times and increase transport reliability. For areas of transport that are devolved, it is up to the Scottish and Welsh Governments to allocate their funding and be accountable to their respective Parliaments for those decisions.
Ruth Jones
I welcome the announcement in the spending review that railway projects in Wales, including five new stations east of Cardiff, will receive an extra £445 million in funding over the next decade. Will the Chancellor provide more detail as to how the money will be specifically allocated and when work will begin?
Rachel Reeves
It was a pleasure to be in Cardiff just after the spending review to look at the difference made by the investment that the Labour Government are putting into transport in Wales. The spending review and the infrastructure strategy recognised Wales’s long-term infrastructure needs and how they have been neglected for too long by the Tory party. We delivered at least £445 million for rail enhancements, which provides funding for continuing to develop and deliver the stations identified in the Burns review, including Newport West and Somerton. Plans for future rail investment in Wales will be made in close consultation with the Welsh Government and through engagement with the Wales Rail Board.
Euan Stainbank
I declare an interest as co-chair of the all-party parliamentary group on British buses. Our £15.6 billion commitment to regional transport through the spending review should be good news for bus manufacturing. However, Alexander Dennis’s ongoing consultation threatens 400 jobs in Falkirk, putting another major employer at risk just after the closure of the Grangemouth oil refinery. The Scottish National party’s ScotZEB 2 scheme famously failed to invest in Scotland. Where things are built and by who matters, so will the Chancellor act to guarantee that our investment in transport is of maximum benefit to Scottish vehicle manufacturers?
Rachel Reeves
It is important that, as this Government put more money into infrastructure, including transport, it benefits companies and jobs here in Britain. It is not right the Scottish Government spend more on buses made in China than on buses made in Scotland. There is nothing preventing the Scottish National party from investing in jobs and growth in Scotland.
Graham Stuart (Beverley and Holderness) (Con)
MPs and councils of all parties across east and north Yorkshire are united in wanting to enhance connectivity in the area, have greener options and optimise the economic output of the area, so will the Chancellor work with us on a cross-party basis to look at reopening a direct rail line from Hull to York, so that those great university cities can be united by effective transport infrastructure once again?
Rachel Reeves
I really welcome the fact that the right hon. Gentleman supports the investment that this Labour Government are making in transport and infrastructure after the 14 of years neglect by his party. We have increased transport spending by 1.9% per year in real terms in every year of this spending review period, benefiting all parts of the country, including Yorkshire, where both he and I have the honour and privilege of being Members of Parliament.
Dr Luke Evans (Hinckley and Bosworth) (Con)
The Prime Minister, the Business Secretary and the Chancellor had the joy of coming to my constituency to see the MIRA technology park last week. They will have come via the A5. The previous Prime Minister talked about the funding that would be submitted via the A5, but in the spending review that money seems to have dropped, so will the Chancellor commit to the same funding for the A5 that we had from the last Government, because it is really important for my area?
Rachel Reeves
The irony is that the last Government made a lot of commitments but did not put any money into delivering them. That is the difference that this Government are making, with fully funded plans to upgrade transport. The Department for Transport now has its settlement and it will look at a number of projects. The mess left by the Conservatives is something we have had to sort out. The Conservatives have not backed any of the measures that we have taken to bring in more revenue, yet, as we have seen, they are very keen on spending the money. That is why we were left with a £22 billion black hole when we came into office a year ago.
Liz Jarvis (Eastleigh) (LD)
Mr Gagan Mohindra (South West Hertfordshire) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
The Government protected the smallest businesses from changes to national insurance by increasing the employment allowance from £5,000 to £10,500. That means that this year 865,000 employers will pay no national insurance contributions at all, and more than half will either gain or see no change to their national insurance contributions.
Mr Mohindra
Given the recent trio of U-turns, this Government have demonstrated that they are keen to change their minds as well as to create new multibillion-pound black holes. Will the Chancellor do the right thing and U-turn on the increase in national insurance contributions, to provide businesses with a much-needed boost in the sluggish economy that she has created?
Rachel Reeves
It is a bit rich for anyone in the Conservative party to mention black holes, after the one that they left for us to clear up. The hon. Gentleman will have seen the Lloyds business barometer, which has recently been published and shows that business confidence is now at a nine-year high, led by increases in confidence in retail and manufacturing. That report referenced the impact of the spending review on boosting business confidence—a recognition that this Government are backing Britain and backing Britain’s businesses.
Bill Esterson (Sefton Central) (Lab)
The Chancellor is quite right to mention that business confidence is at a nine-year high. Does that not go to show that not only were the announcements in the spending review right for business, but her emphasis on stability and certainty in the economy is exactly what is needed? Moreover, it is in sharp contrast to the chaos, constant changes of policy and complete disaster in economic policy that we saw from the Conservative Government.
Rachel Reeves
The stability that this Government have returned to the economy has meant that the Bank of England has been able to cut interest rates four times in the last year, taking hundreds of pounds off people’s mortgages—there was such a big impact in that regard under the last Government. The reasons for the increase in business confidence also include the industrial strategy publication, the spending review and the three trade deals, all of which are boosting business confidence and have helped to create 385,000 new jobs in Britain since the last general election.
Richard Fuller (North Bedfordshire) (Con)
Labour’s jobs tax has really clobbered British businesses. The Office for National Statistics says that the number of available jobs is collapsing. Perhaps the Chancellor has not updated herself on how British business thinks about confidence: the Institute of Directors has said today that business confidence has plummeted; the Bank of England is warning of significant declines in wage growth; and the British Chambers of Commerce says that taxes on businesses cannot be increased. The Chancellor has bungled welfare changes, eviscerating confidence in the Prime Minister and blowing an even bigger hole in the public financing, meaning that she will raise taxes yet again this autumn. Will she avoid creating the same damaging uncertainty she did last summer by ruling out from the Dispatch Box today any further tax increases on British businesses?
Rachel Reeves
I am not going to take lessons from the Conservatives: they increased taxes 25 times. When they increased taxes, it was always ordinary working people who paid the price. In our Budget last year, we protected the payslips of ordinary working people by not increasing their income tax, their national insurance or their VAT, and we did not go ahead with the increase in fuel duty that the Conservatives had planned. Instead of talking down the British economy, why do the Conservatives not back the plans that are backed by British businesses to grow our economy and make working people better off?
Daisy Cooper (St Albans) (LD)
Non-profit businesses and charities have been hit really hard by the jobs tax. Last week, my local meals on wheels service told me that businesses like theirs around the country are having to make redundancies and put up prices for vulnerable people. In the context of today’s welfare reforms that the Government are pursuing, can the Chancellor confirm whether the Treasury will conduct any assessment of the increased cost of essential and charitable services relied on by disabled people and their carers at a time when their welfare support could be cut?
Rachel Reeves
As the hon. Lady knows, the changes we have made to the welfare Bill will mean that nobody who is currently receiving personal independence payments will have a cut, so I just do not think the premise of her question is correct. When we debate the welfare Bill today, we will be voting for the biggest increase in the universal credit standard allowance for a generation and protecting those people with the most severe conditions from having to be reassessed for their condition, which is degrading. We have got rid of the Tories’ work capability assessment changes, which the courts said were illegal, and we are putting £1 billion into back-to-work support. At the same time, we are investing £29 billion in the NHS. That is possible only because of the rise in national insurance increase on business, which the Liberal Democrats opposed—and yet that is how we are funding our NHS.
Rachel Gilmour (Tiverton and Minehead) (LD)
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
The Government are delivering on the priorities of the British people. Yesterday, the Office for National Statistics confirmed that the UK was the fastest-growing G7 nation in the first quarter of this year. Since the election, this Labour Government have brought £120 billion of private investment into our economy. There have been four interest rate cuts, lowering the cost of mortgages, and 384,000 new jobs—more than 1,000 jobs a day—since this Government were elected. Real wages increased more in the first 10 months of this Labour Government than they did in the first 10 years of the last Conservative Government, and we have a £1,400 pay rise for a full-time worker on the national living wage. That is the difference that this Government are making after 14 years of mismanagement by the Conservatives.
John Lamont
The award-winning bookshop and deli Mainstreet Trading Company in St Boswells has been forced to reduce its operating hours because
“increases to employer national insurance mean that our operating cost base has increased significantly.”
What advice does the Chancellor have for small businesses suffering because of this Labour Government’s reckless decisions?
Rachel Reeves
This Government increased the employment allowance from £5,000 to £10,500, and that means 865,000 employers will pay no national insurance at all. Indeed, half of employers will either gain or see no change. It was also welcome that the Lloyds business barometer showed business confidence at a nine-year high, with a particular uptick in retail. I cannot comment on an individual business, but that is the system nationwide.
Mr Speaker
This is topicals; we have got to get going. Brian Leishman will set a good example.
Sir Mel Stride (Central Devon) (Con)
The winter fuel payment U-turn will cost £1.25 billion, and the welfare reform U-turn will cost £2.5 billion, all adding to Labour’s unfunded black hole. This is from a Chancellor who said that she would never make a spending commitment without explaining where the money was coming from—yet another U-turn. The Chancellor has also said that her fiscal rules are iron-clad and non-negotiable. Can she reconfirm that commitment now, or are we heading for yet another U-turn?
Rachel Reeves
I would take that a bit more seriously if the Conservatives were not voting against the welfare reforms this evening, and if they had not committed to fully reversing the winter fuel changes, which would cost a further £400 million that they cannot explain. I am always grateful to the right hon. Gentleman for his questions, because he always offers a useful lesson in what not to do. Even George Osborne now says that the shadow Chancellor has “no credible economic plan”. I will give the shadow Chancellor this: he knows a thing or two about welfare spending, because under his watch, the UK became the only country in the G7 with an unemployment rate stuck below pre-pandemic levels. Under his watch, the cost of working-age inactivity rose by £15.7 billion a year.
Sir Mel Stride
The House will note that the right hon. Lady did not categorically rule out the possibility of changing the fiscal rules in the autumn. Given that, will she at least confirm that she stands by her commitment not to raise the rates of income tax, national insurance or VAT in the autumn? Is it a yes, or is it another potential U-turn?
Rachel Reeves
We made a commitment in our manifesto not to increase the key taxes that working people pay, and we stick by those commitments because, unlike the Conservative party, we stick by our manifesto.
Joe Morris (Hexham) (Lab)
Daisy Cooper (St Albans) (LD)
More than 50% of local authorities are having to overspend on the dedicated schools grant to cover the rising costs of SEND services, and the increasing demand for inter-authority borrowing has pushed up interest rates. May I urge the Chancellor to consider, as a matter of urgency—even before the Government publish their White Paper on special educational needs and disabilities—introducing a concessionary interest rate, perhaps at the same level as the Public Works Loan Board rate, so that councils do not have to raise council tax just to serve their interest payments and can spend the money on frontline services instead?
Rachel Reeves
The hon. Lady, and other Members, will have seen the reference in the spending review to a real-terms uplift in schools spending in every single year of the current Parliament, as well as additional capital investment to help rebuild the schools whose roofs were literally crumbling under the last Conservative Government. My right hon. Friend the Education Secretary will publish a Green Paper on SEND reform in the autumn, and we have extended local authorities’ statutory override for SEND education for a further two years while we bring in those reforms. This Government want to ensure that mainstream schools are more inclusive for all children.
Chris Hinchliff (North East Hertfordshire) (Lab)
Rachel Reeves
As my hon. Friend will know, in last year’s Budget we got rid of the non-dom tax status, increased capital gains tax, put VAT on private school fees and ended the loophole for private equity, as well as introducing further measures, in order to raise £40 billion. As a result, we are investing £300 billion more than would have been raised under the plans that we inherited from the Conservative party. Ours is the only country where—
Helen Morgan (North Shropshire) (LD)
Rachel Reeves
We are increasing transport investment by 1.9% in real terms after HS2 in every year of the spending review period. We are also extending the bus fare cap, which is particularly beneficial to rural areas.
Noah Law (St Austell and Newquay) (Lab)
Mr Peter Bedford (Mid Leicestershire) (Con)
Rachel Reeves
I am sure that the relevant Health Minister would be happy to meet representatives of the hospice. The Health Secretary set out the settlement for hospices at the end of last year to compensate financially for the increases in national insurance, but those increases in national insurance are funding the NHS, which helps fund our hospices.
Frank McNally (Coatbridge and Bellshill) (Lab)
This Government delivered a record real-terms settlement for Scotland at the spending review, so it was deeply concerning to hear from the Scottish Government last week that there is a £2.6 billion black hole in the public finances, which could see NHS spend reduce by 12%. Does my right hon. Friend agree that the SNP’s long-standing record of fiscal mismanagement must end, and that Scottish Ministers must ensure that the funding gets to the struggling Scottish public services?
Jack Rankin (Windsor) (Con)
Rachel Reeves
The problem with the Conservatives is that they support all the funding, but they do not support any of the ways of funding it. Agricultural property relief means that estates worth more than £3 million will now be taxed at half the rate at which inheritance tax is usually charged. That can be repaid over a 10-year period, interest-free. I think that is the right and fair settlement, given the fiscal environment we face.
Catherine Atkinson (Derby North) (Lab)
Backing Rolls-Royce, a brilliant Derby business, to deliver small modular reactors with £2.5 billion of investment shows what Labour’s new industrial strategy is about—backing British business, creating more skilled jobs and delivering clean, secure energy. Does the Chancellor agree that, after years of chaos under the Conservatives, Britain is unashamedly open for business?
Rachel Reeves
I thank my hon. Friend for that question. We are proud as a Government to back Rolls-Royce, and to have it as our preferred provider for the small modular reactor programme, resulting in lower bills and more good jobs, particularly in Derbyshire.
Blake Stephenson (Mid Bedfordshire) (Con)
From responses to my written parliamentary questions, we know that the median earner can expect to pay £273 more in tax this year under Labour. When the Chancellor sat on the Opposition Benches, she described freezing tax thresholds as “picking the pockets” of working people. Does the Chancellor accept that she is now the one picking the pockets of working people?
Rachel Reeves
In the Budget last year, we increased taxes by £40 billion, but without affecting the pay packets of ordinary working people. We did not increase their national insurance, their income tax or their VAT, and we did not go ahead with the wrong-headed increase in fuel duty that was put in place by the Conservative party. We are protecting working people; the Conservative party picked their pockets time and again.
Perran Moon (Camborne and Redruth) (Lab)
Ports are engines for economic growth in sectors such as energy and critical minerals. Falmouth port, in the constituency neighbouring mine, is surrounded by massive tin and lithium deposits, and it has ambitious plans to play its part. In line with our manifesto commitment for a £1.5 billion ports fund, will the Chancellor outline what mechanisms the National Wealth Fund and GB Energy can deploy to invest in ports?
Rachel Reeves
I thank my hon. Friend for that question. He will know that this Government have already invested through the National Wealth Fund in the tin mine in his constituency, bringing good-quality jobs paying decent wages to the people of Cornwall, as advocated by Cornish MPs. However, there is more we can do through the National Wealth Fund, including investing in our ports, which is absolutely vital for clean, cheap energy and for creating good jobs in this country, including in Cornwall.
Greg Smith (Mid Buckinghamshire) (Con)
A recent freedom of information request has revealed that, for a number of schemes, HMRC has settled with large corporations for just 15% of what was owed. With the loan charge review ongoing, does the Chancellor agree with me that individuals should be treated no differently from the large corporations for which this precedent has been set?
Esther McVey (Tatton) (Con)
Does the Chancellor believe that the changes she has made to employer’s national insurance contributions will lead to higher levels of employment, or will they lead to higher levels of unemployment?
Rachel Reeves
Let us look at the record so far. There are 385,000 more jobs in the UK economy today than there were when Labour came to office a year ago, which is more than 1,000 jobs a day. So businesses are voting with their feet and taking on more workers, because of the policies of this Labour Government compared with the Tory policies that took our economy down.
Callum Anderson (Buckingham and Bletchley) (Lab)
As people are living longer, they face more complex financial choices. The new, simplified advice regime announced by the Government and the Financial Conduct Authority yesterday is hugely welcome and will help more people make better informed investment decisions. Will the Minister provide more detail on the steps the Government will be taking to help firms deliver better advice at scale, especially to young people and the self-employed?
Sarah Dyke (Glastonbury and Somerton) (LD)
Jackie from Street suffers with Crohn’s disease, fibromyalgia and mental health issues. She worked for most of her life until ill health made it impossible. Under the reforms, she will lose her entitlement to personal independence payment and employment and support allowance, plunging her into poverty. Can the Chancellor give Jackie the reassurance she needs that she will not be left in poverty?
Rachel Reeves
Yes, I can absolutely give my assurance to Jackie, and to other people who are currently claiming PIP, that they will see absolutely no change in their entitlement. That is what my right hon. Friend the Secretary of State for Work and Pensions announced to the Chamber yesterday: everybody who is currently on those benefits will see no change whatever. The Timms review, which will be co-produced with disabled people and those who represent them, will build a new system for the future.
John Slinger (Rugby) (Lab)
Does the Minister agree that we are driving growth across every part of the country with investments at the spending review, including £15.6 billion for transport projects in city regions and additional support that I saw myself in Warwickshire with the launch of an electric bus fleet, including buses built at Alexander Dennis in this country; and that this shows a Government who are investing in the future prosperity of our country?
Rachel Reeves
It was great to be with my hon. Friend in Warwickshire just a couple of weeks ago to welcome some of the investment, through our industrial strategy and our spending review, which will turbocharge the British economy, creating more good jobs and paying decent wages in all parts of the country, including in Warwickshire.
Sarah Olney (Richmond Park) (LD)
Last week, ahead of the launch of its ethnicity code, the Lending Standards Board announced it would be closing, following the withdrawal of support from major high street banks. This was going to be a groundbreaking step towards tackling the barriers that ethnic minority business owners face in accessing finance. What steps will the Government take to ensure that the ethnicity code is implemented, supported and scaled, so that its principles are embedded across the financial sector?
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
Will the Chancellor please provide an update on the invaluable Viking CCS project in the Humber?
Rachel Reeves
At the spending review, we were able to build on the investment we had already made in Merseyside and Teesside with Track-1 of carbon capture and storage, and put investment into both the Acorn project in Scotland and Viking CCS in the Humber to support the Government’s ambitions for Britain to lead the way in carbon capture and storage, creating more good jobs in all parts of the country, including in Great Grimsby and Cleethorpes.
Spending Review 2025
Rachel Reeves Excerpts(4 months, 3 weeks ago)
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The Chancellor of the Exchequer (Rachel Reeves)
My driving purpose since I became Chancellor is to make working people in all parts of our country better off, to rebuild our schools and our hospitals, and to invest in our economy so that everyone has the opportunity to succeed after 14 years of mismanagement and decline by the party opposite, culminating in a £22 billion black hole in the public finances. That was the Conservatives’ legacy, and the first job I faced as Chancellor was to set it right. So at the Budget last October and again in the spring, I made the choices necessary to fix the foundations of our economy. We wasted no time in removing the barriers to growth: the biggest overhaul of our planning system in a generation; launching Britain’s first National Wealth Fund; and reforming our pensions system to unlock billions of pounds of investment into our economy.
We are starting to see the results. The stability we have provided has helped support four cuts in interest rates, saving hundreds of pounds a year for families with a mortgage. Real wages have grown by more in the first 10 months of this Labour Government than in the first 10 years of the Conservative Government. And the latest figures show that we are the fastest growing economy in the G7. Countries around the world are lining up to do business with Britain again, with new trade deals with India, the United States and the European Union.
We are renewing Britain, but I know that too many people in too many parts of our country are yet to feel it. This Government’s task, my task as Chancellor, and the purpose of this spending review is to change that—to ensure that renewal is felt in people’s everyday lives, in their jobs, and on their high streets. The priorities of this spending review are the priorities of working people: to invest in Britain’s security and Britain’s health and to grow Britain’s economy so that working people are better off.
Today, I am allocating the envelope I set out in the spring. I am enormously grateful to my excellent team of officials at the Treasury and to my right hon. Friend the Chief Secretary to the Treasury for his tireless work throughout this process, crunching the numbers and looking at the assets and liabilities. On that note, I thank all my Cabinet colleagues for their contribution to this process—they are all assets to this Labour Government.
In this spending review, total departmental budgets will grow by 2.3% a year in real terms. Compare that to the Conservatives’ choice of austerity. In contrast to our increase of 2.3%, they cut spending by 2.9% a year in 2010. Let us be clear: austerity was a destructive choice for both the fabric of our society and our economy, choking off investment and demand and creating a lost decade for growth, wages and living standards. That is their legacy.
My choices are different. My choices are Labour choices—the choices in this spending review that are possible only because of my commitment to economic stability and the decisions this Government have made. The Conservatives’ fiscal rules guaranteed neither stability nor investment, and that is why I changed them. My fiscal rules are non-negotiable, and they are the foundation for stability and investment.
