Spending Review 2025

Rachel Reeves Excerpts

Wednesday 11th June 2025 Commons Chamber

[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.

[Mr Speaker]

I call the shadow Chancellor.

[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.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[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.

[Daisy Cooper]

indicated dissent.

[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?

--- Later in debate ---

[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.

[Madam Deputy Speaker (Judith Cummins)]

I call Liz Saville Roberts.

[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?

--- Later in debate ---

[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?

--- Later in debate ---

[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.

--- Later in debate ---

[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?

[Rachel Reeves]

It absolutely is.

[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?

--- Later in debate ---

[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

Tuesday 20th May 2025 Commons Chamber

[Graham Stuart (Beverley and Holderness) (Con)]

3. What assessment she has made of the potential impact of the autumn Budget 2024 on costs for businesses.

[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.

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

[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.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[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)]

4. What progress she has made on updating the Green Book.

[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)]

5. What steps she is taking with Cabinet colleagues to support growth in the night-time economy.

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[Nick Timothy (West Suffolk) (Con)]

6. What assessment her Department has made of the potential impact of the double contributions convention in the UK-India free trade agreement on levels of tax revenue.

[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)]

8. What steps she is taking with Cabinet colleagues to ensure cross-departmental planning in the development of the spending review.

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[Andy MacNae (Rossendale and Darwen) (Lab)]

9. What steps she is taking to increase levels of funding for northern towns.

[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?

[Mr Speaker]

No. 11 Market Street, Chorley? [Laughter.]

[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)]

10. What steps she is taking through the spending review to help increase levels of economic growth.

[Gill German (Clwyd North) (Lab)]

14. What steps she is taking through the spending review to help increase levels of economic growth.

[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.

[Mr Speaker]

I call the shadow Minister.

[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)]

13. What steps she is taking through the tax system to support vulnerable families.

--- Later in debate ---

[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?

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[Rosie Duffield (Canterbury) (Ind)]

T1. If she will make a statement on her departmental responsibilities.

[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)]

T2. Last month, Firth Ports officially opened the Charles Hammond berth at the port of Leith, in a £100 million private investment to create Scotland’s largest renewables hub. Will my right hon. Friend join me in welcoming that investment in Leith and set out how she is working with Cabinet colleagues to ensure that green manufacturing and supply chain jobs are created in Scotland?

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[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)]

T4. Will my right hon. Friend outline the steps being taken in the forthcoming spending review to ensure that increased defence spending will stimulate economic growth, so that supply chain companies, such as Collins Aerospace in my constituency, can continue to strengthen national defence capabilities while boosting our local economies, jobs and quality apprenticeships?

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[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)]

T6. Labour-led Ipswich borough council recently announced investment to reopen the iconic Grimwades building in our town centre, which has been left vacant for more than a decade. This local ambition matches the Government’s national initiatives, but challenges remain, so what steps are the Government taking to go even further and reform the unfair business rates system for good?

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[Deirdre Costigan (Ealing Southall) (Lab)]

T7. Does the Chancellor agree that four interest rate cuts, three trade deals, two successive quarters of growth and almost 1% of growth announced last week show that our plan for change is working? Does she also agree that it is now essential that this House supports the Government’s Planning and Infrastructure Bill and other efforts to boost growth and put money in the pockets of my constituents in Ealing Southall?

[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)]

T5. My Hazel Grove constituents are content to pay their fair share of tax, but they are understandably disappointed when His Majesty’s Revenue and Customs overcharges and then ghosts them. Gail from Romiley is a foster carer who was owed a tax repayment. She repeatedly contacted HMRC over a nine-month period, but it was only when my superstar casework team got involved that she got a £1,200 rebate. What assurance can Ministers give my constituents that HMRC is adequately resourced to give them the support they need to pay their fair share of tax?

[Graham Stringer (Blackley and Middleton South) (Lab)]

T8. The European emissions trading scheme has a carbon price that is 50% higher than the UK’s. What assessment has the Chancellor made of the impact of joining the scheme on inflation in this country?

[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?

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[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

Tuesday 13th May 2025 Written Statements

[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

Tuesday 8th April 2025 Commons Chamber

[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.

[Mr Speaker]

I call the shadow Chancellor.

[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.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[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.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 8th April 2025 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

Growth is the No.1 priority of this Government. That is why in the autumn Budget and the spring statement we unlocked an additional £113 billion for capital spending, compared with the plans that we inherited from the previous Government. Yesterday we announced significant support for the automotive sector and life sciences, and ahead of the spending review in June we have announced the roll-out of an additional 60,000 places in construction skills so that we can build the homes and infrastructure that our country desperately needs.

[Deirdre Costigan]

To drive progress on our growth mission and get the most out of taxpayers’ money, it is vital that Departments work collaboratively and not at odds with each other. Will the Chancellor outline how she is promoting cross-departmental working and planning as part of the spending review?

[Rachel Reeves]

The Chief Secretary to the Treasury is working closely in a constructive way to bring together clusters of colleagues to discuss some of the pressing issues that span Departments and that no one Department can address on its own, whether that is reform of special educational needs and disabilities provision for early years, or tackling issues around homelessness and the cost of temporary accommodation. We are working cross-Government to address some of those cross-cutting issues.

[Paul Holmes (Hamble Valley) (Con)]

The Chancellor is right to focus on increasing economic growth, so will she please explain why my office is still waiting for a response on behalf of a small business to a letter that I sent on 12 December, asking her to look into the impacts of her national insurance rise on small businesses? We asked for an update on 11 February, I raised a point of order on 10 March, and I still have not had a response. Will she please get a response to me as soon as possible?

[Rachel Reeves]

I will follow up on that issue. The smallest businesses—those that employ the equivalent of four people on the national living wage—will be paying no national insurance at all from this April. Up to 1 million of the smallest businesses will be paying less or the same national insurance as they were paying previously.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Since the spring statement the world has been rocked by the announcements by President Trump on tariffs last week. It is an