My first rule is for stability: day-to-day Government spending should be paid for through tax receipts. That is the sound economic choice. It also the fair choice, because it is not right to expect our children and future generations to pay for the services we rely on today. This first rule allows me, as I set out in the Budget, to allocate £190 billion more to the day-to-day running of our public services over the course of this spending review compared with the previous Government’s plans.
My second fiscal rule enables me to invest in Britain’s economic renewal while getting public debt on a downward path. This rule allowed me to increase public investment by more than £100 billion in the autumn and a further £13 billion in the spring. That is investment to rebuild our transport networks, our defence capability and our energy security—in short, to grow our economy.
I have made my choices: tough decisions for stability and changing Britain’s fiscal rules for investment. Today, I am delivering that investment for the renewal of Britain. Now, it is time for the parties opposite to make their choices. The spending plans I am setting out today are possible only because of the decisions I took in the autumn to raise taxes and the changes to our fiscal rules, every one of which was opposed by the parties opposite. Today, they can make an honest choice and oppose these spending plans as they opposed every penny I raised to fund them, or they can make the same choice as Liz Truss: spend more and borrow more, with no regard for the consequences.
In their clamour to cut taxes for the richest, the Conservatives crashed our economy, sent mortgage rates spiralling and put our pensions in peril. I will never take those risks. Yet Reform is itching to do the same thing all over again. The hon. Member for Clacton (Nigel Farage) may be playing the friend of the workers now, but some of us are old enough to remember when he described the disastrous Liz Truss Budget as “the best Conservative Budget” since the 1980s. [Interruption.] Mr Speaker, after the damage is done, he still nods along. Reform has learned nothing. His party has been in Parliament for less than a year, yet it has already racked up £80 billion of unfunded commitments. Reform is simply not serious. Every day it becomes clearer that it is Labour—and only Labour—that has a credible plan for the renewal of Britain.
As I said in my spring statement, the world is changing before our eyes. Since the spring, the challenges that we face have become even more acute. The signs of our age of insecurity are everywhere, so we are acting on the promise in our plan for change: building renewal on the foundations of national security, border security and economic security. As the Prime Minister said earlier this month,
“A new era in the threats that we face demands a new era for defence and security.”
That is why we took the decision to prioritise our defence spending by reducing overseas development aid. Defence spending will now rise to 2.6% of GDP by April 2027, including the contribution of our intelligence agencies. That uplift provides funding for my right hon. Friend the Defence Secretary, with an £11 billion increase in defence spending and a £600 million uplift for our security and intelligence agencies. That investment will deliver not only security, but renewal in Aldermaston and Lincoln; in Portsmouth and Filton; on the Clyde and in Rosyth. Investment in Scotland, jobs in Scotland, and defence for the United Kingdom—opposed by the Scottish National party; delivered by this Labour Government.
Investing in our armed forces, our military technology and our supply chains also brings huge opportunities: £4.5 billion of investment in munitions, made in factories from Glasgow to Glascoed, Stevenage to Radway Green; and over £6 billion to upgrade our nuclear submarine production, supporting thousands of jobs across Barrow, Derby and Sheffield. We will make Britain a defence industrial superpower, with the jobs, the skills and the pride that come with that.
A more unstable world presents new challenges at our borders too. Conflict has opened the way for organised criminal gangs. The British people rightly expect us to have control of who comes into our country. The Conservatives said that they would “take back control”. Well, Mr Speaker, they lost control. With one failed policy after another, there was no control and no security. In contrast, in the Budget last year I announced £150 million to establish the new Border Security Command, and today, to support the integrity of our borders, I can announce that that funding will increase, with up to £280 million more per year by the end of the spending review period for our new Border Security Command.
Alongside that, we are tackling the asylum backlog. The Conservative party left behind a broken system: billions of pounds of taxpayers’ money spent on housing asylum seekers in hotels, leaving people in limbo and shunting the cost of failure on to local communities. We will not let that stand. I can confirm today that, led by the work of my right hon. Friend the Home Secretary, we will be ending the costly use of hotels to house asylum seekers in this Parliament. Funding that I have provided today, including from the transformation fund, will cut the asylum backlog; allow more appeal cases to be heard; and return people who have no right to be here, saving the taxpayer £1 billion per year. That is my choice, that is Labour’s choice, that is the choice of the British people.
If we want national security in a dangerous world, that does not stop at the strength of our armed forces or at our borders. I have long spoken about what I call “securonomics”—the basic insight that, in an age of insecurity, Government must step up to provide security for working people and resilience for our national economy. Put simply: where things are made, and who makes them, matters.
Take energy: the Tories neglected our nuclear and renewables sectors and closed our gas storage facilities, leaving us exposed to hikes in energy prices when Russia invaded Ukraine, and it was working people who paid the price for their mistakes. Labour understands that energy security is national security. Because it is the right choice for bills, jobs and growth, this Government are investing in the biggest roll-out of nuclear power for half a century, with a £30 billion commitment to our nuclear-powered future.
Yesterday my right hon. Friend the Energy Secretary and I announced £14 billion for Sizewell C, which will produce energy to power 6 million homes and support more than 10,000 jobs, including 1,500 apprenticeships, in order to build the nuclear workforce of tomorrow. That is not all. We are investing over £2.5 billion in a new small modular reactor programme. Our preferred partner is Rolls-Royce—a great British company based in Derby. This investment is just one step towards our ambition for a full fleet of small modular reactors, and it provides a route for private sector-led advanced modular reactor projects to be deployed across the UK.
Alongside these actions, we are making nuclear-approved land available in Sellafield to attract private investment and create thousands more jobs. I thank my hon. Friend the Member for Whitehaven and Workington (Josh MacAlister) for his work in this area. To strengthen Britain’s position at the forefront of a global race for new nuclear technologies—a cause championed by Mayor of the East Midlands Claire Ward and my hon. Friend the Member for Bassetlaw (Jo White)—and to support pioneering work taking place in West Burton in Nottinghamshire, we are investing over £2.5 billion in our nuclear future.
To back British industries, pioneering work in carbon capture, usage and storage will take place. Last year we announced funding for two sites, one on Merseyside and one in Teesside, where we are building the world’s first commercial-scale CCUS plant. Today I can announce support for the Acorn project in Aberdeenshire to support Scotland’s transition from oil and gas to low-carbon technology—a challenge and an opportunity well understood by the leader of Scottish Labour Anas Sarwar and my right hon. Friend the Scotland Secretary. We are also backing the Viking project in Humberside—a cause long supported by my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn).
Because I am determined to ensure that the energy technologies of the future are built here and owned here and that jobs come to Britain, this spending review invests in the wholly publicly owned Great British Energy, headquartered in Scotland. These investments will ensure that the towns and cities that powered the last industrial revolution play their part in our next industrial revolution. Reducing our reliance on overseas oil and gas, protecting working families from price shocks, and a new generation of energy industries for a renewed Britain—that is my choice, that is Labour’s choice, that is the choice of the British people.
Economic security relies on our ability to buy, make and sell more here in Britain. In April, this Government faced a choice: to let British Steel in Scunthorpe go under or to intervene. [Interruption.] That choice was a choice not of the metal trader but of this Labour Government. We heard representations from workers, trade unions and my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin). My right hon. Friend the Business Secretary and I were not prepared to tolerate a situation in which Britain’s steel capacity was fatally undermined. We were not prepared to see another working-class community lose the pride, prosperity and dignity that industry provides, so we did intervene to save British Steel and the jobs that come with it, and I am proud of that decision.
The Government will invest in Scunthorpe’s long-term future and the future of steelworks across our great country. In a vote of confidence in our home-grown steel, Heathrow airport, where we are backing London by backing a third runway, has signed the UK steel charter—a multibillion-pound airport expansion backed by Labour and built with British steel.
Building our train and tram lines, our military hardware and our new power stations will mean orders for steel made in Britain at Sheffield Forgemasters, where we are investing in nuclear-grade steel, and in Port Talbot, where the spending review confirms the £500 million grant to Tata Steel. A future for British-made steel and a proud future for Britain’s steel communities. Things built to last, built here in Britain—that is my choice, that is Labour’s choice, that is the choice of the British people.
This Labour Government are backing British business. There will be more to come in the weeks ahead with our 10-year infrastructure strategy and our modern industrial strategy: a plan drawn up in partnership with businesses and trade unions. When I speak to businesspeople and entrepreneurs about what they need to succeed, they say that they need the chance to innovate, they need access to finance and they need a deep pool of talent. We have heard that message, and today we are taking action.
First, on innovation, which is a great British strength. Our universities are world-leading, and we are proud of them. We want our high-tech industries in Britain to continue to lead the world in years to come in car production, in aerospace and in life sciences, so we are backing our innovators, backing our researchers and backing our entrepreneurs with research and development funding rising to a record high of £22 billion a year by the end of the spending review. Because home-grown artificial intelligence has the potential to solve diverse and daunting challenges, as well as the opportunity for good jobs and investment here in Britain, I am announcing £2 billion to back the Government’s AI action plan overseen by my right hon. Friend the Secretary of State for Science, Innovation and Technology.
Secondly, to champion those small businesses seeking access to finance as they look to grow, I am increasing the financial firepower of the British Business Bank with a two thirds increase in its investments, increasing its overall financial capacity to £25.6 billion to help pioneering businesses to start up and scale up, backing Britain’s entrepreneurs and backing Britain’s wealth creators.
Thirdly, as we invest, if we are to thrive in the industries of the future, we must give our young people the skills they need to contribute to our national success as scientists, engineers and designers, and as builders, welders and electricians. I know the ambition, the drive and the potential of our young people; it cannot be right that too often those ambitions and that potential are stifled. Young people who want training find courses are oversubscribed and are turned away at the door, forcing growing businesses, eager to recruit that talent, to look elsewhere—potential wasted and enterprise frustrated. So today I am providing record investment for training and upskilling with £1.2 billion a year by the end of the spending review to support over a million young people into training and apprenticeships so that their potential, their drive and their ambition is frustrated no longer.
On the subject of skills, we should all recognise the Leader of the Opposition’s own commitment to lifelong learning. At the weekend, she promised to learn and “get better” on the job. I am sure that Opposition Members will be supporting her in that endeavour. Good luck with that.
As we build a strong, secure and resilient economy, working people must feel the benefits. That starts with the security of a proper home. Our planning reforms have opened up the opportunity to build. Now, we must act to make the most of those opportunities, and a plan to match the scale of the housing crisis must include social housing, which has been neglected for too many decades, but not by this Labour Government. So, led by my right hon. Friend the Deputy Prime Minister, we are taking action. I am proud to announce the biggest cash injection into social and affordable housing in 50 years with a new affordable homes programme in which I am investing £39 billion over the next decade—direct Government funding that will support house building, especially for social rent. I am pleased to report that towns and cities including Blackpool, Preston, Sheffield and Swindon already have plans to bring forward bids to build those homes in their communities.
I have gone further. Last autumn, I enabled greater use of financial transactions to support investments in our infrastructure alongside strict guardrails that ensure that money is spent wisely through our public financial institutions. So, in line with that commitment, I am providing an additional £10 billion for financial investments, including to be delivered through Homes England, to crowd in private investment and unlock hundreds of thousands more homes. Homes built by a Labour Government; homes built for working people.
But it is no good investing in new skills, new jobs and new homes if they are not properly connected. That is why last week, with the support of my right hon. Friend the Transport Secretary, I announced £15 billion of investment to connect our cities and our towns—the biggest ever investment of its kind—with investments in buses in Rochdale, train stations in Merseyside and Middlesbrough, mass transit in West Yorkshire and metro extensions in Birmingham, Tyne and Wear and Stockport. Alongside that, we are backing Doncaster airport.
Today, I am announcing a four-year settlement for Transport for London to provide certainty and stability for our largest local transport network to plan for the future. For other regions in the UK, I am today providing for a fourfold increase in local transport grants by the end of this Parliament to make the improvements put off for far too long, to improve the journeys that people make every day.
To unlock the potential of all parts of Britain, we are going further by investing in major rail projects to connect our towns and cities. In October, I announced funding for the trans-Pennine route upgrade—the backbone of rail travel in the north, linking York, Leeds and Manchester—with a quarter of that route expected to be electrified by this summer. I know the commitment of my hon. Friends the Members for Huddersfield (Harpreet Uppal), for York Outer (Mr Charters) and for Colne Valley (Paul Davies) to this issue, and today I can announce a further £3.5 billion of investment for that route. But my ambition, and the ambition of people across the north, is greater still, so in the coming weeks I will set out the Government’s plan to take forward our ambitions for Northern Powerhouse Rail.
I have also heard the representations of my hon. Friends the Members for Milton Keynes North (Chris Curtis), for Milton Keynes Central (Emily Darlington), and for Buckingham and Bletchley (Callum Anderson), and I can tell the House today that to connect Oxford and Cambridge and to back Milton Keynes’s leading tech sector I am providing a further £2.5 billion for the continued delivery of East West Rail. On a matter that I know is of great importance to my hon. Friends the Members for Lichfield (Dave Robertson), for Birmingham Northfield (Laurence Turner) and for Birmingham Erdington (Paulette Hamilton), I can announce today that I am providing funding for the midlands rail hub: the region’s biggest and most ambitious rail improvement scheme for generations, strengthening connections from Birmingham across the west midlands and into Wales, too.
For 14 years, the Conservatives failed the people of Wales. Those days are over. Following representations from my right hon. Friend the Secretary of State for Wales, the First Minister of Wales, and Welsh Labour MPs, today I am pleased to announce £445 million for railways in Wales over 10 years, including new funding for Padeswood sidings and Cardiff West junction. That is the difference made by two Labour Governments, working together to undo a generation of underfunding and neglect.
This Government take seriously their commitment to investment, jobs and growth in every part of the UK. I have heard the concerns of my hon. Friends the Members for Mid Cheshire (Andrew Cooper), and for Rossendale and Darwen (Andy MacNae), and the Mayor of the Liverpool City Region, Steve Rotheram, that past Governments have under-invested in towns and cities outside London and the south-east. They are right, so today I am publishing the conclusion of the review of the Treasury Green Book, which is the Government’s manual for assessing value for money. Our new Green Book will support place-based business cases, and make sure that no region has Treasury guidance wielded against it. I said that we would do things differently, and that we wanted growth in all parts of Britain, and I meant it.
Backing our nations and regions means backing our devolved Governments, and this spending review provides the largest settlement in real terms since devolution was introduced, with £52 billion for Scotland, £20 billion for Northern Ireland by the end of the spending review period, and £23 billion for Wales. Having heard representations from many Welsh Labour colleagues, and because I know the obligation that we owe to our industrial communities, I am providing a multi-year settlement of £118 million to keep coal tips safe in Wales.
I know what pride people feel in their communities—I see it everywhere I go—but I also know that, for too many people, there is a sense that something has been lost as high streets have declined, community spaces have closed, and jobs and opportunity have gone elsewhere. The renewal of Britain must be felt everywhere. Today I am pleased to announce additional funding to support up to 350 communities, especially those in the most deprived areas—funding to improve parks, youth facilities, swimming pools and libraries, and to support councils in fighting back against graffiti and fly-tipping, including in Blackpool South, Stockport, Stoke-on-Trent Central, Swindon North, and Newcastle upon Tyne East and Wallsend.
And there is more. Job creation and community assets are vital to our growth mission, but too often, regeneration projects are held back, gathering dust in bureaucratic limbo. We are changing that. We will establish a growth mission fund to expedite local projects that are important for growth—projects such as Southport pier, an iconic symbol of coastal heritage that has stood empty since 2022; Kirkcaldy’s seafront and high street, where investment would create jobs and new business opportunities; and plans for Peterborough’s new sports quarter, to drive activity and community cohesion. People deserve a Government who share their ambition for their communities, and who deliver renewal, growth, and opportunity, and that is what you get with a Labour Government.
If people are to feel pride in their community, enjoy their public spaces, and spend time on their high streets, they must feel safe when they do so—safe in the knowledge that when people break the law, they feel the full force of the law. The Conservative party left our prisons overflowing and on the brink of collapse, and left it to us to deal with the consequences. We are taking the necessary action, so my right hon. Friend the Justice Secretary and I have announced that we are investing £7 billion to fund 14,000 new prison places, and putting up to £700 million per year into reform of the probation system. Today, I will do more. I am increasing police spending power by an average 2.3% per year in real terms over the spending review period, to protect our people, our homes and our streets. That is more than £2 billion, supporting us to meet our plan for change commitment of putting 13,000 additional police officers, police community support officers and special constables into neighbourhood policing roles across England and Wales.
I am determined that every family, as well as every place, should feel the benefits of Britain’s renewal. Falling interest rates, supported by our commitment to economic stability, are already saving many families hundreds of pounds a month on their mortgage. I have accepted pay review body recommendations for our armed forces, nurses, teachers and prison officers, giving public sector workers the fair pay rises that they deserve. In autumn, I increased the national living wage—a pay rise for around 3 million hard-working people. This Government are doing more: we are banning exploitative zero-hours contracts, strengthening statutory sick pay, and ending the use of unscrupulous fire-and-rehire practices. Those are my choices; those are Labour choices.
I know that for many people the cost of living remains a constant challenge. That is why we are capping the cost of school uniforms. I can tell the House today that I am extending the £3 bus fare cap until at least March 2027. Earlier this week, we announced that over three quarters of pensioners will receive the winter fuel payment this year. And there is more: to get bills down, not just this winter but in winters to come, we have expanded the warm homes plan to support thousands more of the UK’s poorest households. That includes providing £7 million to homes in Bradford, £11 million to homes in Rugby, and £30 million to homes in Blackpool. Today I can announce that I will deliver in full our manifesto commitment to upgrading millions of homes, saving families and pensioners across the country up to £600 off their bills, each and every year. I am determined to do everything in my power to put more money in people’s pockets, to give people security and control in their lives, to make working people better off, and to show them that this Labour Government are on their side.
Taxpayers work hard for their money, and they expect their Government to spend their money with care. For the first time in 18 years, this Government have run a zero-based review, and made a line-by-line assessment of what the Government spend—something that the Tories did not bother to do in 14 years. As a result of that work, and our wider drive for efficiencies, led by my right hon. Friend the Chancellor of the Duchy of Lancaster, in this spending review I have found savings from the closure and sale of Government buildings and land, from cutting back office costs, and from reducing consultancy spend—all of which the previous Government failed to do. Those reforms will make public services more efficient, more productive, and more focused on the user. I have been relentless in driving out inefficiencies, and I will be relentless in cutting out waste, with every single penny reinvested in our public services.
I joined the Labour party almost 30 years ago because I knew, growing up, that the Conservative party did not care much about schools like mine, or the kids I grew up with. I joined because I believed that every young person should have an equal chance to succeed, no matter where they come from or what their parents do. I believe that just as strongly today as I did then. That is why, at the Budget last autumn, I ended the tax loophole that exempted private schools from VAT and business rates. I put that money where it belongs: into helping the 93% of children in our state schools. The Conservatives opposed money for their local state schools, but I will always prioritise those schools. That was my choice; that is the Labour choice.
Because of decisions that we made in this spending review, last week, this Government, working with my right hon. Friend the Education Secretary, announced that free school meals will be extended to over half a million more children. That policy alone will lift 100,000 children out of poverty—children in schools from Tower Hamlets to Sunderland, and from Swansea to Bridgend.
Last year, at the Labour party conference, I was proud to announce the first steps in our plan to deliver breakfast clubs for every child, with an initial roll-out to the first 750 schools. We will continue with that national roll-out as part of our manifesto commitment, so that no child goes hungry, and every child can have the best chance of thriving and succeeding. I know that a good start in life does not start at school, so I can also announce £370 million for school-based nurseries, to put us firmly on track to meet our plan for change commitment to a record number of children being school-ready. On children’s social care, to break the dangerous cycle of late intervention and low-quality care, I am providing £555 million of transformation funding over the spending review period, so that children do not needlessly go into care when they could stay at home, and so that, where state intervention is necessary, there is better care, and there are better outcomes.
Last week, I was pleased to announce, with my right hon. Friend the Secretary of State for Culture, Media and Sport, that more than £130 million from the dormant assets scheme, run with the financial services sector, will be allocated to funding facilities for our young people, to give every child the chance to take part in music, sport and drama, and to fund libraries in our schools, so that the confidence and opportunities that those resources open up are no longer the preserve of the privileged few. Those are my choices, those are Labour choices, and those are the choices of the British people.
Overall, I am providing a cash uplift of over £4.5 billion a year in additional funding for the core schools budget by the end of the spending review, backing our teachers and our kids. People who went to ordinary comprehensives in the ’80s and ’90s are all too familiar with the experience of being taught in temporary classrooms. The previous Conservative Government oversaw another generation of kids being herded into cold and damp buildings as school roofs literally crumbled. It was not acceptable when I was at school, and it is not acceptable now. I am therefore providing investment, rising to nearly £2.3 billion per year, to fix our crumbling classrooms, in addition to £2.4 billion per year to continue our programme to rebuild 500 schools, including Chace community school in Enfield, Woodkirk academy in Leeds and Budmouth academy in Weymouth. Investing in our young people, investing in Britain’s future and investing in opportunity for all: that is Labour’s choice.
Finally, let me turn—[Hon. Members: “More!”] I knew they would cheer. Let me turn to our national health service. It is our most treasured public service, and people rightly expect an NHS that is there when they need it; that an ambulance will come when they call one; that a GP appointment will be available when they need one; and that a scan will be performed when they are referred for one. I am hugely grateful to our nurses, our doctors, our paramedics and other healthcare professionals for everything that they do.
If we want a strong economy where working people can fulfil their potential, we must have a strong NHS—not, as the Reform party have called for, an insurance-based system. We believe in a publicly funded national health service, free at the point of use. Perhaps the hon. Member for Clacton should spend more time focusing on the priorities of the British people, and less time in the Westminster Arms—although, after this week, perhaps the Two Chairmen pub might be a better fit.
At the Budget, I took the decisions necessary to provide an immediate injection of funding to get the NHS back on its feet. I commend my right hon. Friend the Health Secretary for all the progress that he has already made. In less than a year, this Government have recruited 1,700 new GPs, delivered 3.5 million extra appointments and cut waiting lists by more than 200,000. Fixing our NHS also means delivering fundamental reform across social care, so we are backing the first ever fair pay agreement for that sector. I am also increasing the NHS technology budget by almost 50%, and we are investing £10 billion to bring our analogue health system into the digital age, including through the NHS app, so patients can manage their prescriptions, get their test results and book appointments all in one place.
We are shifting care back to the community and providing more funding to support the training of thousands more GPs to deliver millions more appointments. We are investing more in prevention, to meet our manifesto commitment of providing mental health support teams in all schools in England by the end of this Parliament. Those investments will enable the delivery of our upcoming 10-year plan for health and will put the NHS firmly back on the path to renewal.
To support that plan, to back the doctors and nurses we rely on, and to make sure that the NHS is there whenever we need it, I am proud to announce today that this Labour Government are making a record cash investment in our national health service, increasing real-terms, day-to-day spending by 3% per year for every single year of this spending review—an extra £29 billion per year for the day-to-day running of our health service. That is what the British people voted for and that is what we will deliver: more appointments, more doctors and more scanners. The national health service: created by a Labour Government, protected by a Labour Government and renewed by this Labour Government.
This is a spending review to deliver the priorities of the British people: security, with a strong Britain in a changing world; economic growth, powered by investment and opportunity in every part of Britain; and our nation’s health, with an NHS fit for the future. I have made my choices. In place of chaos, I choose stability; in place of decline, I choose investment; and in place of pessimism, division and defeatism, I choose national renewal. These are my choices, these are Labour choices, and these are the choices of the British people. I commend this statement to the House.
Sir Mel Stride (Central Devon) (Con)
This spending review is not worth the paper it is written on, because the Chancellor has completely lost control. This is the “spend now, tax later” review, because the right hon. Lady knows that she will need to come back here in the autumn with yet more taxes, and a cruel summer of speculation awaits.
How can we possibly take this Chancellor seriously after the chaos of the last 12 months? We were assured at the election that Labour’s plans involved barely any additional spending or borrowing. Now the Chancellor parades her largesse, with hundreds of billions in additional spending over this Parliament. The initial profile for that spending was, of course, significantly front-loaded, but the Chancellor now expects us to believe that she will let spending rise by only 1.2% a year. There is no chance whatsoever of that happening, for the lesson of the last year has been that when the going gets tough, the right hon. Lady blinks.
She presented herself as the iron Chancellor, but what we have seen is the tinfoil Chancellor: flimsy and ready to fold in the face of the slightest pressure. She said she would not fiddle her fiscal rules; then she did. She said that she would not make any unfunded commitments; with the humiliation of the winter fuel U-turn, she just has. She looked business leaders in the eye and said no more taxes, but we all know what happened next, and we all know what is coming in the autumn. Her own Back Benchers, her Cabinet colleagues, Labour’s trade union paymasters and even the Prime Minister himself have all seen that she is weak, weak, weak. They can smell the blood. They will be back for more, and they will get it.
These spending plans are a fantasy, and is it not the truth that the Chancellor has to maintain this fiction because she has left herself no room for manoeuvre? She is constantly teetering on the edge of blowing her fiscal rules, which she has already changed to allow even more borrowing. The only way she can claim to be meeting her rules is by pretending that she can control spending over the coming years, but let us look at the record so far. Borrowing in the last financial year came out £11 billion above even the Office for Budget Responsibility’s March forecasts, and 70% higher than the plans she inherited from the Conservatives.
For someone so keen on borrowing, the Chancellor seems strangely reticent even to use the word. Indeed, Ministers bizarrely tell us that it is Labour’s fiscal rules themselves that have “generated investment”. The reality is a little more straightforward: they have loosened the fiscal rules so they can borrow more. They borrow and borrow and borrow, allowing the national debt to continue to rise higher every single year while Ministers pretend that it is not. There will be an eye-watering £200 billion of additional borrowing in this Parliament compared with the plans set out in the last Conservative Budget, with £80 billion more to be spent on debt interest alone. In fact, if the Chancellor had retained our fiscal rules—[Laughter.] Labour Members may laugh, but if she had retained our fiscal rules, as she said she would before the election, the OBR has confirmed that she would be breaking them right now.
Our country is now vulnerable to even the smallest changes in the bond markets. Should we face a sudden external shock, we have no fiscal firepower left with which to respond, all thanks to the right hon. Lady’s choices. So can I ask the Chancellor: will she be open about what she has done? Will she admit that she has made a conscious choice to borrow more and to accept higher debts? Does she accept that this means interest rates and mortgages will be higher than they would otherwise have been, as the OBR itself has said? Given that she continues to claim that she has brought stability to the public finances, can I ask her what on earth her definition of “stability” is?
The Chancellor must be delighted that she does not have to face a new OBR forecast today, because if she did, she would have to set out how she would fund her humiliating U-turn on winter fuel payments, having already blown the savings on buying off her trade union paymasters last year. She said this week that there was still
“work to do to ensure the sums always add up”.
From the person in charge of the nation’s finances, that is hardly reassuring. You do not need to have worked at the Bank of England for a decade to know that that pitiful utterance is unlikely to soothe the markets.
So can the Chancellor confirm categorically that there will be no additional borrowing to pay for this chaotic reversal? And if that is the case, can she explain how on earth it can be paid for without raising taxes? Can she explain why, last summer, apparently to avoid a run on the pound, this measure was so urgent that pensioners had to be left in the cold over the last winter? What exactly has changed? Because it certainly has not been made possible by an improvement in the economy or the public finances, which the Institute for Fiscal Studies said this week are both in a worse state now than when Labour came into office.
If we had an OBR forecast, we might also get some answers on how the Government intend to find £3.5 billion to abolish the two-child benefit cap, which we are led to believe is imminent—another addition to the ballooning welfare bill; another expensive surrender to the Labour left. And we would certainly get the OBR’s assessment of the economic outlook following the tariffs—changes that the right hon. Lady knew full well were coming. Meanwhile, her deluge of taxes and regulations has left business confidence at record lows, costing people their livelihoods. Only yesterday we saw the latest evidence of that. Figures for last month show that the number of people on payrolls fell by more than 100,000, after already falling by 55,000 in April. Unemployment is up by more than 10% since Labour came to office.
The right hon. Lady may trumpet extra spending today, but is it not the simple truth that she has trashed the economy and left no contingency in the face of a highly volatile global outlook? Is it not the reality that the Chancellor knows she will have to come back in the autumn with more tax rises to fund these plans? Or can she assure us right now that this is not the case—yes or no? We know that the Deputy Prime Minister has helpfully provided her with an entire brochure of tax rises that she will no doubt be perusing over the summer—the Corbynist catalogue. Can the Chancellor confirm that, as promised, the income tax thresholds will not be frozen at the Budget, a move she herself said would hurt working people?
What about the uncertainties in the departmental spending plan that the Chancellor has set out today? Can she assure us that these plans will not be topped up and that no backroom deals have been cut with disgruntled Cabinet Ministers? Can she assure us that the capital allocations announced today will actually be spent on capital and will not be diverted in-year, as she has done in the past, to day-to-day budgets to play more games with her fiscal rules?
The Chancellor has had to impose a settlement on the Home Secretary because this spending review will not deliver for our hard-working police officers across the country. Instead, the Home Office budget gets squandered on asylum costs because this Government simply do not have a plan on illegal migration. As the Defence Secretary has admitted, the Government have “lost control” of our borders. Small boat crossings are up by 42% on the same point last year.
On energy, at a time when businesses up and down the country are struggling with high energy costs, the Chancellor has chosen today to fund the Energy Secretary’s vanity projects such as GB Energy. And although we welcome the announcements on expanding nuclear capacity, the scale of ambition is a downgrade on the commitments made previously by the Conservatives.
Labour barely mentioned farming in its manifesto, and now we know why. It is not enough to have hit the farmers of our country with a family farm tax; today, what we see in black and white is a choice to make further cuts to the vital grants on which many farmers rely. This is a huge betrayal of our farming communities, and something that many Labour MPs in rural areas will have to go back to their constituencies later this week to explain.
On defence, we will always welcome any additional investment in our armed forces and capabilities, though I note nothing was said about when 3% will be achieved. All we heard was that intelligence services spending was to be included in defence spending to flatter the numbers. We left Labour a fully funded plan that they dithered over for a year, but now what we get is the Chancellor’s own black hole on defence spending and the lack of a timeline on when we will achieve 3%. Instead, we get a £30 billion bill for the Chagos surrender—money that should have gone to our brave armed forces rather than, as is being reported, funding lower taxation in Mauritius. The first tax cuts for which this Chancellor has been responsible are in Mauritius.
We would have made different choices. We would not have killed growth with huge tax rises and new regulations. We would not have talked down our economy and the great businesses up and down our country. We would be focusing on efficiency and productivity in the public sector, not handing out pay rises with no strings attached. We would be getting a grip on welfare. Labour cancelled our plans for fundamental reform to health and disability benefits that would have seen 450,000 fewer people on long-term sickness benefits—that is a disgrace. Instead of proper reforms to PIP, the Government’s own plans are a rushed cost-cutting exercise—so rushed they even had to change them after they were announced. Their own Back Benches are in full revolt. Yet again, the Government talk tough, but there is no substance.
The right hon. Lady has no grip. She has no clue. The markets and the public see a Chancellor completely out of her depth. Having blown her headroom and more from her Budget in the autumn, she was forced into an emergency Budget in March to scrabble around to try to repair the damage. Today she comes before us again with yet another fantastical tale that she knows will have completely fallen apart come the autumn. We are not left with stronger foundations, as she would have us believe, but rather another dose of that hallmark for which her actions have made her so renowned: uncertainty and failure.
So there the right hon. Lady sits, powerless to resist her disillusioned MPs and her panicking Prime Minister, like a cork on the tide, the drumbeat for U-turns pounding in her ears. Yet her tone today suggests that all is well; the sunlit uplands await. What a hopeless conceit—a masterclass in delusion. Inflation is up, unemployment is up, growth is marked down, business and households are hurting, investors are fleeing in their droves, the bond market vigilantes circle—and here we have the Chancellor who refuses to listen, not only tinfoil, but tin-eared, too.
Let me be clear: it is working people and businesses who will pay the price come the autumn, with yet more taxes to pay for her weakness and her failures. We cannot afford this spending review, and for many, the growing conclusion is that we cannot afford this Chancellor.
Rachel Reeves
I will address the shadow Chancellor’s specific points in a moment, but I want to start by acknowledging the progress he has made. After all, it has been quite a week for him. Last Thursday, he gave a speech saying that it will “take time” for his party to win back trust on the economy. Today he showed us how far he and his party have to go to achieve that. I want to give him some credit for last week’s analysis. He said that
“the Conservative Party was seen to have failed”,
and he is right. He said that the last Conservative Government
“put at risk the very stability which Conservatives had always said must be carefully protected”,
and I agree with him. [Interruption.]
Madam Deputy Speaker (Judith Cummins)
Order. I need to be able to hear, and I am sure our constituents also want to hear.
Rachel Reeves
The shadow Chancellor said:
“The credibility of the UK’s economic framework was undermined by spending billions…with no proper plan for how this would be paid for.”
I could not put it better myself. He could have gone a lot further. For example, he could not even bring himself to mention Liz Truss by name—Stride by name, baby steps by nature—but at least he has made a start. He also spoke about
“the death of what we might call the Age of Thoughtfulness.”
Speaking of the death of thoughtfulness, let me turn to the shadow Chancellor’s response to the spending review. He welcomed our nuclear investment of £30 billion, but he said it is not enough. He welcomed our defence investment of £11 billion, but he said it was not enough. He and his party opposed the decisions that this Government have taken to make those announcements possible by voting against the Budget in October. You cannot spend the money if you will not raise the money. That is a lesson from Liz Truss that he has already forgotten.
The shadow Chancellor complained about the level of investment that I have announced, ignoring the fact that the reason this investment is so important is because his party oversaw 14 years of cratering investment, stagnating wages and public service collapse. Let me remind him of what I said: the Tories’ fiscal rules guaranteed neither stability nor investment, and that is why I changed them, so we can get stability and investment. All their fiscal rules enabled was them to crash the economy, and the working people of Britain will never forgive them for doing that.
The Conservatives set themselves against investment in the renewal of Britain. They set themselves against NHS investment, free school meals, investment in skills, investment in carbon capture and storage, investment in transport in our towns and cities—investment in everything that we have set out today—and yet the British people voted for that investment. The right hon. Gentleman says that the Home Office budget involves an increase in asylum costs. It does not. Asylum costs are coming down under this Labour Government because we are deporting more people and getting them out of hotels. He says we are cutting police spending; we are increasing it by 2.3% a year in real terms. We have had no apology for the damage the Conservatives did to our economy and our public services.
Interest rates have been cut four times in the past 11 months; GDP was the fastest growing of all G7 economies in the first quarter of the year; business confidence is rising; 500,000 more people are in work; record investment has been made in Britain; real wages have increased more in 10 months than they did in 10 years of a Conservative Government; the national living wage has increased, giving 3 million working people a pay rise; and we have done all that without increasing taxes on working people. Those are the choices we have made. That is the difference we are making.
In the spending review today, we set out the spending that we announced in the Budget last year and in the spring statement—not a penny more, not a penny less. I said in the Budget and in the spring statement that public services must now live within the means that we have set, and we have achieved that. There will be a Budget later this year, and in that Budget we will set out all the fiscal plans in the round. But we have already drawn a line under the Tory mismanagement, with tax rises last year, and we will never have to repeat a Budget like that again because we will never have to clean up after the mess that the Conservatives made again.
The reason that this Labour Government have spent their first year fixing the foundations of our economy and stabilising our public finances is because it is what we had to do. The Government of which the shadow Chancellor was a part of left an unenviable legacy, which is why his party is, in his own words, “in a difficult place.”
We have made our choices. We are removing barriers to growth, which were untouched by the Conservatives in their 14 years in office; strengthening Britain’s security with the biggest real-terms increase in defence spending since the end of the cold war, which the Conservatives did not do in their 14 years in office; bringing our health service into the 21st century after 14 years of Conservative neglect; investing in Britain’s renewal to repair the damage done by the Conservatives in their 14 years in office; and, in stark contrast to the Conservatives’ 14 years of chaos, waste and decline, we are delivering on the priorities of the British people.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Treasury Committee.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I congratulate my right hon. Friend on delivering this spending review—the first zero-based review in a very long time. It is vital that as taxpayers—the citizens—are looking carefully at their spending in this cost of living crisis, that Government do that too. We look forward to having the Chief Secretary to the Treasury before the Committee in two weeks’ time to consider the review in more detail.
I note from the figures that the Chancellor has made a good fist of ensuring that Departments have more than they did under the Conservatives in many cases, and I welcome her work to deliver on tackling child poverty, a scourge on our society. I note from my brief glimpse, however, that there is a smaller increase for the Ministry of Housing, Communities and Local Government than there would have been—there is the £39 billion over a decade for affordable social housing. Children living in poverty also face poverty of situation in many cases. Will she expand on how she and the Deputy Prime Minister will deliver that money to provide the social housing that so many children in poverty desperately need?
Rachel Reeves
I appreciate my hon. Friend’s welcoming of the breakfast clubs, free school meals and the capping of school uniform costs, which will help families living in poverty. The free school meals will, as she knows, lift 100,000 children out of poverty. She mentions the affordable homes grant, which will have its biggest ever increase. We have set that budget for 10 years to give certainty to the sector, so that it understands what is available. In addition, we have set out some social rent changes to give certainty to the sector to invest for the future.
Daisy Cooper (St Albans) (LD)
It has been almost a year since Labour swept to power with the promise of change, but we are still not seeing the scale of ambition needed to turn the country around. We welcome the announcement of investment in the NHS, but it will not work unless the Government invest in social care too. We welcome the investment in infrastructure, but it will not work unless the Government invest in skilling up the workforce that we need to build it. Cutting billions in real terms from departmental budgets seems unnecessary when the Government could instead go for growth and get a much deeper trading relationship with Europe—a move that could raise an extra £25 billion a year for the public purse. As long as the Government fail to truly tackle the red tape and trading barriers blocking British businesses, the Government’s grip on economic growth is more akin to a handbrake than an accelerator.
The last Conservative Government left our NHS on its knees. On their watch, waiting lists were soaring, hospitals were crumbling and our high street healthcare was hollowed out. Can the Chancellor confirm that this funding will deliver the extra 8,000 GPs needed to guarantee everyone an appointment within seven days, or within 24 hours if the matter is urgent? Can she confirm that this funding will bring dentists back into the NHS and put an end to dental deserts? Will she promise that this funding will mean that every cancer patient starts treatment within 62 days? Will she promise that the Government will meet the Prime Minister’s own pledge for 92% of routine operations to take place within 18 weeks? Will she and the Health Secretary—they are sitting side by side—set up a crumbling hospitals taskforce to look at creative funding ideas, bring construction dates forward and put an end to the vicious cycle and false economies of delayed rebuilds leading to rising repair costs, as we saw under the previous Government?
Then, of course, there is the elephant in the NHS waiting room: the crisis in our social care services. The Chancellor knows, the Health and Social Care Secretary knows, this whole Parliament knows: today’s investment in the NHS will be like pouring water into a leaky bucket if hospitals cannot discharge patients who are well enough to leave because there are no care workers to help them recover at home. The fair pay agreement that the Chancellor talked about is of course welcome, but it is barely a baby step, and it is nowhere near enough to bring social care back from the brink. At a bare minimum, we need a higher minimum wage for our care workers to stop the sector haemorrhaging staff to other sectors. When will the Chancellor finally recognise that we will never fix the NHS if we do not fix social care too? Will the Government finally act with urgency by committing to conclude the social care review by the end of this year, not in three years’ time?
On housing, we warmly welcome the Government’s investment in social homes. Will they now commit to the Liberal Democrats’ target of building 150,000 social homes every year?
Other public services are crying out for investment, too. Our communities need proper neighbourhood policing to feel safe, our farmers need fair support payments to keep putting food on our tables, and people of all ages deserve access to training and skills to build their future and to power our economy forward. That is why it is so disappointing that the Chancellor has today made things so difficult for our public services by cutting unprotected budgets by billions. Yes, we know she was faced with the fallout from the most reckless, out-of-touch Conservative Government in recent memory, but being responsible is not just about making tough decisions; it is about having the moral courage to make the right ones. Yet this Government seem determined not to adopt the one policy that could put rocket boosters on our economy and raise billions for our public services: a proper trade deal with Europe.
A new, bespoke customs union with the European Union could boost our GDP by more than 2.2%, securing additional revenue to the tune of £25 billion a year—a huge boost to businesses and our struggling public services. If the Chancellor can U-turn on the winter fuel payment thanks to a skinny EU trade pact worth just 0.2% in extra GDP, just imagine how many more U-turns she could perform with a proper trade deal worth ten times as much.
We Liberal Democrats strongly support the allocation of 2.5% of GDP on defence, but we want Ministers to go further and faster to bolster our national security in today’s uncertain world. Will the Chancellor agree to cross-party talks in which we can work together to set a pathway to 3% of GDP well ahead of 2034? Will the Government use some of today’s investment to reverse the Conservatives’ irresponsible cut of 10,000 troops? Will she ensure that investing in our national security becomes a lever for economic growth, putting much greater emphasis on British steel producers and SMEs as we scale-up our defences, and ensuring that British start-ups can use defence innovation for the public good?
Before I conclude, I must thank the Chancellor for finally completing the world’s slowest U-turn, on the unfair winter fuel payment cut. Now that she has U-turned, will she do the right thing and backdate the payment for all those who lost out on support last winter but who are now eligible under the new rules? And now that she has U-turned once, will she make it a hat trick and also change course on the PIP and carer’s allowance cuts? Perhaps she might even look again at the growth-crushing jobs tax and the other changes affecting our high streets, small businesses and family businesses, and consider instead the fairer ways of raising the same amount of revenue that we Liberal Democrats have set out time and again: asking the big banks, social media giants and online gambling companies to start paying their fair share of tax.
After years of chaos and incompetence under the last Conservative Government, this was a unique opportunity to draw a line under the social care crisis, squeezed budgets and sluggish economic growth. I strongly urge the Chancellor to ignore those who talk down Britain’s economic potential, to rip up the red tape holding British business back, and to strike a properly ambitious trade deal with Europe that will turbocharge our economy and bring in billions to rebuild our public services. The Government say that their No. 1 mission is growth. That is the way to deliver it.
Rachel Reeves
I thank the hon. Lady for her comments. I know she has not had a chance to look at the figures yet, but it is not right to say that there are real-terms cuts to public services. Public service spending is increasing by 2.3% a year on average over the course of the spending review.
I will start on investment in the NHS and social care. As I set out in my speech, we have already delivered 1,500 more GPs and put £26 billion into the NHS in the first phase of the spending review. I note that that compares with the £8 billion that the Liberal Democrats said they were going to put into the NHS in their manifesto. We have already put £26 billion in, and we will put more money in today and in every year of this Parliament.
The new hospital programme is being rolled out. I think the Health Secretary met just last week with Members of Parliament who are having hospital improvements in their local communities, including many Liberal Democrat MPs, so the hon. Lady should be aware that we are making improvements to the fabric of our hospitals as well as investing in technology, scanners and so on to improve productivity in our health service.
With regard to social care, as the hon. Lady knows, we are introducing the fair pay agreement—that is something that the Health Secretary and my right hon. Friend the Deputy Prime Minister are very much committed to. As the hon. Lady will know when she looks at the documents, we have increased local government spending power so that we can put more money into social care. In addition, Louise Casey is doing her review into the future of social care.
We are going big on infrastructure. We announced £100 billion more in the Budget last year and another £13 billion in the spring statement, and we are backing that up with skills. As I set out in my speech and as is detailed in the spending review documents, we are making the biggest ever investment in young people’s skills so that they can access the new jobs that are being created in defence, house building and other infrastructure.
On red tape and backing business, it is a little bit ironic that the Liberal Democrats voted against the Planning and Infrastructure Bill yesterday, yet they come to the House today saying that they want to do away with red tape and go for growth. Well, we want to go for growth, and that is why we took that legislation through Parliament. Perhaps the hon. Lady will ask her party’s Lords to vote for growth in the other place.
We have done trade deals with the US, India and the EU. I think the Liberal Democrats opposed the trade deal with the US, but apparently they now think that trade deals are the way to go—well, so do we. That is why my right hon. Friend the Business and Trade Secretary has three of them helping our automotive sector, our steel sector and our farming communities.
We will use defence spending to support growth—the Defence Secretary and I have been very clear about that—and, as I set out in my speech, to make Britain a defence industrial superpower. I say gently to the Liberal Democrats and the hon. Lady that if we want to support investment in public services, we have to increase the tax rises to get there. They voted against the national insurance increase, which is what has enabled us to make the investments that I have set out today.
The hon. Lady says that she wants a wealth tax. We changed inheritance tax, and the Liberal Democrats voted against it. We introduced VAT on private schools, and the Liberal Democrats voted against it. Either they are serious about investing in public services, in which case they need to back the tax increases, or they want to go down the route of the magic-money-tree Conservative party and just borrow more to pay for things.
On the winter fuel allowance, we have made our choices clear: we will keep the means test, but it will be paid to people with a pension of less than £35,000. I think the Liberal Democrats want to make it a universal benefit again.
Rachel Reeves
Okay, that is just the Tories—well, they need to explain how they would pay for it.
I appreciate the fact that the hon. Lady welcomes some of our policies, but the job of the Chancellor and the Government is to ensure that the sums add up. We made difficult decisions last October, but I stand by those difficult decisions; without them, today we would not have been able to make the investments we have made in schools, energy and our health service. I am proud of what we have achieved as a Government, and I am proud of the investment that we are putting in today.
Bill Esterson (Sefton Central) (Lab)
The warm homes plan will mean healthier and warmer homes and will see lower bills and create jobs in communities right across the country. It is a very good plan, especially for those facing fuel poverty. The last Government’s home energy programme changed every few months, which meant that businesses could not plan and consumers had no confidence in it, not to mention the scandalous misapplication of fixed-wall insulation. Will my right hon. Friend confirm that this is a long-term warm homes plan that will deliver warmer homes and cut bills to the benefit of millions of our constituents for years to come?
Rachel Reeves
I thank the Chair of the Energy Security and Net Zero Committee for that question. Warm homes are a big part of our plan to tackle the cost of living crisis, and the money that we have put into the warm homes plan today will mean that millions more homes can be retrofitted with better boilers, insulation and solar panels. On average, that takes £600 a year off people’s bills not just for one year, but for every year to come. My hon. Friend is absolutely right. What we have done today is set out a five-year package of capital investment, because it is crucial that the industry is able to plan for the future and that young people are therefore willing to train up and businesses are willing to invest in apprenticeships. That is why on all of our capital spending, including the warm homes plan, we have set out a five-year plan.
Dame Harriett Baldwin (West Worcestershire) (Con)
My constituents in Tenbury Wells are seeking funding for a flood defence scheme. They will have listened very closely to the Chancellor’s remarks today to hear her mention flood defence capital spending, yet it was not mentioned in her speech. Can she confirm that the capital that will be allocated in the spending review period to flood defences will be as high in real terms as it was in the previous Parliament?
Rachel Reeves
The hon. Lady knows that we increased money for flood defences in the spending review in autumn last year, because we knew that there was no time to waste. We have already increased that flood defence spending, in addition to what the previous Government were spending.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
This spending review is good for Britain’s business, because it invests in the things that British business needs: it invests in skills, infrastructure and innovation, cuts red tape and supports small firms. Can the Chancellor clarify that this spending review will also open a new era of energy abundance for our country? The Business and Trade Committee heard directly from the International Monetary Fund in Washington yesterday that high energy costs are holding back growth. That is a consequence of the dither and delay from the Conservatives, who left us with the highest industrial energy costs in Europe. Will the Chancellor confirm to the House that we are consigning that era to history?
Rachel Reeves
My right hon. Friend is right. We are backing innovation, skills and infrastructure, because we are backing British business. We are also cutting red tape, as we did yesterday, when we took the Planning and Infrastructure Bill through the House, making it easier to get things built in Britain again. As we make the investments, we want those jobs to come to Britain, including in the energy sector, whether it is investment in small modular reactors, Sizewell C, carbon capture and storage or floating offshore wind. We will set out the industrial strategy in the next couple of weeks, in which we will have more to say about energy costs for business.
Gavin Robinson (Belfast East) (DUP)
I thank the Chancellor for engaging productively in the discussions about sustainable budgets for Northern Ireland, for the willingness to negotiate further and for the recognition that our need levels should be met. I thank her for that engagement and for the allocations to Northern Ireland for specific community projects that have been advanced by us. She has chosen through this allocation to make a budget available for the redevelopment of Casement Park. She will know about the political nature of some of the concerns around that redevelopment, and that in all previous agreements in the Executive, these things have been advanced in a balanced and non-partisan way. This Government have chosen to step into this issue in an unbalanced and partisan way. As such, in making financial transactions capital available—£50 million over the course of the next spending period—I ask the Chancellor to ensure that where there is a need for investment in football, as there is, she returns to the Executive’s agreement of 2011 in a balanced and non-partisan way. I hope that she will not be found wanting.
Rachel Reeves
I thank the right hon. Gentleman for his question and the way in which he has put it. I was pleased to be able to announce the settlement for Northern Ireland in today’s spending review, but also money through the Ministry of Housing, Communities and Local Government. He mentions Casement Park, and we have put £50 million in through this spending review. I will arrange for the right hon. Gentleman to meet either the Northern Ireland Secretary or a Minister from my Department to talk through what he wants to see.
Helen Hayes (Dulwich and West Norwood) (Lab)
I welcome the focus my right hon. Friend the Chancellor has placed on children and young people in this spending review, with additional investment in children’s social care, schools and skills. These announcements show the Government’s commitment to improving the life chances of every child, and my Committee looks forward to scrutinising the detail in the coming weeks. The Chancellor will know that universities are the life force of many local economies, generating jobs, improving skills and boosting life chances, yet a number of our universities are at the brink of insolvency. The sector has been calling for a transformation fund to help universities reform and secure a sustainable future, so can the Chancellor confirm that she will work with Cabinet colleagues to ensure that no town or city has to face the calamity of a university going bust?
Rachel Reeves
I thank my hon. Friend, the Chair of the Education Committee, for her question. I appreciate her welcoming the investment in children’s social care, in skills and in schools—issues that she knows and cares passionately about. In the spending review, we were able to set out a total of £86 billion of investment in research and development, much of it spent through our universities and research institutes, but I am certain that the Education Secretary or the relevant Minister will meet my hon. Friend to talk about the wider allocation from this spending review.
John Glen (Salisbury) (Con)
Scientists at the UK Health Security Agency at Porton Down make a massive contribution to the welfare of our country in difficult times. Ten years ago, the Chancellor’s predecessor wanted to invest £525 million in moving to a single science hub in Harlow. Some £400 million has already been spent, and last year, the National Audit Office said that it would cost £3.2 billion to complete the move by 2036. Three weeks ago, I had an Adjournment debate in which I was told that today, we would know the outcome of what was actually going to happen with this project. Can the Chancellor explain what is happening with the future of the UKHSA at Porton Down? Is it going to move to Harlow, at massive expense—six times the original estimate—and 15 years later than was estimated, or can we save some money and use it for better investment in our public estate?
Rachel Reeves
I thank the right hon. Gentleman and member of the Treasury Select Committee for his question. We have made the allocation to the Department of Health and Social Care—an annual uplift of £29 billion—and it will be up to the Secretary of State to allocate that money, but I will make sure that he has heard the right hon. Gentleman’s question and that he gets a proper reply to him.
Louise Jones (North East Derbyshire) (Lab)
With a £2.5 billion investment into nuclear in Derby, £2.5 billion into nuclear fusion in north Nottinghamshire, and half a billion into steel suitable for use in the nuclear industry in Sheffield, my constituency is surrounded by wonderful opportunities in these industries of the future. Can the Chancellor outline what more we can do to support young people in my constituency to access careers in those industries?
Rachel Reeves
We as a Government were proud to be able to step in and save British Steel at Scunthorpe, and again I thank my hon. Friend the Member for Scunthorpe, but it is not just Scunthorpe. There are also opportunities in Sheffield and Port Talbot, because as we build this infrastructure—whether it is trams and trains, nuclear power or submarines—we want to use steel made in Britain. That is a really exciting opportunity, and the investments we are making in small modular reactors and fusion in Nottinghamshire and Derby create great opportunities for jobs. That is why we are also making a record investment in skills through the spending review, so that young people in North East Derbyshire and beyond can get access to the jobs that are being created.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr iawn, Dirprwy Lefarydd. The announcement of just £44.5 million a year for the next 10 years for Welsh rail is Labour’s flimsy fig leaf of an excuse for the multibillion and multi-decade scandal that is HS2. The money announced today is only significant if it matches what Wales will continue to lose from all England-only rail projects, up to now and in the future. Can the Chancellor guarantee that from now on, Wales will receive the full £4 billion HS2 consequential funding, or will she admit that her announcement on Welsh rail funding is nothing but smoke and mirrors?
Rachel Reeves
I do not think £445 million is not real money. That money will be invested in the Burns review stations. In addition, we are putting in £118 million to make the coal tips safe. Maybe the right hon. Lady is not that concerned about that, but I know that plenty of Welsh Labour MPs are.
Matthew Patrick (Wirral West) (Lab)
I wonder whether the Chancellor can help me. I want to write a letter to my constituents, and I do not know which story I should lead with—whether it is the rapid investment in our NHS to get more doctors’ appointments, the money for our police to get more police on the streets, the transport investment to build new train stations, or the money to give hungry children in my constituency free school meals. Could she help me out? I only have one page. What should I start with?
Rachel Reeves
My hon. Friend will want to leave space on the leaflet to remind his constituents that he was lobbying for all those things so that he can take the thanks.
Dave Doogan (Angus and Perthshire Glens) (SNP)
I welcome the U-turn on the winter fuel payment—of course I do, and lots of my constituents will do likewise—but there is no respite in this spending review for farmers in Scotland, business owners in Scotland, GP surgeries in Scotland, or the disabled in hospices in Scotland. Despite what the Chancellor says, there have also been real-terms cuts to the Home Office, Foreign Office and local government in this spending review.
The Chancellor is an open book. She plays roulette with the economy, but I would not encourage her to play poker any time soon, because she mentioned Reform and the hon. Member for Clacton (Nigel Farage) in her speech more times than she mentioned Scotland—what a disgrace! She mentioned that she has finally got around to Acorn, but without a figure attached. What funding is she going to allocate for Acorn? We know that if it is Merseyside or Teesside, there is £22 billion for them. How much for Acorn?
Rachel Reeves
I did mention the SNP—I questioned why the SNP does not support defence investment in Scotland—but I can mention it again, if the hon. Gentleman would like me to. Why has the SNP let down the people of Scotland with rising hospital waiting lists? Why has the SNP let down people in Scotland with more drugs deaths? Why has the SNP let people down time and again? We are putting money into Acorn and into defence investment, and we are giving a record settlement to the SNP Government, but hopefully they will not be there for much longer.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank my right hon. Friend the Chancellor for prioritising affordable housing, which is overdue. That extra investment will go a long way towards addressing the spiralling, broken housing system that has pushed so many people into poverty. Last year, a record 126,000 households faced homelessness, an increase of over 17,000 in one year alone. We see so many families placed in what we call temporary accommodation, but it is not temporary—five years or more is far from temporary. Children are travelling for hours to get to school, families do not have a space in which to grow up, and we have lost a decade of building the social homes that we need. I join with the likes of Shelter and the National Housing Federation in welcoming the investment in affordable housing and the certainty of a 10-year rent settlement, but we need more of these measures, and we need to build truly social homes. Can the Chancellor confirm what proportion of social rent homes will form the backbone of the affordable homes programme, to get those families into a safe, secure and stable home?
Rachel Reeves
I thank my hon. Friend for her campaigning on housing and homelessness, which is a big challenge in many of our constituencies, including hers in Vauxhall and Camberwell Green. We want to work closely with local councils and the Mayor of London to build the affordable homes that we desperately need in the capital city, where house prices and rents are still far too high for so many families. I look forward to working with my hon. Friend on just that.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
The billions of pounds that have been announced by the Chancellor are very big rises, and the Public Accounts Committee looks forward to scrutinising that expenditure—I am sure it will be welcomed by those who receive it—to ensure we are getting value for money, but can the Chancellor explain to the House how it will be funded, because debt and tax are at record levels? Can British workers look forward to a summer of expecting more tax increases?
Rachel Reeves
I look forward to that scrutiny, but the hon. Gentleman will know that the allocations we have made today are based on the tax increases we made in the Budget last year. We are not spending a single penny more or a single penny less than the money we set out in the autumn Budget and the spring statement.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I welcome the significant transport investment that the Chancellor has announced in the north and in the city regions. That is helped through her changes to the Green Book, but when will the place-based business cases be reviewed so that those areas can start planning for the local transport initiatives that they have waited so long for?
Rachel Reeves
I hope that my hon. Friend can already see the impact of our changed attitude and our changed perspective at the Treasury with our putting this record investment of £15.6 billion, which we announced last week, into eight mayoral combined authorities to better connect towns and cities. Because of the changes we have made, we have been able to put more money into the trans-Pennine route upgrade and the midlands hub, as well as significant investment in trains in Wales.
Tim Farron (Westmorland and Lonsdale) (LD)
My communities in Westmorland will be outraged by a 17% reduction in farm funding. We are perplexed, because we were told to expect a decision today on the vital scheme to dual the A66 from Penrith to Scotch Corner. That is crucial to east-west connectivity, to the northern economy and to saving lives. There was no mention in the statement or in the accompanying documents at all. Will the Chancellor confirm that the A66 upgrade will take place?
Rachel Reeves
The allocation has now been made to the Department for Transport. We have not set out every project that that will fund, but I am sure the Transport Secretary will come to this House or the relevant Select Committee in due course.
Graeme Downie (Dunfermline and Dollar) (Lab)
I thank the Chancellor of the Exchequer for putting her faith in young people and the future with investments in the AI, nuclear and defence opportunities that young people in Scotland deserve, alongside £1.2 billion for training and apprenticeships. Meanwhile, in my constituency, Fife college has recently warned about course cuts and campus closures, thanks to the mismanagement of the Scottish budget by the SNP. Does she agree that the best way to get young people the opportunities they deserve in defence, nuclear and other industries is with a Scottish Labour Government and Anas Sarwar as First Minister?
Rachel Reeves
We saw in the by-election last week how desperate the people of Scotland are for change, after two decades of SNP so-called leadership. We are investing in training and apprenticeships in this spending review, and I very much hope that the SNP will match that investment in Scotland.
Richard Tice (Boston and Skegness) (Reform)
The Chancellor supposedly inherited a black hole, and she has dug a crater into which public confidence and business confidence are plunging. The truth is that 250,000 jobs have disappeared since the blunder Budget. Despite all the noise we hear from those on the Government Benches, the reality is that Government spending is completely out of control. Inflation is up, unemployment is up, Government borrowing is up and the cost of Government borrowing is up. The only things that are going down are jobs and GDP. I have some good news for the Chancellor, however. The 10 councils that we control are already identifying savings of hundreds of millions of pounds. She may want to learn some lessons. That is why Reform is leading in the polls.
Rachel Reeves
I noted recently that the hon. Member said on a podcast that he wanted to cut Government spending by £300 billion, but that would mean getting rid of the whole of the NHS and the whole of the defence budget. We have increased spending by £300 billion to invest in our schools, our hospitals, our transport and our defence. I know that Reform is soft on defence, soft on workers’ rights and wants to privatise our NHS. I do not think those are the priorities of the British people.
John Grady (Glasgow East) (Lab)
Reform’s economic policies appear to have been cooked up after a heavy night at Moe’s bar in “The Simpsons”. In 18 years, the SNP has failed to invest in Glasgow’s transport infrastructure. We have no airport rail link, and no Parkhead station. We do not even have lifts at Bridgeton station. I contrast that with my right hon. Friend the Chancellor’s firm commitment to transport. There is also £50 billion extra for the Scottish Government to sort out the SNP’s NHS waiting lists; record investment in the defence industry and the Clyde to defend our nation, which the SNP objects to; investment in clean energy, which is critical for jobs in Glasgow; and continued support for the Glasgow and Clyde Valley city deal. Does she agree that those things demonstrate that Scotland is at the heart of this Labour Government? It is time that we turfed out the SNP, after its 18 years of failure.
Rachel Reeves
In the spending review today, we have set out: investment in defence to support jobs in Scotland; investment in Acorn to support jobs in Scotland; investment in nuclear, which will benefit the people of Scotland through lower bills; and a record settlement for the Scottish Government. It is up to them now to use that money wisely. I would not hold out much hope, under the SNP.
Esther McVey (Tatton) (Con)
I know the Chancellor considers herself to be a world-leading economist, so can she tell me how it is that everyone in the country knew that hiking taxes on employers’ national insurance contributions—making it more expensive to employ people—would destroy jobs, destroy businesses and destroy the economy, and the only people who did not know that were her and her socialist boss?
Rachel Reeves
I am sorry to disappoint the right hon. Lady, but there are 500,000 more jobs in Britain since the last general election. Business confidence is going up.
Dr Jeevun Sandher (Loughborough) (Lab)
My constituency of Loughborough, Shepshed and the villages is in the east midlands, a region that has been overlooked for too long. That ends today, first with the changes to the Green Book, which we all welcome. There will be more money outside London; I hope my colleagues do not mind too much. Secondly, we have more than £100 billion of investment. Can the Chancellor please set out how today’s investment will get bills down and wages rising in my constituency of Loughborough, Shepshed and the villages?
Rachel Reeves
I thank my hon. Friend for welcoming the changes to the Green Book, which will better enable the Government to invest, and will stop the situation whereby the Treasury used to wield the Green Book against local communities when it came to the investments that they wanted to make. This was a good spending review for the east midlands, as my hon. Friend mentioned, with investment in nuclear fusion and small modular reactors. Many businesses in the supply chain right across the east midlands will benefit from that significant investment and the jobs it will bring.
Bobby Dean (Carshalton and Wallington) (LD)
Last year, during the mayoral election, Sadiq Khan claimed that a Labour mayor working with a Labour Government would be a game changer for the city, but just now he has released a statement criticising the spending review for underfunding the Met police, failing to invest in our transport infrastructure, and potentially making the housing crisis in our capital worse. Was Sadiq Khan wrong to put his trust in this Labour Government?
Rachel Reeves
For London, today we have increased the spending power of the police by 2.3% in real terms every year; we have record investment in the affordable homes programme, which includes building new homes in London; and we have free school meals, lifting around 10,000 children in London out of poverty, and much more. We are also backing a third runway at Heathrow and investing in tunnelling to take HS2 to Euston. This is a good spending review for London, but most importantly, it is a good spending review for the whole United Kingdom.
Alex Baker (Aldershot) (Lab)
I congratulate the Chancellor on the spending review, and welcome her commitment both to defence spending and to our being a defence industrial superpower, which is vital to my community in Aldershot and Farnborough. This week, my hon. Friend the Member for York Outer (Mr Charters) and I published a report entitled “Rewiring British Defence Financing”, which supports the Chancellor’s work to fire up our defence industrial base. As part of that, will she support my campaign for a UK-led multilateral defence security and resilience bank to finance our national resilience, support our allies, and keep our country safe?
Rachel Reeves
I thank my hon. Friend for the work that she and my hon. Friend the Member for York Outer (Mr Charters) have done to make the moral case for financial services funds investing in defence, which is what keeps our country safe. As we uplift our defence spending, we want to get value for money. That is why we were so pleased that, in the deal that we did with the European Union, we secured a defence industrial partnership with the EU.
Adrian Ramsay (Waveney Valley) (Green)
Across the country, people see their health services severely overstretched, school headteachers face having to make cuts, and, of course, the most vulnerable people in society face cuts to disability benefits. According to the BBC’s analysis of the Chancellor’s statement, her figures will mean a sharp decline in budgets for public services after 2026. Is not the statement a matter of smoke and mirrors? Will the Chancellor instead consider the growing call for a wealth tax on the ultra-rich, so that she can raise the extra tens of billions that are needed to support our public services and restore much-needed pride and hope in Britain?
Rachel Reeves
It is difficult to tell whether the hon. Gentleman supports the spending review and the additional money that we are putting into public services, or is against it. The settlement for the NHS means 3% real-terms growth a year, and for the police the figure is 2.3% a year. There is also an increase in per-pupil funding, as well as a real-terms increase in the schools budget, so I am not exactly sure what the hon. Gentleman’s complaint is.
Nick Smith (Blaenau Gwent and Rhymney) (Lab)
There was a terrible, dangerous coal slip in my constituency last autumn, and the coal tips safety funding announced today is hugely welcome. It is great to see our Labour Government standing up for Wales. Looking forward, however, may I ask the Chancellor please to review the miners’ staff superannuation scheme? Hard-working families deserve fairness in their retirement, and I am sure that she will give them a fair hearing.
Rachel Reeves
I am very pleased that we were able to make this multi-year commitment on coal tip safety. The Government provided money for this in last year’s spending review, but that was for just one year, and today we have been able to give certainty that money will be available for the vital work that is necessary. I thank my hon. Friend for welcoming it; it is a shame that Plaid Cymru did not.
My hon. Friend has been a staunch supporter of reform of the miners’ pension scheme. We made reforms in the Budget last year, but I will ensure that the relevant Minister meets him to discuss what more we can do to secure a fair pension for miners in retirement.
Sarah Olney (Richmond Park) (LD)
London Members were hoping to hear more about infrastructure investment in the capital today. We are looking for spending on the Bakerloo line extension, and spending to deal with the Croydon bottleneck. I even dared to dream that Hammersmith bridge might one day be fixed, but all we have heard from the Chancellor is her reiterated support for the expansion of Heathrow airport. As she will know, Heathrow expansion is opposed by every political party in the capital, and by the Mayor of London. It is not welcome. The negligible economic benefits of expanding Heathrow do not compensate for the massive environmental and noise impact that expansion will have on many people in the capital, particularly my constituents. May I ask the Chancellor to look again at her support for Heathrow, and consider the greater merits of many other infrastructure projects across London?
Rachel Reeves
The hon. Lady started that question wanting to be a builder, and ended it by being a blocker. I suppose that is not surprising, given that the Liberal Democrats voted against the Planning and Infrastructure Bill yesterday, while we Labour Members supported it, because we want to get Britain building and to create prosperity and wealth in all our communities. In today’s spending review, we have provided an integrated settlement for the Mayor of London and a multi-year settlement for Transport for London. We have also supported expansion at City airport, and we have an in-principle commitment to expansion, and a second runway, at Gatwick. This Government are backing London, but most importantly, we are a Government for the whole country. That is why we have announced significant investments across the UK today, which are much needed.
Claire Hanna (Belfast South and Mid Down) (SDLP)
The SDLP’s priority continues to be funding Northern Ireland on the basis of need, and I urge the Government to take focused action, so that we can have sustainable public services and, hopefully, stable politics that will start to deliver for health and education and deal with the squeeze in housing and childcare.
I warmly welcome the funding allocation for Casement Park, which represents much more than just a stadium. It is a home for Ulster’s Gaelic Athletic Association, to match the wonderful homes that we have for soccer and rugby in Northern Ireland, and it is a flagship venue for west Belfast and an economic opportunity for the whole city. Does the Chancellor agree that, while there is a way to go to secure the funding for the stadium that the GAA’s hundreds of thousands of supporters and volunteers deserve, the onus is now on the Stormont Executive—on Sinn Féin, the Democratic Unionist party and the Alliance party—to get moving, end a decade of dither and delay, and finally get Casement Park built?
Rachel Reeves
This Government have provided £50 million in the spending review today, but we have also, I hope, done much more for Northern Ireland, providing a settlement that is a record since devolution, as well as significant investment in our defence sector. Northern Ireland has a proud history of producing for the UK’s defence needs.
Martin Vickers (Brigg and Immingham) (Con)
Of course I welcome the continuing support for Scunthorpe steelworks, but may I gently remind the Chancellor that that support came seven months after I first raised the issue in the House, and we then had the panic of the Saturday sitting in April?
The Chancellor mentioned support for the Viking carbon capture and storage project, for which, again, I have lobbied for a long time. Can she give me a little more detail about the timeframe?
Rachel Reeves
I thank the hon. Gentleman for welcoming what we did with British Steel in Scunthorpe. I know that he has been a strong voice advocating for British Steel there, unlike some of our late arrivals in another party. As for Viking CCS, I was very pleased to announce that funding today, along with the Acorn investment in Aberdeenshire. The Energy Secretary will set out, in due course, the timing and the money available, but after our investment in CCS in Merseyside and Teesside at the end of last year, we are now in a position to provide a second tranche in Aberdeen, and also in the Humber.
Yasmin Qureshi (Bolton South and Walkden) (Lab)
I thank the Chancellor for all her commitments to spending on education, health and transport, but I thank her particularly for the £39 billion that she has committed to housing. In my constituency, thousands of families are still waiting for social homes, and about 20,000 people are now on Bolton’s housing waiting list. May I ask whether some of that money could be used to build more social housing in areas like mine, so that we can meet the needs of our constituents?
Rachel Reeves
My hon. Friend speaks powerfully about the desperate need for more social and affordable homes in all our communities, including those in Bolton. That multi-year commitment and £39 billion of investment will help us to build the social and affordable homes that our country desperately needs, and the Ministry of Housing, Communities and Local Government will work with local authorities to bring forward those plans and get Britain building the homes that we need.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
What is most interesting about the spending review is what is not mentioned: there is no mention of the River Thames scheme, no mention of our rivers, no mention of the Animal and Plant Health Agency in New Haw, and no mention of improvements to rail, despite the nationalisation of South Western Railway. In fact, there is almost no mention at all of the south-east, despite the Chancellor saying that this a spending review for the whole UK. However, she has effectively confirmed the third runway at Heathrow, despite there being no local engagement. May I invite the Chancellor to come to Runnymede and Weybridge to meet people and see if their priorities are indeed hers, as she claims?
Rachel Reeves
It is difficult to understand exactly what the Conservative critique of this spending review is. The shadow Chancellor says that we should spend less, but the hon. Gentleman has just asked us to spend more. If hon. Members on either side of the House want to spend more, they need to say where the money would come from. I am not sure that he has an answer to that.
Lola McEvoy (Darlington) (Lab)
I welcome the Chancellor’s statement and her steely determination to ensure that everyone in Darlington is better off. I particularly welcome the capital infrastructure projects, which are essential not only for sovereign security but for regional growth. Does she agree that these projects will be transformational for engineering and fabricating SMEs in my constituency, many of which were set up and are staffed by incredibly highly skilled people who found themselves out of a job when the last Government turned their backs on British foundation industries?
Rachel Reeves
My hon. Friend is absolutely right: what this spending review does, through its investment in infrastructure, is create jobs in our supply chains for small businesses in communities right across our country. The investment in some of our foundational industries, such as steel, offers real opportunities for good, unionised jobs that pay decent wages, and I am really proud to be able to set out that investment and the jobs that young people in Darlington and around the country will be able to access because of the choices we have made today.
Chris Coghlan (Dorking and Horley) (LD)
As the Chancellor knows, our economy will only escape its difficult place if we raise economic productivity. On the Treasury Committee, I introduced the Chancellor to London Business School’s Paolo Surico’s research on how using public R&D, and especially defence spending, can help us to do that. In the spring statement, the Government used Professor Surico’s research to upgrade long-term GDP forecasts by £11 billion a year—that is how we pay for it. I strongly welcome the Government’s commitment to investing in public R&D in the spending review, but how will the Chancellor follow through to ensure that the R&D will be used to crowd in and stimulate public investment—especially from the more innovative, high-tech start-ups and venture capital firms—which is necessary to realise the potential of Professor Surico’s research?
Rachel Reeves
Every £1 of Government investment in R&D crowds in £2 of private investment and returns £7 of benefit to the wider economy. That is why we have put £86 billion of investment into R&D over the course of this spending review.
Imran Hussain (Bradford East) (Lab)
Madam Deputy Speaker, I am sure that your constituents, my constituents, the constituents of my hon. Friend the Member for Shipley (Anna Dixon), and indeed the Chancellor’s constituents, will greatly welcome the £2.1 billion for a new tram and a new bus station in Bradford, as well as the billions for social and affordable housing, which is much needed. However, the Chancellor will know that over half of all children in my constituency are still growing up in poverty, which is true of many hon. Members’ constituencies. Child poverty is not a statistic; it is a national disgrace. It is a direct result of 14 years of ideological austerity under the Conservatives. Today’s statement is a step in the right direction, particularly with the announcement that half a million more children will be eligible for free school meals, but frankly it does not go far enough. Will the Chancellor tell me what further measures this Government will announce to alleviate and finish child poverty, including scrapping the two-child limit, which continues to put thousands of children into poverty?
Rachel Reeves
I appreciate my hon. Friend’s welcome for the £2.1 billion for the West Yorkshire combined authority, which will help pay for mass transit to connect Leeds and Bradford, but also Kirklees and Calderdale. In today’s statement we were able to provide money for free school meals for 500,000 children, lifting 100,000 out of poverty, as well as continuing to roll out breakfast clubs and the warm homes programme, which will help insulate properties and bring down bills for millions of families. In addition, we have increased the national living wage by nearly 7%, and the Employment Rights Bill will ensure that more people have security and dignity at work—all part of our plan for change and lifting children and families out of poverty.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
High Speed 2 owns vast swathes of the Staffordshire countryside. In fact, it owns a third of all the properties in the village of Hopton, which is having an enormous impact on residents and causing an enormous blight. Could the Chancellor set out for the House, and for so many residents right across Staffordshire, when we will know whether farmers are going to have their land back and whether villages will be able to return to normal life, with people moving into the empty houses?
Rachel Reeves
I am sure that the right hon. Gentleman has apologised to his constituents for the total mess that the Conservatives made of HS2. We are fixing their mess and getting a grip of the project costs. Frankly, it is astounding for the right hon. Gentleman to raise HS2, given the mess they made of it.
Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)
After almost 20 years of an SNP Government in Scotland, we have 43,000 Fifers on an NHS waiting list and a growing gap in educational achievement between kids from the richest and poorest areas. After less than one year of a Labour UK Government, we are delivering record funding for Scotland, falling energy bills, a pay rise for 8,000 Fifers, new defence jobs in Fife and, following an announcement that will be warmly welcomed by my constituents today, new investment in the renewal of Kirkcaldy town centre and the potential of our amazing seafront. Does the Chancellor agree that this is the difference a Labour Government can make?
Rachel Reeves
The work that this Labour Government are doing will reduce inequality. We are giving a pay rise to millions of workers and creating defence jobs that pay a decent wage, and GB Energy will be headquartered in Scotland. Today I have been able to announce additional investment in the seafront in my hon. Friend’s constituency, which will bring economic benefits.
Robin Swann (South Antrim) (UUP)
An NHS fit for the future—I congratulate the Chancellor and the Health Secretary on the investment in the health service in England. Given the money that has been allocated to Northern Ireland, will the Chancellor encourage the Executive to provide the same investment in the health service in Northern Ireland? The Executive have been working with single-year budgets since 2016. Does the Chancellor agree that this SR allows them to set a multi-year, recurrent budget that allows the transformation of health services and other public services in Northern Ireland?
Rachel Reeves
The hon. Gentleman makes a really important point. What we did today was not just set out money for next year; we have set out money for day-to-day spending for the next three years, and for capital spending for the next five years. Wherever people are in the UK, it is vital that local councils, the devolved Administrations and community groups can plan for the future with confidence. That is what we have done with this spending review, and I urge the devolved Administrations to do similar and make multi-year settlements in order to give certainty for the future.
Rachael Maskell (York Central) (Lab/Co-op)
Despite being the lowest-funded unitary authority in the country, we are doing everything possible to drive down inequality in the city of York, but the differential has stayed at 13 years. Today’s announcement of investment in health, investment in social housing and investment in education will make a real difference for my constituents. However, I worry about the inequality for disabled people in our country. I have looked through the statement. Will the Chancellor give assurances that if disabled people are unable to work, they will not be left behind, and that we will ensure that we have the social security they need, so that they, too, can gain from today’s statement?
Rachel Reeves
Part of the investment in the north of England is for the trans-Pennine route upgrade, which my hon. Friend and I both welcome. The investments in health and education are important, but so too is supporting disabled people, which is why £1 billion has been set aside in the spending review to help get people back to work. Many disabled people are desperate to work, if the right support is available. Of course, the social security system and the welfare state must always be there for people who cannot work, and under this Labour Government they will be.
Adam Dance (Yeovil) (LD)
I heard very little about Somerset, which is facing huge pressure on GP practices, affordable homes, SEND provision, reliable bus services and access to affordable energy. Can the Chancellor promise my constituents that Yeovil will not be overlooked, and does she believe that the decisions announced today leave Somerset council and Government Departments with enough to properly invest in communities in Yeovil?
Rachel Reeves
Let me put that right: the people of Somerset will benefit from a 3% uplift in NHS spending; the people of Somerset will benefit from free school meals for their children if they are on universal credit; and the people of Somerset will benefit from stronger defences and stronger borders through the investment that we are making. This is a spending review for the whole country, including people in Yeovil in Somerset.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
The Chancellor, who visited Birmingham last week, knows that the west midlands region has the talent and ideas to thrive. A fair settlement in today’s spending review is not just support; it is a smart investment in Britain’s future. Over 26,000 people are on the housing register in Birmingham, so I thank her for doubling investment in the affordable homes programme. I also thank her for the announcement on the midlands rail hub investment, which I have been campaigning for. Does she agree that that will be transformational in delivering a decade of renewal and growth that works for everyone?
Rachel Reeves
I thank my hon. Friend for that question. We will build more housing, which is what the investment in affordable homes grants will achieve, and that goes alongside transport investment—significant transport investment—in the west midlands and Birmingham. I was very pleased that my hon. Friend joined me in Birmingham last week, when we were able to celebrate the investment to extend the Metro out to east Birmingham and then to Solihull.
Lincoln Jopp (Spelthorne) (Con)
I thank the Chancellor for her statement, but I fear that she may have misunderstood the question that my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) asked about the River Thames scheme. He asked whether the scheme is included in the £4.2 billion TDEL—total departmental expenditure limit—over three years referenced in paragraph 5.121 of the review. The Chancellor replied that my hon. Friend wants to put up expenditure and will not say where it is coming from, but both he and I are asking this: is the Environment Agency’s half of the River Thames scheme—Surrey county council pays the other half—funded from the £4.2 billion TDEL that she has announced today?
Rachel Reeves
The allocations have been made to Government Departments, and the Treasury is not going to micromanage every scheme, so it will be up to Departments to allocate the money in the way they choose. I am sure that the Transport Secretary will come to the House and set out those plans.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
The spending review says that there will be a report from the Office for Value for Money on temporary accommodation and the terrible waste of money going into poorly procured temporary accommodation. Some 90,000 children live in temporary accommodation in London. Does the Chancellor agree that the £39 billion for new, genuinely affordable homes, combined with that review of the cost of temporary accommodation, is really positive for all children living in London who, sadly, do not have a permanent home into the future, and does she agree that this will make a transformational change in London?
Rachel Reeves
My hon. Friend has spoken to me powerfully on many occasions about how much Westminster city council has to spend on temporary accommodation, which is why the investment in affordable homes grants is so important—and not just for London, but for the whole country—but there are specific issues. As I said in answer to my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), there are particular challenges in London because of the extraordinarily high house prices and rents. This investment in affordable and social housing can have a big impact in London. Combined with the additional money for free school meals, the roll-out of breakfast clubs and the increase in the national living wage, this is a spending review to benefit people across the whole country, including in Westminster and London.
Josh Babarinde (Eastbourne) (LD)
Fellow Eastbournian Mark Tonra and I were gravely ill together in the same ward at Eastbourne district general hospital last year. Harrowingly, because of the outdated and outgrown hospital buildings at the DGH, Mark watched from his bay as a patient opposite him died, and other patients watched Mark deteriorate, with only a flimsy curtain to protect his dignity, before he himself died. The delay to our new hospital will mean that many more Eastbournians will face this indignity until it is fully rebuilt come 2041. Short of heeding my town’s calls to unlock that investment sooner, will the Chancellor at least confirm to local families such as Mark’s and to my NHS trust that her NHS capital expenditure will specifically be able to fund the 98% unmet cost of our maintenance backlog in Eastbourne to help more patients get the care and dignity they deserve?
Rachel Reeves
I thank the hon. Gentleman for speaking powerfully about his experience and the experience of his constituents. After the 14 years and the broken promises of the Conservative party, our hospitals are not in a good enough condition. That is why we have set out the new hospital buildings programme, but it is also why we have put aside money in the spending review for improvements to hospital conditions in the meantime. I will make sure that the relevant Health Minister meets him to talk through what that means for people in Eastbourne.
Chris Webb (Blackpool South) (Lab)
Today’s announcement is a great day for Blackpool, which was mentioned more than any other place in the country. The Chancellor will know the issues we face from when she joined me in Blackpool last year and saw for herself the deprivation and the damage that 14 years of the Tories did to our town. Will she confirm that this is just the start and the beginning of new investment for deprived areas such as Blackpool across the country now that we have a Labour Government and a Labour Chancellor in charge?
Rachel Reeves
I thank my hon. Friend for that question, and he always passionately argues the case for Blackpool. Yes, there is deprivation in Blackpool, but there is also huge opportunity, which is why we are backing Blackpool with the investment we are putting in through the spending review.
Jim Allister (North Antrim) (TUV)
Why does the Chancellor think it appropriate to pledge £50 million on a preferential basis to a sporting organisation that has a political objective as its first and defining attribute, and that has named some of its sports grounds and trophies after IRA terrorists who brought such death and destruction to Northern Ireland, while other organisations are required to make do with what they were allocated in 2011? Does the Chancellor not see and agree that £50 million would make a far better contribution to meeting the housing needs, particularly for social housing, and the sewerage infrastructure needs that in my constituency have brought much of the building of new housing to a halt? What is the priority when matters like that are ignored?
Rachel Reeves
Alongside the investment at Casement Park, we have also made record investment, with a record settlement for the Northern Ireland Executive, in the announcements we have set out today. In addition, there is substantial investment in the defence sector, including in Northern Ireland. So there is plenty of money going into Northern Ireland, and it now needs to be spent wisely.
Mr Alex Barros-Curtis (Cardiff West) (Lab)
I commend the Chancellor on her statement, and I pay tribute to her, and to my right hon. Friend the Welsh Secretary and all my Welsh Labour colleagues for their advocacy in standing up for Wales at this spending review. I particularly welcome the investment in coal tips, which will be really important in constituencies across Wales, and in rail, with £445 million to turn the tide on 14 years of under-investment by the Conservatives, of whom four are left on the Opposition Benches. As she is here, can I take this opportunity to ask her whether, given the substantial rail investment that has been announced, she will use her good offices to support a campaign in my constituency for Ely Mill station to be built? Now all the stakeholders have the money they need, they can get on with it, can they not?
Rachel Reeves
Well, we did announce two new railway stations in Wales today with that £445 million. In the 10-year infrastructure strategy, which we publish next week, we will be setting out more details of investment right across the UK. I am pleased that my hon. Friend welcomes the £118 million for the coal tips work, which I know is so important and which so many Welsh Labour MPs have lobbied me about over the last few months. I am pleased that we can deliver for their communities in Wales.
Vikki Slade (Mid Dorset and North Poole) (LD)
I declare an interest as a sitting councillor. Local government will be pleased to see an increase in spending and to have clarity but, alongside social care, we have no clarity on another area that will sink councils: the statutory override on special educational needs. That was promised time and again, and we were hanging our hats on having it today. Will the Chancellor tell us what is happening and can we give security to councils on special educational needs?
Rachel Reeves
The hon. Lady makes a really important point. Every single MP in this House will have heard harrowing stories of parents desperate to get support for their kids with special educational needs. The Secretary of State for Education will be bringing forward a White Paper to make the reforms that are desperately needed. We will make sure that we do that in partnership with the parents and children who are most affected.
Chris McDonald (Stockton North) (Lab)
The Chancellor of the Exchequer may remember that the last Conservative Prime Minister boasted about moving funding from Teesside to Royal Tunbridge Wells. I am pleased to see that her statement plugs places such as Stockton North back into our economy. I thank the Chancellor for agreeing to make Stockton central one of the trailblazer areas, investing in our local facilities and tackling fly-tipping and graffiti. Does she agree that the statement shows that our Labour Government are providing jobs for working people, providing homes for working people and providing opportunities for our young people?
Rachel Reeves
I am pleased that Stockton will be benefit from some of those investments, because pride in place is so important for all our communities. Some of the most deprived parts of the country have missed out on funding for too long, which is why we are pleased to be able to rectify that and ensure, for example through the Green Book reforms, that money goes to where it is most needed.
Sammy Wilson (East Antrim) (DUP)
First of all, I welcome the fact that, at least in real terms, the Northern Ireland budget has been maintained over the spending period, although I would point out to the Chancellor that a 0.5% real increase will not enable the Northern Ireland Executive to match the real increase in spending on health and policing which will be taking place in the rest of the United Kingdom.
May I emphasise again the preference that she has given in this budget to money for a Gaelic Athletic Association ground? In blundering into this issue, she has given the Executive a massive financial headache. She requires £50 million to be matched by funding elsewhere. The Executive will be required to find about £200 million to make up the deficit, raising expectations and, I believe, creating tension within the Executive as a result. I think it was wrong for her to try to interfere in the minutiae of spending of the Executive in that way. As a general point, maybe in the autumn many people who welcome the headlines today will be regretting the tax increases they will face to pay for the announcements today.
Rachel Reeves
The announcements today are all within the envelope that I already set out through the tax increases and the changes to the fiscal rules in autumn and then the decisions in the spring statement. All we have done today is allocate the envelope that we already set out. As I said at the time, public services would now need to live within the means that we have set at that Budget. This statement does not spend a single penny more or a single penny less than the money that was already allocated.
On the specific issue the right hon. Gentleman raises, I am very happy to pass on what he says to the Northern Ireland Secretary and to ensure that there is a meeting between the relevant Minister and the relevant Members of Parliament.
Andy MacNae (Rossendale and Darwen) (Lab)
I wholeheartedly welcome this statement. It is a true Labour package that backs Britain and reverses years of declinism under parties on the Opposition Benches who seem to have given up on Britain. I particularly welcome the results of the Green Book review, which will get investment into the places that need it most. In that regard, does the Chancellor agree with me that, while big projects and city schemes will get the headlines, it is vital that the full benefits of renewal are felt in small towns like those that make up my constituency of Rossendale and Darwen, and that these previously left behind places must be at the forefront of our thinking as we develop local transport and infrastructure delivery plans?
Rachel Reeves
My hon. Friend is one of many MPs who has spoken to me about the need to reform the Green Book. I thank him for feeding in his concerns about the ways in which the Treasury has previously looked at requests for investment. I am pleased for the people of Rossendale and Darwen that we can start making a difference to the communities that were forgotten about for 14 years under the Conservatives. I was also very pleased to be in his constituency at the end of last year to open the 100th banking hub on a local high street.
John Milne (Horsham) (LD)
I welcome the Government’s decision to widen access to free school meals—a long-standing Liberal Democrat policy—but Castlewood primary school in my constituency tells me that it is currently losing 56p for every single meal it provides. Will the Chancellor undertake to fully fund school meals, or else is she asking schools to choose between teaching and eating?
Rachel Reeves
I am really pleased that what we have set out today will lift 100,000 children out of poverty by providing free school meals to an additional 500,000 children. Real-terms funding for schools is increasing and real-terms funding per pupil is increasing to ensure that schools are able to provide the free school meals and the teaching that our children need.
Matt Bishop (Forest of Dean) (Lab)
I thank the Chancellor for announcement of the extra funding for crumbling schools. As we know, schools across the country were left to fail under the 14 years of the previous Government. How can establishments such as Forest high school in my constituency, which is literally crumbling day by day and at serious risk of closure, access the vital funds so we can provide the service required by students in the Forest of Dean?
Rachel Reeves
I thank my hon. Friend for raising those concerns about schools in the Forest of Dean and that school in particular. The state that schools are in after 14 years of Conservative Government is just not good enough. After what they did in the ’80s and ’90s, I did not think that even a Conservative Government would leave schools in this state. Many MPs will be able to talk about examples similar to my hon. Friend’s from their constituencies. I will ensure that the Department for Education and the Education Secretary hear about the specific case that he raises, because we want to improve the conditions that our young children are taught in.
Gideon Amos (Taunton and Wellington) (LD)
I thank the Chancellor for her statement. As well as freeing people up by tackling the social care crisis, the real way to get the growth we all want is a target for publicly funded social homes—albeit, I welcome the funding that has been found for housing—and funding for the infrastructure that communities want, which will unlock tens of thousands of homes. The Wellington and Cullompton stations project was something I raised with the Chancellor last summer. She said at the Dispatch Box that it would be going ahead, because it had started. That project will bring £180 million of growth to the Cardiff-Bristol-Exeter corridor and generate hundreds of new jobs. Are my constituents right—a genuine question to the Chancellor—to be dismayed that there is no mention of any south-west projects in the statement today?
Rachel Reeves
Last week, we set out additional money for the Mayor of the West of England, and today we have announced a fourfold increase in local transport funding, which will be available for communities across the country. The hon. Member says that he wants to grow the economy—it is disappointing that the Liberal Democrats voted against the Planning and Infrastructure Bill yesterday, which will do exactly that.
Yuan Yang (Earley and Woodley) (Lab)
I strongly congratulate the Chancellor on the impact she has already had by reforming the way the Treasury works, in particular to unlock the capital investment that we need for the future of our economy. I also commend her for her commitment to future generations through her funding for schools and the extension of free school meals. Will she continue to work with the Treasury to change the way it appraises the benefits of human capital investment to ensure there is sufficient funding, particularly for early intervention in special educational needs and disabilities in local authorities like mine in Reading and Wokingham?
Rachel Reeves
I thank my hon. Friend for welcoming the reforms we have introduced at the Treasury—the reform to the fiscal rules to unlock money for investment, the reform of financial transactions to enable more money to be spent through public finance institutions, and particularly the reform of the Green Book. She is absolutely right to mention the importance of human capital, which is why we have announced in the spending review significant investment in skills and in the early years to ensure that children are ready for school.
Mr Will Forster (Woking) (LD)
As the MP for Woking, I represent the most bankrupt and indebted local authority in the country. I was very disappointed, therefore, that it appeared that the Chancellor did not mention councils or local government once in her statement. I am more disappointed, having listened to the detail of the statement, that the Government are investing only an extra 1.1% in local government next year and the year after. What does the Chancellor say to councils across the country and to my constituents in Woking to justify that lack of investment?
Rachel Reeves
This Labour Government are giving real-terms increases in spending to local authorities every year. Compare that with the Conservative-Liberal Democrat Administration from 2010 to 2015 that cut real spending by 2.9% every year. I am much happier to stand on my record as Chancellor than I would be to stand on what the Liberal Democrats did when they had a chance at being in government.
Anna Dixon (Shipley) (Lab)
I thank the Chancellor for listening to the priorities of people in my constituency and across the country and investing in our schools. It was great to see free breakfast clubs in action at Baildon Glen and Beckfoot Priestthorpe schools recently, and I am delighted to hear today that the Labour Government will be putting in some £2.3 billion to fix our crumbling schools, having recently visited Eldwick primary school, where pupils are being taught in a temporary building with half the school out of action due to reinforced autoclaved aerated concrete. Can the Chancellor reassure the pupils at Eldwick that they will finally be able to get back to their classrooms?
Rachel Reeves
I thank my hon. Friend for the passion with which she speaks about schools, which is something I very much share. That is why we are rolling out breakfast clubs at primary schools and introducing free school meals for all children whose carers are on universal credit; it is why we are putting in real-terms increases for school funding and per-pupil funding; and it is why we are addressing the terrible situation of children being taught in temporary classrooms and crumbling schools. I will ensure that the Department for Education hears about the experience in Shipley to hopefully ensure that that school is on the list.
Deirdre Costigan (Ealing Southall) (Lab)
A woman came to my surgery in Ealing Southall last Friday and showed me photos of the one bedroom she shares with her four children. The five of them share beds and they live with black mould on the walls. All the kids have been hospitalised, no doubt because of related bronchial infections. It is temporary accommodation, but she has been there 10 years. That is not unusual. Does the Chancellor agree that today’s record £39 billion investment in social and affordable homes marks an end to Conservative austerity and an end their failure to build, and that it will finally give hope to families stuck in damp, overcrowded flats in London and across the country?
Rachel Reeves
Stories like that are exactly why the Deputy Prime Minister and I have prioritised investment in affordable homes. Nobody should have to live in those conditions in the 21st century—and, with the reforms we are making and the money we are putting in, they will not have to for much longer.
Adam Thompson (Erewash) (Lab)
I thank the Chancellor for her statement today. I welcome all the choices she has made, but especially the investments in Derby and the wider east midlands, which will be an enormous boon to my constituents in Erewash. I also warmly welcome her commitment to ending the use of asylum hotels in this Parliament. The Tory party let the asylum system get completely out of control. Does the Chancellor agree that investment now will result in savings of billions as the system is fixed?
Rachel Reeves
The investment we are putting into Derby and Nottinghamshire is significant, with small modular reactors, investment in defence and investment in fusion, creating good jobs and paying decent wages right across the east midlands. I do not think that taxpayers’ money should be used to pay for asylum hotels, which is why we are reducing the cost of asylum accommodation by around £1 billion during the course of this Parliament and ending the use of asylum hotels.
Andrew Lewin (Welwyn Hatfield) (Lab)
It is a source of pride to see a Labour Chancellor announce such a transformative programme for social housing. My hope is that the boost to the affordable homes programme can be used to unlock stalled projects like those in Welwyn Garden City, in my constituency, where the Metropolitan Thames Valley development adjacent to the station needs to get motoring. I thank the Chancellor for her investment today. Does she agree that our message to councils and housing associations is, “We back you—now it is time for you to build”?
Rachel Reeves
The changes we have made to the planning system and the changes we are making through the Planning and Infrastructure Bill provide the opportunity to build. Today, we have backed those opportunities with money through the affordable homes grant to ensure that a good proportion of social and affordable housing is included in that, for all the reasons that hon. Members have mentioned. On the particular issue of housing around stations, there is huge potential there. The infrastructure is there—we want to have the housing there, too.
Dr Lauren Sullivan (Gravesham) (Lab)
I thank the Chancellor for the spending review. Local austerity is over—after being a local councillor for nearly a decade, I thank her for that. Labour-led Gravesham council has given thousands of permissions for stalled brownfield sites, many of which are needed for the homes that we need in Gravesham. I seek reassurance from the Chancellor that this can be supported by Homes England to deliver and retain council, social and truly affordable homes for our community.
Rachel Reeves
I know that there is great need for affordable homes in Gravesham. With today’s spending review, as well as the planning reforms we have introduced and continue to introduce—opposed, I think, by all the Opposition parties—we can get those homes built for families in Gravesham.
Jack Abbott (Ipswich) (Lab/Co-op)
I welcome the huge raft of announcements today, not least the announcement that we will expand free school meals, which will benefit 6,500 children in Ipswich. I also want to celebrate the enormous, multibillion-pound green light for Sizewell C. We all know its national importance, from energy security to powering 6 million homes, but I cannot overstate the difference it will make in Ipswich and Suffolk, particularly to our young people, who now have the promise of a skilled, secure and well-paid job. I thank the Chancellor from the bottom of my heart for the investment in my town and county. Can she expand on how else the new age of nuclear will benefit our whole country?
Rachel Reeves
The Prime Minister was in Ipswich yesterday with my hon. Friend to visit a local college. He came back from that visit even more determined to crack on and build Sizewell nuclear power station in Suffolk because of the impact it will have not just on bringing down bills, but on bringing good jobs to Britain—good jobs through the supply chain—and on giving young people their hope and future back, knowing that they will have good jobs in the places they live, where they can make a career for themselves and bring prosperity to their families and communities.
Daniel Francis (Bexleyheath and Crayford) (Lab)
I know that my constituents across Bexleyheath and Crayford will welcome the investment that the Chancellor has announced today for new and affordable housing. The Government have set an ambitious target of 1.5 million homes, including 88,000 across London. To reach those targets, we will need investment not just in affordable homes, but in new transport infrastructure. Projects such as the docklands light railway extension to Thamesmead, for example, is forecast to unlock up to 40,000 new homes in brownfield sites across two of the most deprived boroughs in London. Will the Chancellor reaffirm the Government’s support for this important project and commit to providing funding for it?
Rachel Reeves
As my hon. Friend is aware, Bexleyheath and Crayford is a part of the country that I know well. It has huge potential for more homes and more investment. We have set a budget for the Department for Transport. We will set out the 10-year infrastructure plan next week to unlock further investment—both public and private—in housing and transport.
Antonia Bance (Tipton and Wednesbury) (Lab)
One of the first pieces of casework that I picked up was from a young woman pushing her two children through central Wednesbury. We moved to the side and she told me that she was in temporary accommodation, and then she showed me the insect bites up her arm. In my council area, there are 21,000 people on the housing waiting list and nearly 550 families in temporary accommodation—awful, substandard bed and breakfasts, from which it takes multiple buses to get the kids to school. Will my right hon. Friend confirm that our share of the £39 billion for council and social housing is coming to Tipton and Wednesbury and Coseley, to the Black Country and to the west midlands to build the homes that our local families need?
Laurence Turner (Birmingham Northfield) (Lab)
I was delighted to hear the official commitment today to backing the midlands rail hub. I thank the Chancellor and the Transport Secretary for listening to the, at times, persistent representations in support of this essential project. We inherited a set of engineering plans with no money behind them. Now there is a chance to turn them into something real, and that is good news for Birmingham and for the economy of the west midlands.
At the centre of those works is Kings Norton station in my constituency. We need the works there to unblock the cross-city line. On a matter of literary heritage, Kings Norton is also the birthplace of Thomas the Tank Engine—the Reverend Awdry lived a few yards down the road. Would it not be a great tribute if spades could go in the ground for the 80th anniversary next year? Will the Chancellor and her officials work with local representatives so that we can understand which of those individual projects are going to be started first and finally restore Kings Norton station to its former glory?
Rachel Reeves
I once spent a day at Thomas the Tank Engine world. I hope that the trains and the tram lines that we are going to be investing in will be a little less talkative and a bit more productive. The reason I mentioned my hon. Friend in my speech today is that he has persistently lobbied for the midlands rail hub, and we are very pleased as a Government to be able to make that commitment today, which will benefit his constituents and many others as well.
Kevin Bonavia (Stevenage) (Lab)
Today’s spending review is a great big boost for the defence and life science sectors in this country. My constituency of Stevenage is a national hub for both those sectors. This morning, I visited the Cell and Gene Therapy Catapult with the Minister of State for Science, Research and Innovation, Lord Patrick Vallance. Last week, my right hon. Friend the Secretary of State for Defence visited MBDA to see the Storm Shadow missiles being fitted out for Ukraine. Today’s extra investment will be hugely welcomed in my town of Stevenage. Young people want those new jobs. When can they expect to see the benefits of that new investment?
Rachel Reeves
There are huge opportunities in Stevenage, both in life sciences and in the defence sector, to take advantage of the investment that we are putting in—whether that is in research and development or lifting defence spending to 2.6% of GDP in the next two years. I know that businesses, working with their tireless local MP, will make sure that that investment gets to Stevenage.
Sam Rushworth (Bishop Auckland) (Lab)
A third of children in Bishop Auckland live in poverty, so I welcome today’s spending review, which set out how they will benefit not just from the free breakfast clubs, but from the extension to free school meals, warmer homes, more access to sports and the arts, and their parents getting the pay rises that they deserve under this Labour Government. But many of those children live in deprived neighbourhoods, which have seen big cuts to social infrastructure over the past 15 years, including the closure of swimming pools, youth clubs, Sure Start centres, boxing gyms and the like. I noted with interest that, on page 36, there was a reference to 350 deprived communities across the UK receiving Government investment. Will the Chancellor say more about that, because there are no figures in the spending review. If she cannot give a full answer today, perhaps I could engage with her office on this later.
Rachel Reeves
This will be a scheme operated from the Ministry of Housing, Communities and Local Government. We announced some of the neighbourhoods that will benefit from that investment today. This is not something that neighbourhoods will have to bid for; this will go to the communities that need it most. The Deputy Prime Minister will be setting out in due course all the 350 neighbourhoods that will benefit from this investment.
Joe Powell (Kensington and Bayswater) (Lab)
Under the Conservatives, London’s housing crisis escalated to dangerous levels, with one child in every classroom in temporary accommodation. I warmly welcome not only the £39 billion for the affordable homes programme, but the 10-year rent deal, the new low interest loans, and something that I have been pushing for—I can see that the Minister for Building Safety and Fire has just entered the Chamber—which is equal access to the building safety fund for housing associations, so that money can go towards improving conditions of homes and not to remediation. Can the Chancellor outline how this package will tackle London’s housing crisis, including in my constituency, which is one of the most unequal parts, not only of London, but of the country.
Rachel Reeves
I thank my hon. Friend for that question. It is good to see the Minister in his place to hear it, too. It is really important that, as we invest in the social and affordable housing needed both in our capital city and in the whole country, we are investing in the right places. That housing must have the potential not only to provide the homes that people need, but to reduce that pressure on local authority and national budgets, which, so often, are picking up the costs of previous Governments who failed to invest in social and affordable homes.
Jacob Collier (Burton and Uttoxeter) (Lab)
I, too, warmly welcome the investment in the midlands rail hub, which will mean 150 extra trains a week through Burton, and the investment in Rolls-Royce, which will produce small modular reactors and nuclear subs that will benefit my constituency and local jobs. The Chancellor also announced a huge package around transport. She will know that I have been pushing for improvements on the A50/A500 and in the infrastructure around Branston bridge. Can she say more about when we can expect an announcement on the road investment strategy?
Rachel Reeves
It sounds like it is a pretty good day to be an MP in Burton. We are pleased to be able to make those investments in the midlands rail hub and in nuclear technology. There will also be additional housing investment that will go into Burton and other places across the country. The allocation has been made to the Department for Transport, and the Secretary of State will set out her plans in due course. We will also be setting out more detail in the 10-year national infrastructure plan next week.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
Fourteen years of the Tories and 18 years of the SNP have left many Scottish high streets in desperate need of investment, including those in my constituency of Paisley and Renfrewshire South. I welcome the Chancellor’s announcement today of investing in new community funds, bringing the total UK Government direct investment in Scottish local growth funding to almost £1.7 billion. Will my right hon. Friend agree to come to Paisley to see why our high street deserves a slice of that very substantial pie.
Rachel Reeves
I thank my hon. Friend for that kind invitation. I look forward to being with her in Paisley and Renfrewshire before too long. It is the case that 14 years of Conservative Government and an additional 18 years of SNP Government in Scotland, have left many communities on their backs. The investments that we have announced—particularly with their multi-year nature—are about turning those communities around, so that more people can have pride in the places in which they live.
Mrs Elsie Blundell (Heywood and Middleton North) (Lab)
I welcome the Government’s announcement of an additional £2.5 billion in Greater Manchester. This will have a real benefit for my constituency and the town of Heywood, which will get the tram for the first time. What can the Government do, together with the Greater Manchester combined authority, to make sure that we get shovels in the ground as quickly as possible?
Rachel Reeves
I thank my hon. Friend for her lobbying; because of her efforts, Heywood will now get that metro station. Working together with the Mayor of Greater Manchester, we will ensure that the spades are in the ground quickly so that her constituents can benefit from the additional investment that this Government are putting in.
Dr Zubir Ahmed (Glasgow South West) (Lab)
It is clear from my right hon. Friend’s statement that she understands Scotland and that she has left no stone unturned in backing Scotland’s economy. Despairingly, her ambition is not matched by the SNP Government in Holyrood. Will she join me in urging the SNP Government to end their ideological blockade on the defence industry and nuclear industry so that my constituents can finally access the skills, jobs and prosperity that this Labour Government are investing in?
Rachel Reeves
In the statement today we were able to announce investment for Acorn in Aberdeenshire and for Great British Energy, headquartered in Scotland, as well as substantial investment in defence—£11 billion extra by the end of the spending review period—to keep our country and the continent of Europe safe. Scotland and Glasgow have a proud tradition in the defence sectors, but our ambition is not being matched by the SNP Government. This Labour Government are backing defence across the whole of the UK, including Scotland.
Amanda Martin (Portsmouth North) (Lab)
I thank the Chancellor for listening to me on behalf of Portsmouth residents with her commitments in today’s review to investing in building British in our defence sector, backing our SMEs, investing in our country’s security, our Royal Navy base and our NHS, and investing in the education of young people and our public services. A really important issue for my constituents is housing. With the £39 billion affordable housing pot and local growth funding targeted to reach hundreds of communities, under Labour there is now a real chance of addressing the housing need in Portsmouth. How can I work with the Chancellor and the Deputy Prime Minister to ensure that this ambitious investment is wholeheartedly embraced by my Lib Dem council, so that it is as ambitious for Portsmouth as we are, and so that we finally see action and much-needed homes for the people of Pompey?
Rachel Reeves
I think the whole House would pay tribute to the people of Portsmouth and their commitment to our country’s defence. On affordable housing, through the Planning and Infrastructure Bill and the planning reforms we have already announced, we are enabling the building of these homes. Through the £39 billon announced today, we are putting in money so that we can build social and affordable homes. It is disappointing that the Liberal Democrats do not back our planning and infrastructure reforms, because unless everyone backs those, it will be very hard to get Britain building again and to build the 1.5 million homes that people in Portsmouth and the rest of our country desperately need.
Gill German (Clwyd North) (Lab)
I warmly welcome the Chancellor’s statement and, like my hon. Friend the Member for Cardiff West (Mr Barros-Curtis), in particular the historic £445 million investment into rail in Wales. I also echo my hon. Friend’s thanks for the tireless representation of our Secretary of State for Wales and our Welsh Labour MPs. For my constituency, the investment means vital funding for Network North Wales to seamlessly connect with Northern Powerhouse Rail, bringing us closer to realising the ambitious vision of our UK Labour Government, our Welsh Labour Government, and our Labour metro mayors. Does the Chancellor agree that it is only with Labour working together that we can truly deliver for the people of north Wales?
Rachel Reeves
We finally have a Labour Government here and in Wales to work together for the people of Clwyd North and across Wales to make those investments, including the significant investments in transport that we have announced today. I pay tribute to all the Welsh Labour MPs who have lobbied me so extensively to get this investment into Welsh rail. I was left with no doubt about what the priority is for the people of Wales: transport investment and investment into coal tip safety. I am pleased to have been able to set that out in the spending review.
John Slinger (Rugby) (Lab)
In the age of anger that our opponents seek to exploit, we need a responsibility revolution. This Government have taken on that responsibility by taking tough decisions to stabilise the economy and carry out long-term reforms. Does my right hon. Friend agree that it is her responsible approach, not cakeism 2.0, Trussonomics or Reform’s fantasy economics, that enables today’s welcome investment? The investment will benefit my constituents—in healthcare, the green transition, and the defence investment that will help GE Vernova employ hundreds more people in my constituency.
Rachel Reeves
We had to make difficult decisions last year to put the public finances on a firm footing after the appalling economic management of the Conservatives sent interest rates soaring and put pensions in peril—something that was welcomed by the current shadow Chief Secretary to the Treasury, the hon. Member for North Bedfordshire (Richard Fuller), and that is why he has the word “shadow” at the front of his title. Economic responsibility is essential. I set out the envelope for public spending in the Budget last year, and we have allocated that money today—not a penny more, not a penny less.
Mark Ferguson (Gateshead Central and Whickham) (Lab)
A Labour Government, a Labour Chancellor, and a Labour plan. We have half a million children getting free school meals, huge investment into our national health service, jobs and opportunities closer to home, and £39 billion for affordable housing. This is fantastic for my community, but does the Chancellor agree that people in Gateshead and Whickham may benefit the most from the changes she made to the Green Book, and that it gives communities like mine huge opportunities for the future?
Rachel Reeves
My hon. Friend has been a big advocate of reforms to the Green Book, and after setting up the consultation in January, we are pleased to be able to announce changes today to get more investment into places such as Gateshead and Whickham in the north of England. My hon. Friend is also a big champion for free school meals. I am really pleased that in the spending review 500,000 more children will get free school meals, lifting 100,000 children out of poverty.
Lorraine Beavers (Blackpool North and Fleetwood) (Lab)
I welcome the Government’s commitment to investing in Britain’s future, tearing up the old rulebook that held back constituencies like mine for too long, but my constituents need to feel the benefits now. We need better transport infrastructure, including the reopening of our train line and more jobs. Can the Chancellor confirm that Blackpool North and Fleetwood will get the attention that the Conservatives refused to pay it?
Rachel Reeves
Blackpool will benefit from the affordable homes programme, free school meals for children and the roll-out of breakfast clubs. It also stands to benefit from the increase in the local transport grant—a fourfold increase compared with the plans we inherited from the Conservatives.
Jim Dickson (Dartford) (Lab)
People in my constituency will hugely welcome today’s statement—not just the investment in public services such as schools and the NHS and in new homes, but the commitment to investment in transport infrastructure. People in Dartford are sick and tired of living with the terrible congestion caused by the Dartford crossing as well as the collapsed Galley Hill Road in Swanscombe. Can the Chancellor reassure me that as a result of the spending review not only will families be better off, but Dartford will be helped to get moving?
Rachel Reeves
In January I gave the Government’s backing to the lower Thames crossing. We have set out the allocation for the Department for Transport and the 10-year infrastructure plan. The Secretary of State for Transport will set out more detail in due course.
Claire Hughes (Bangor Aberconwy) (Lab)
I thank the Chancellor for her statement and for what is a record-breaking settlement for the Welsh Government to invest in public services in Wales. On Wales, I understand that some Opposition Members might not be happy with the announcement, but my constituents who rely on the north Wales main line to get to work, as well as those of my constituency neighbour, my hon. Friend the Member for Clwyd North (Gill German), will be delighted. Does the Chancellor agree that investment in rail is about so much more than trains and tracks; it is about connecting people across Wales with opportunities and jobs?
Rachel Reeves
I thank my hon. Friend for making those representations to me and to the Secretary of State for Transport on the importance of better rail connections so that people in Bangor Aberconwy and across north Wales can better access good jobs and public services. That is why we have put in £445 million at the spending review.
Madam Deputy Speaker (Judith Cummins)
For the final question, I call Gregor Poynton.
Gregor Poynton (Livingston) (Lab)
I thank everyone for staying.
I warmly welcome the Chancellor’s statement, which shows that this Labour Government are investing in Scotland’s renewal. I particularly welcome the funding allocation for the Acorn carbon capture and storage project, which will unlock billions of pounds of private investment and create high-quality jobs in Scotland. May I ask the Chancellor how the project will create jobs in my constituency and support sites such as Grangemouth to thrive?
Rachel Reeves
After backing Teesside and Merseyside for carbon capture and storage last year, we are really pleased today to be able to announce tranche 2, with backing for both Acorn and Viking. We will crack on and get that investment to Aberdeenshire, as well as the investment that we are putting into Great British Energy. We know of the huge potential that Scotland has to contribute to those jobs and industries of the future in energy security, defence and so much more, and that is why we are backing Scotland with this spending review.
Oral Answers to Questions
Rachel Reeves Excerpts(5 months, 2 weeks ago)
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Graham Stuart (Beverley and Holderness) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
The Government considered all the policies in the autumn Budget carefully, in the context of the difficult fiscal inheritance that we had received from the Conservative party. The decisions to increase employers’ national insurance contributions and reduce the secondary threshold were taken to stabilise the public finances and ensure that money was available for our crucial public services, especially the national health service.
Graham Stuart
Johnson’s of Hedon, a DIY store, has traded successfully for 56 years, but its owner Mike Brooke, who has run it throughout that time, says that the national insurance hike introduced by the Chancellor has finally made the business unviable. Was the cruel destruction of Johnson’s of Hedon, and the jobs that it provides, deliberate or an accident?
Rachel Reeves
The money from national insurance—which, of course, only came in last month—is being used to fund investment in the national health service. Since the general election we have delivered 3 million additional NHS appointments, which benefits constituents in East Yorkshire and throughout the country. As for supporting business, the trade deal that we secured with the European Union was welcomed yesterday by the Confederation of British Industry, the Food & Drink Federation, the Institute of Directors and others, because it will add about £9 billion to the size of the UK economy.
Sir Mel Stride (Central Devon) (Con)
Only last week the right hon. Lady was trumpeting that the economy had turned a corner, but, as she has just said, it is barely a month since her disastrous jobs tax started to bite. May I ask her precisely which business confidence survey—just one—she can point to which supports her assertion that everything is coming up roses?
Rachel Reeves
According to PwC’s global CEO survey—that is just one of the surveys—Britain is the second-best place in the world in which to invest, and that is what this Government are doing. The shadow Chancellor simply is not serious, and his party is becoming completely irrelevant. He talks about jobs; 200,000 jobs have been created since the general election. He talks about economic growth; the UK is now the fastest-growing economy in the G7. He talks about business; we have secured three trade agreements which are backed by British businesses and British trade unions, and the Conservative party opposes every single one of them. No wonder even George Osborne has said that the shadow Chancellor has “no credible economic plan”. While the Conservative party plummets into irrelevance, this Labour Government will deliver in the national interest.
Daisy Cooper (St Albans) (LD)
In the Budget the Government reduced business rates relief, which is hitting small businesses hard. Under current plans, in the next financial year small independent businesses could see their rates go up by 80% and chains could see theirs go down by 40%. I have shared that analysis with Ministers; will the Chancellor please promise that she will look at it personally to ensure that this—I think—unintended consequence does not come to pass and independent businesses do not close, leaving even more of our high streets looking the same?
Rachel Reeves
The hon. Lady will know that in the Budget, at a cost of about £1.5 billion, we were able to extend business rates relief, which was due to end entirely under the plans we had inherited from the Conservative party. As she will also know, we are reforming the way in which business rates work so that there are permanently lower rates for hospitality and retail sectors, particularly on our high streets.
Lisa Smart (Hazel Grove) (LD)
The Chancellor of the Exchequer (Rachel Reeves)
In January, I announced a review of the Green Book to ensure that it is supporting fair, objective and transparent advice on public investment across the country, and I am working closely with our mayors, particularly Steve Rotheram, who has championed this issue. Since January, the Treasury has been in conversation with over 70 different organisations and individuals regionally and nationally to identify areas where we can make changes to the Green Book and champion investment in the north of England.
Lisa Smart
Bear with me on this, Mr Speaker. The previous Conservative Government did not get absolutely everything wrong. They rightly identified that Treasury spending was a powerful tool to rebalance our economy in favour of areas like ours in the north of England. They then failed to deliver, and voters delivered their verdict at the ballot box. This Government have the opportunity to use this powerful tool and ensure that regional disparities are not further entrenched when they look at the Green Book. What reassurance can the Chancellor give my constituents that projects such as repairing Stepping Hill hospital, or bringing the tram-train to Marple, will get a fair crack of the Treasury spending whip?
Rachel Reeves
I totally agree with the hon. Lady. The plans that we inherited from the Conservative party saw capital spending decline as a share of GDP, which is totally the wrong decision if we want to grow the economy and improve prospects in towns and cities across the north of England. Over the course of this Parliament, we are putting £113 billion more into capital spending so that we can build the road and rail infrastructure, the energy infrastructure, the digital infrastructure and the housing that our country desperately needs. Under our reforms to the Green Book, we will make sure that we get more investment to the places that need it, including towns and cities in the north of England.
Markus Campbell-Savours
I am grateful to have secured Thursday’s Adjournment debate on the A66 road improvement project—a key transport link between Cumbria, the north-east and North Yorkshire. Cumbria is a long way from Westminster, and many of us fear that the economic case for major projects is stacked in favour of the economically active south-east. Can the Chancellor reassure me that Cumbria will not be disadvantaged when key public spending decisions are taken?
Rachel Reeves
My hon. Friend is a staunch defender of his constituency and region. We will make decisions at the spending review, which we will publish on 11 June, but as a proud northern MP, I am absolutely determined that the north gets its fair share of investment.
Jessica Toale (Bournemouth West) (Lab)
Nick Timothy (West Suffolk) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
The trade deal that we have secured with India adds around £5 billion to the UK economy. On social security contributions, if somebody who works for an Indian business is posted to the UK, or someone from a UK business is posted to India, they will not pay two lots of contributions: if you are paying into the Indian provident fund in India, you will not be paying national insurance contributions here; and if you are paying national insurance contributions here, you will not be paying into the Indian provident fund. On top of that, to come to the UK to work from India you will need to pay just over £3,000 for the NHS surcharge to be able to access those services and £769 in visa fees, contributing to the UK Exchequer.
Nick Timothy
I note that the Chancellor did not actually address the point of the cost to the Exchequer of the double contributions convention, which the Government has agreed with India. Indian workers sent here by their employers on intra-company transfers cost more in taxes than British workers, but that flips under this deal: Indian workers will be taxed less and cost less to employ than British rivals for doing the same jobs. That will not only cost the Treasury lost revenue, which the Chancellor did not admit, but displace British workers, suppress wages and increase immigration. Will the Chancellor commit now to monitoring the effects of the agreement and, if the data shows any of that happening, promise to scrap this charter for immigration with India?
Rachel Reeves
This deal is worth £5 billion to the UK economy, and it also benefits British workers being posted by their company to work in India. The Conservatives are now in the absurd situation of opposing the US deal, the India deal and the deal with the EU. They are simply not serious. The India deal reduces tariffs on Scotch whisky by more than half and brings into the UK more good jobs paying decent wages—the Conservatives seem to be against that.
Chris McDonald (Stockton North) (Lab)
Special steels business Paralloy in Billingham, in my constituency, has told me that uncertainty on international trade has recently left its customers running for the hills. Does the Chancellor of the Exchequer agree that now we have trade deals coming along like buses—with India, the US and the EU—we can offer reliability and confidence to important local businesses such as Paralloy that want to export to the world?
Rachel Reeves
Steel is one of the sectors that will benefit particularly from the trade deals this Government have secured, freeing ourselves of tariffs on steel going into the US. Indeed, the deal we secured with the EU yesterday means that we avoid tariffs on steel being sold into European markets, as well as now being exempt from the European carbon border adjustment mechanism, which is good for steel and good for jobs right across Britain.
Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
Andy MacNae (Rossendale and Darwen) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
I was pleased to go with my hon. Friend to Darwen to visit the 100th banking hub, which was rolled out just a few months ago. We also visited the thriving Darwen market in one of his local towns. We will set out at the spending review how we will spend the £113 billion extra that we are putting in to capital spending, compared with the plans we inherited from the Conservatives. Of course, we will ensure that towns and cities, including across the north of England, benefit from that investment.
Andy MacNae
I thank the Chancellor for that answer—the Government’s commitment to the north is absolutely clear. We very much enjoyed our visit to Darwen market. At the same time, however, history tells us that small towns, like those that make up Rossendale and Darwen, can far too easily get left behind and not feel the benefits of major infrastructure investment, despite being the very communities that need to see and feel change the most. Does the Chancellor agree that as we implement our investment and growth strategy, and deliver the review of the Green Book, we must put our left-behind communities first? As part of every major investment decision, we should ask the question: what does this do for our most deprived and left-behind neighbourhoods? It is only by targeting investment where it is needed most that we can ensure that every community feels the benefit of the growth that this Government will bring.
Rachel Reeves
My hon. Friend is a proud champion of the towns and villages of Rossendale and Darwen. We will make sure that we use our Green Book review to properly assess the benefit of all this Government’s investments. On top of that capital investment, the people of Rossendale and Darwen are benefiting from the 3 million additional appointments that we have delivered, which have led to reductions in NHS waiting lists, and also the increase in the national living wage, which will make working people in his constituency and across the country better off.
Tim Farron (Westmorland and Lonsdale) (LD)
The towns and villages of the lakes and the dales in Cumbria are proud to host 20 million visitors every single year—we are the UK’s biggest visitor destination outside of London—yet we get almost no support whatsoever for the costs incurred by those visitors on our highways and other infrastructure, health services and police. Will the Chancellor look at funding allocations to make sure that those services that support the residents and the visitors are properly funded?
Rachel Reeves
The Green Book reforms will ensure that we properly assess the benefits of investments in different parts of the UK, but the people of Cumbria and the lakes will benefit from the record investment in the NHS, the roll-out of nurseries and free breakfast clubs at primary schools, as well as the increase in the national living wage, from which many workers in sectors such as hospitality and retail in the hon. Member’s constituency will directly benefit.
Mr Paul Foster (South Ribble) (Lab)
One way to get Treasury officials to start focusing more on northern towns would be to move the Treasury up north. After experiencing our rail networks and our infrastructure, they may very quickly invest more money in the area. Are there any plans to move any Treasury offices to the north?
Rachel Reeves
This Government have committed to increasing the proportion of civil servants who work in the north of England. But we already have a hub that we are expanding in Darlington, where eight Departments work, including officials from the Treasury. The Treasury is very mindful of the importance of investing right across the north of England—in Darlington, Leeds, Cumbria, Rossendale and Darwen and many other constituencies beside.
Martin Vickers (Brigg and Immingham) (Con)
The prosperity of northern towns is very much dependent on good transport connections. Will the Chancellor ensure that National Highways is adequately funded, so that it can improve access to the port and town of Immingham through improvements to the A180, and also that the Department for Transport has adequate funds to meet the modest amount that is needed to fund an extension of the King’s Cross to Lincoln train service through to Grimsby and Cleethorpes?
Rachel Reeves
I shall make sure that the Transport Secretary hears those requests, but the hon. Gentleman knows that our investment in British Steel, which will save that company, is set to increase the number of jobs there. That will make a massive difference to his constituents, as will the investment in renewable energy in the North sea, particularly around Immingham, creating good jobs and paying decent wages in his constituency and in many others, too.
Patrick Hurley (Southport) (Lab)
Gill German (Clwyd North) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
I know that my hon. Friend is working closely with the local Labour council in Southport to regenerate the local town centre, and we will make sure that this Government back him every step of the way.
Patrick Hurley
Whether it is the Marine Lake Events Centre, the Enterprise Arcade or the new Market Quarter in my Southport constituency, my town has benefited from state-led investment in neighbourhoods and the public realm. Does the Chancellor agree that investment policies of this sort are essential to driving economic growth in our regions and nations and will help us to finally turn the page on the failed austerity policies of the Conservative party?
Rachel Reeves
I absolutely agree, and that is why we have reversed the Conservatives’ decisions to cut capital spending. Instead, we are preserving that capital investment, which means spending £113 billion more on road, rail, energy, homes and digital infrastructure than would have been spent in the plans we inherited. We are also spending on day-to-day things, such as making sure that we have police on our streets, and working with our mayors, including Mayor Steve Rotheram, to ensure we get investment into the places that most need it.
Jas Athwal
Small businesses are the backbone of our economy. In Ilford South we have many small businesses, ranging from restaurants like Delhi O Delhi, Mr Bunns Bakery, tea shops like Mi Chaii to local shops like the Chopra convenience stores. They make Ilford an amazing place to eat, shop and do business. Will the Chancellor join me in commending the local businesses that make the high street the beating heart of Ilford South, and will she lay out what steps she is taking to support these entrepreneurs?
Rachel Reeves
At the Budget, we more than doubled the employment allowance to £10,500 to take many small businesses out of paying national insurance altogether. On corporation tax, we have maintained the small profits rate to help smaller businesses, and to help entrepreneurs raise finance and grow, the Government have extended the enterprise investment scheme and the venture capital trust scheme. I very much add my words of support to businesses across Ilford, and I commend the work my hon. Friend does to champion them.
Gill German
Clwyd North is a proud coastal constituency, home to a dedicated hospitality sector with many small businesses, including the recently opened Bobcats Coffee, where young entrepreneur Bobby is an example to us all. Economic circumstances have been tough after a decade of neglect by the Tories. Will the Chancellor outline the Treasury’s plans to support the small businesses that are such a vital part of our local economy?
Rachel Reeves
From the next financial year, this Government will introduce permanently lower rates for high street, retail, hospitality and leisure properties with rateable values below £500,000, and we are doing that exactly to support the sort of businesses that my hon. Friend champions.
Harriet Cross (Gordon and Buchan) (Con)
I draw attention to my entry in the Register of Members’ Financial Interests. Earlier this month, Harbour Energy announced that it would be cutting 25% of its onshore workforce, blaming the Government’s punitive fiscal position and challenging regulatory environment. When the news was announced, the Chancellor said that this was just a commercial decision by one company, so how does she explain the other energy sector jobs that have been lost in north-east Scotland in just the last few weeks? Belmar Engineering is entering liquidation, with 48 job losses. Well-Safe Solutions faces 45 job losses. Beam, a subsea technology company, has made all 200 staff redundant. With Harbour Energy’s cut of 25% of its workforce—250 jobs—we are talking about 600 jobs in total. How can the Chancellor explain that, and how will she support the industry in the spending review?
Rachel Reeves
My hon. Friend the Exchequer Secretary to the Treasury is working closely with businesses right across the energy sector. The previous Government increased the rate of tax on energy companies to 75%, and we increased it by three percentage points to 78%, reflecting the fact that energy companies have enjoyed huge profits since Russia’s illegal invasion of Ukraine. When people’s bills have gone up, it is right that we ask the energy companies making those profits to contribute a little more.
Dave Doogan (Angus and Perthshire Glens) (SNP)
What changes will the Chancellor introduce in the spring statement to compensate for the growth-threatening sword of Damocles she has just placed over the Scottish fishing industry? She should know, but probably does not, that 70% of revenue from fishing and aquaculture comes from Scotland, and she should know, but probably does not, that the fishing industry in Scotland is 50 times larger for Scotland’s economy than for the UK’s. Can she explain what discussions she had with the Scottish Fishermen’s Federation or the Scottish Government before making this damaging decision?
Rachel Reeves
I was very pleased that the Scottish salmon association welcomed the trade deal that we secured with the EU yesterday. Some 70% of the fish that is caught in UK waters is sold into European markets. That will now benefit from the sanitary and phytosanitary deal that we have secured within that deal. We have rolled over the deal that the previous Government secured, giving certainty to fishermen in Scotland and across the UK. We have made it easier for them to export into European markets. We have ensured that we can sell shellfish again into European markets, and we announced yesterday the £360 million package of measures to support coastal and fishing industries. The Scottish National party is now in an absurd situation where it supports Reform and the Tories in opposing the deal with the EU.
Calum Miller (Bicester and Woodstock) (LD)
I welcome the Chancellor’s answers on growth. She has been a strong champion of the Oxford-Cambridge growth corridor, but my constituents are concerned to know that she will lend her support to Lord Vallance’s efforts to join up across Departments and ensure that there is the social infrastructure to support the growth. My constituents worry that hospitals, schools and roads will not keep up with the ambitious pace that Lord Vallance is proposing.
Rachel Reeves
That is an opportune question, because I will be meeting Lord Vallance this afternoon to discuss the work he is taking forward on the Ox-Cam corridor to bring more good jobs, paying good wages, not only to Oxford and Cambridge, but, crucially, to the towns and cities in between. Some of the extra money we are putting into capital investment will absolutely be going to support the huge growth opportunities in that part of the world.
Richard Fuller (North Bedfordshire) (Con)
Of course, the best way to improve economic growth is for this Chancellor to stop punishing businesses with higher taxes. Within the spending review, the key is to improve public sector productivity. As the Chancellor knows, one of the key aspects in doing that is the use of technology. This Government have substantial advantages over the next few years with major advances in artificial intelligence technology, but those can only be captured if the Treasury sets clear directions for Departments, including incentives and penalties. What directives has His Majesty’s Treasury given to Departments to improve productivity through the adoption of artificial intelligence? Specifically, does that advice include a requirement for the use of agentic AI during the multi-year spending period?
Rachel Reeves
I thought the hon. Gentleman was going to welcome the investment of Universal Studios in Bedfordshire, which will be a massive boon to the county’s economy.
On supporting the adoption of AI, we are doing two key things. First, we are supporting that sector investing in the UK, and the deal we secured with the US will help bring more investment into our digital sector. Secondly, and crucially, we are improving the productivity of our public services. The hon. Gentleman will see more about that when we publish the spending review on 11 June. We are absolutely determined to boost productivity in the public sector, after the mess in which it was left by the Conservatives.
Munira Wilson (Twickenham) (LD)
The Chancellor of the Exchequer (Rachel Reeves)
Kick-starting economic growth is this Government’s No. 1 mission. From the next financial year, South Yorkshire combined authority will receive a single flexible funding pot through its integrated settlement, and the East Midlands combined authority will benefit from a new advanced manufacturing and logistics park, unlocking up to £1 billion of investment. Both areas will benefit from £240 million of investment towards trailblazers to tackle economic inactivity.
Dr Tidball
The speciality steel site at Stocksbridge in my constituency has a strategically significant, highly specialist capability to produce world-leading steel that is crucial to our national defence, aerospace and energy industries. The site employs 650 people and has an excellent skills training centre. I welcome the Government’s £2.5 billion commitment to our UK steel industry. What discussions has the Chancellor had with the Department for Business and Trade to ensure that the Government do everything they can to secure the British steel industry by using our domestic steel assets productively, and in particular the Stocksbridge speciality steel site?
Rachel Reeves
Although I will not get into detailed discussions about one individual company, last year the Government set out the £2.5 billion steel fund in the Budget to preserve and grow steel manufacturing in the UK. In the trade deals we have secured with the US and with the EU in the last couple of weeks, we have reduced tariffs on steel exports, which will be good for the British steel industry.
Baggy Shanker
Shockingly, in Derby South 62% of adults in the community are financially vulnerable, which is far above the national average of 38%. To lift people out of this vicious cycle, we need a growing economy, but for those who are worried about how they will make it to the next payday, dreading an unexpected bill or struggling to feed their family, the benefits of growth can feel miles out of reach. Will the Chancellor outline how her plan for growth will put money in people’s pockets and deliver change for those in our struggling communities?
Rachel Reeves
We will shortly publish a financial inclusion strategy, as well as extending the household support fund to support some of the most vulnerable. There are huge opportunities in Derby, as my hon. Friend knows. I was at Rolls Royce in Derby just last week. What we are doing on trade deals, particularly with the US, hugely supports our aerospace sector, along with the increased spending on defence to 2.5% of GDP, which helps to invest in Great British firms and, indeed, in Great British steel.
Josh Babarinde (Eastbourne) (LD)
I am aware that Derby’s economy was blighted last November by a foul smell said to be emanating from its local water treatment works. Similar is true of my constituency, due to the failure of Southern Water’s air scrubbing system. Will the Chancellor ensure that the spending review grants the Environment Agency the resources it needs to crack down on smell nuisances so that the water companies get a grip on the matter, for the benefit of local growth and our economy?
Rosie Duffield (Canterbury) (Ind)
The Chancellor of the Exchequer (Rachel Reeves)
This Government are securing economic growth. Last week, the numbers published showed that the economy grew by 0.7% in the first quarter of this year, including an 8% increase year on year in investment spending. We are now the fastest-growing economy in the G7. Since the general election, there have been four cuts in interest rates, 200,000 jobs created and three trade deals secured. Britain’s economy is stronger, but I will continue to do everything in my power to ensure that working people are better off.
Rosie Duffield
Westminster is once again buzzing with the latest U-turns, speculation and briefings over the Chancellor’s policies on the winter fuel allowance and the two-child benefit cap. There is less of a buzz for the visitors to Canterbury food bank, however, which last month distributed enough food to make 13,545 meals, in a 47% rise on the same period last year. Will the Chancellor end the serious anxiety of those experiencing fuel and food poverty now and reverse those policies?
Rachel Reeves
The only reason that we have been able to grow the economy and get those cuts in interest rates, which help working families in Canterbury and right across our country, is because we have returned stability to our economy. That means never making a policy commitment without being able to say where the money comes from, which is what got our country into a mess under the previous Government. We have set out the policies that we needed to put investment into the NHS and secure our public finances.
Tracy Gilbert (Edinburgh North and Leith) (Lab)
Sir Mel Stride (Central Devon) (Con)
Will the Chancellor explain what the Economic Secretary to the Treasury meant last week when she said that there will be no tax rises on individuals at the autumn Budget? Will the Chancellor similarly confirm that there will be no tax increases on businesses?
Rachel Reeves
In our manifesto, we set out that we would not increase taxes on working people—that is, the income tax, national insurance or VAT that they pay. That is why we also reversed the previous Government’s decision to increase fuel duty, which would have had a disastrous effect on working people in our country. We will set out all other tax policy at the Budget.
Sir Mel Stride
What many up and down the country are asking is why that manifesto pledge not to impose taxes on working people was broken. Last week the Pensions Minister confirmed to the House that the Government would never interfere with the fiduciary duty of pension trustees to get the best return for their members, but when the Chancellor was questioned on that topic by Bloomberg the very same day, she said:
“I am never going to say never”.
This is chaos. The Government cannot even speak with one voice. It is clear that the right hon. Lady and the Pensions Minister cannot both be right, so will she now put the record straight?
Rachel Reeves
We have secured an agreement with the biggest pension companies to invest on a voluntary basis in UK unlisted equities and infrastructure, which is something the Conservatives never achieved. We are getting investment into British infrastructure and British businesses because that is the way to grow the economy and support working people.
Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)
Daisy Cooper (St Albans) (LD)
Yesterday the Chancellor said that she understands the concerns that some people have about the limit at which the winter fuel payment is removed. Does she therefore now agree that restricting the eligibility so tightly was a mistake?
Rachel Reeves
As the hon. Lady knows, when I became Chancellor last year, we inherited a £22 billion black hole in the public finances—not in some year in the future, but in the financial year that we were already three or four months into. This meant that we had to make difficult and urgent decisions to put our public finances back on a firm footing—because, unlike the Conservatives, I will never play fast and loose with the public finances.
Jack Abbott (Ipswich) (Lab/Co-op)
Deirdre Costigan (Ealing Southall) (Lab)
Rachel Reeves
I very much agree, but what is truly extraordinary is that the Conservatives, Reform and the Scottish National party have voted against or abstained on the Planning and Infrastructure Bill, and they do not support any of the trade deals that we have secured to support working people in our country.
Lisa Smart (Hazel Grove) (LD)
Graham Stringer (Blackley and Middleton South) (Lab)
Rachel Reeves
As my hon. Friend knows, sometimes the UK carbon price has been higher, but sometimes it has been lower than in the EU. This deal will ensure a bigger market that, on average, brings prices down. We are confident that the deal secured yesterday will bring more good jobs and bring down bills for consumers.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Scottish councils now have the power to introduce a tourism levy. That has gone down extremely badly with the hospitality sector. In particular, they fear a tax on a tax—that would be VAT. Will the Government look at zero rating that in the event that a tourism levy is introduced?
Rachel Reeves
I want to welcome tourists to Great Britain and Northern Ireland. That is why we are securing trade deals with countries around the world, showing that we as a country are open for business. In the end, it is up to the Scottish Government which additional taxes they introduce, but as with income tax, the SNP never takes the side of ordinary working people.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Last week I raised with the Minister for Social Security and Disability the case of a local disability charity being hit by increased bank charges, and the Minister committed to work with me on the issue. Will Treasury Ministers do the same so that we can take these banks to task and support fantastic local organisations?
Esther McVey (Tatton) (Con)
I am sure that the Chancellor subscribes to the basic principle that if the cost of something is put up, we will see less of it. That is why Governments have, over many years, put taxes on things like smoking. Does she accept that the principle also applies to employing people—that the more expensive the Government make employing people, with their jobs tax increasing NICs for employers, the less we will see of that?
Rachel Reeves
The Conservative party is a good example of that. The cost of the Conservative party went up, and its number of MPs shrank.
Chris Webb (Blackpool South) (Lab)
The recent report by the independent commission on neighbourhoods shows that 98% of Blackpool’s population is living in high-need neighbourhoods. With 34 mission-critical neighbourhoods in my constituency, Blackpool is desperate for investment and economic growth. Will the Chancellor outline what the Government are doing to improve growth in our forgotten coastal towns?
Rachel Reeves
Yesterday we announced £360 million of investment in coastal and fishing communities. That will be vital to ensure that those communities continue to thrive.
Vikki Slade (Mid Dorset and North Poole) (LD)
Dorset and Wiltshire fire and rescue service has suffered a real-terms funding cut, partly because the majority of firefighters are on call so the employer national insurance contributions were not sufficiently compensated. Will Ministers commit to reviewing the funding formula to fit the needs of communities, and to undertaking a local impact assessment on the effect of the funding cuts on public and firefighter safety?
Brian Leishman (Alloa and Grangemouth) (Lab)
To alleviate grinding penury for millions of people, the Chancellor could introduce an annual wealth tax on multimillionaires, which would raise approximately £24 billion per annum, yet she refuses to entertain the idea and considers cuts to welfare acceptable. Why do “tough political choices” always seem to impact the most vulnerable?
Rachel Reeves
At the Budget last year, we increased the rate of tax on non-doms, we increased capital gains tax, we increased the carried interest on bonuses and we introduced VAT on private schools. This Government are ensuring that the wealthiest pay their fair share, because that is a basic Labour principle.
Notification of Contingent Liability
Rachel Reeves Excerpts(5 months, 3 weeks ago)
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The Chancellor of the Exchequer (Rachel Reeves)
The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022. The sales of corporate bonds ceased on 6 June 2023, with a small number of outstanding corporate bonds reaching maturity on 5 April 2024. Therefore, the APF is now comprised solely of gilts.
The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.
Since 12 November 2024, when the maximum authorised size of the APF was last reduced, the total stock of assets held by the APF for monetary policy purposes has fallen further from £654.5 billion to £619.7 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £619.7 billion, comprising entirely of gilts.
The risk control framework previously agreed with the Bank will remain in place, and His Majesty’s Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, the APF and its directors from any losses arising out of, or in connection with, the facility. Provision for any payment due under the liability will continue to be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
[HCWS630]
Speaker’s Statement
Rachel Reeves Excerpts(6 months, 4 weeks ago)
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Mr Speaker
Before we come to Treasury questions, I have agreed to a request from the Chancellor to make some brief comments about the global financial situation, following which the shadow Chancellor and the Liberal Democrat spokesperson will be allowed to respond and ask a question. I will then call other hon. Members to ask the questions on the Order Paper in the usual way. Other Members may well wish to refer to the Chancellor’s comments in their supplementary or topical questions, and I will take a more liberal view of the scope of supplementary questions than is usually the case. I call the Chancellor of the Exchequer.
The Chancellor of the Exchequer (Rachel Reeves)
Thank you, Mr Speaker. As you say, I would like to make some brief remarks on the current economic situation.
The United States decision to impose tariffs has had, and will continue to have, huge implications for the world economy. These implications have been reflected in the reaction we have seen in global markets in recent days, which the financial authorities have of course been monitoring closely. This morning, I spoke to the Governor of the Bank of England, who confirmed that markets are functioning effectively and that our banking system is resilient.
I know, too, that this is an anxious time for families, who are worried about the cost of living—we have your backs. British businesses are worried about what a changing world will mean for them—we have your backs, too. This Government are clear-eyed that our response to global change cannot be to watch and wait, but instead to act decisively, to take the right decisions that are in our national interest, protecting working people. All the decisions that we make as a Government will be underpinned by the stability of our non-negotiable fiscal rules.
A trade war is in nobody’s interests. That is why we must remain pragmatic and cool-headed, and pursue the best deal with the United States in our national interest. That remains our priority. It was part of the discussion that I had with US Treasury Secretary Scott Bessent last week. But we have been clear that nothing is off the table. That is why we will continue to back British businesses during these uncertain times, particularly in industries that are most affected, as we rebuild our industrial base here in Britain.
We showed that backing yesterday when the Prime Minister and I announced new measures to give British car makers certainty and stability, and to support them on the transition to electric vehicles. We have put forward plans to support our life sciences sector by cutting back the time it will take to set up clinical trials in the UK. It is why we are working with our international allies to reduce barriers to trade right across the world. Over recent days I have had discussions with my counterparts in Canada, Australia, Ireland, France and Spain, and with the European Commission. We will pursue those talks in earnest. Tomorrow, I will hold talks with the Indian Government as part of our two nations’ economic and financial dialogue, as we seek to secure a new trade deal with India.
Finally, we must go further and faster in our mission to kick-start economic growth. I know that the challenges facing the global economy, and their potential impact, could be profound. As a Government, we must step up to that challenge to deliver security for working people through our plan for change, which is underpinned by stability, reform and investment—prioritising the builders, not the blockers; reforming our public services, not defending the status quo; investing in our long-term infrastructure, not cutting it for the short term. Security for working people, renewal for Britain—that is our focus, and that is what this Government will deliver.
Mel Stride (Central Devon) (Con)
I thank the right hon. Lady for advance notice of her comments.
This is a time of great concern for millions of people up and down our country, for businesses, and, as an open-trading nation, for our economy at large. Free trade has been the bedrock of prosperity for our country, and for many countries around the world, for decades. It has raised billions of people out of poverty. Tariffs are the enemy of free trade, and we on the Conservative Benches will do whatever we can to assist the Government in getting those tariffs down.
Having said that, of course we will never cease to be an effective Opposition who vigorously hold the Government to account—not least on the disastrous decisions that they have already taken in respect of our economy. We will be responsible when it comes to these matters, particularly where market sensitivities are engaged.
I want to ask the right hon. Lady the following questions. First, could she provide further details of the US negotiations and specifically whether further meetings with Scott Bessent and others have been arranged that involve her? Secondly, which areas beyond tariffs are being discussed in those negotiations? Thirdly, which sectors beyond cars and life sciences are being considered for potential Government support? Finally, could she update the House on what options there are for protecting sectors of the economy that might be affected by the dumping of goods as a consequence of trade diversion?
Rachel Reeves
I thank the right hon. Gentleman for that response and for his offer to work constructively. I know from my time as shadow Chancellor that those moments when we can work constructively together in the national interest, whether in response to covid or in supporting Ukraine against the aggression of Russia, are when this House is at its best.
The shadow Chancellor asked for further details in a number of areas. Discussions are ongoing across a range of Government Departments, including the Treasury, with the United States, and I will be meeting US Treasury Secretary Scott Bessent shortly. Beyond tariffs, we are discussing a range of different areas, but the focus is on reducing tariff and non-tariff barriers to trade, with a particular focus on those sectors that are subject to the higher tariffs.
Although the 10% tariffs are lower than those for many other countries around the world, and we welcome that, the additional tariffs on cars, on steel and potentially on life sciences pose a real challenge to our country, because those are some of our biggest export markets. That is why we made the announcements yesterday, and in those sectors—automotives, life sciences and steel—we will continue to take the action that is necessary, working in partnership with business and trade unions, to make sure we are addressing those issues. We are also using institutions such as the British Business Bank, the National Wealth Fund and UK Export Finance to help businesses through these times.
The shadow Chancellor also mentioned concerns around dumping. We are working with colleagues around the world to understand those implications, but our first priority is not to create more trade barriers but to reduce the ones that exist today.
Daisy Cooper (St Albans) (LD)
People up and down the country will be incredibly concerned about what Trump’s trade war means for their living standards and their communities. At the same time, people want to show that Britain is not going to take Donald Trump’s trade tariffs lying down. We welcome the Chancellor’s announcement that the Government will be working further and faster with our allies abroad. Can she confirm that any new trade deals will be brought before this House for a vote before they are ratified? At the same time as working with our allies abroad to create new export markets, will the Chancellor and the Government commit to a “Buy British” campaign as part of a broader national effort to encourage people to buy British here at home?
Rachel Reeves
I thank the hon. Lady for those questions. This is a time for pragmatism and cool heads, not to rush a response. We are working closely with business. My right hon. Friend the Secretary of State for Business and Trade announced in the House last week a call for evidence on the response that businesses are looking for. Ratcheting up barriers to trade and ratcheting up tariffs will not be in our country’s interests, whether in terms of inflation or, indeed, for supply chains. We need to have cool heads and think about the national interest, not give knee-jerk reactions.
We are very much focused on doing deals with other countries around the world. There is the EU-UK summit on 18 May. We are hosting the economic and financial dialogue with Minister Sitharaman, who is coming to London today for those conversations, and those discussions are ongoing with a number of countries. Of course, any treaties would be brought forward for ratification by this House.
In terms of buying British, I think everyone will make their own decisions. What we do not want to see is a trade war, with Britain becoming inward-looking, because if every country in the world decided that they wanted only to buy things produced in their country, that would not be a good way forward. Our country has benefited hugely from access to global markets, and we will continue to want to be able to do that, because that is in our national interest, for working people and businesses in this country.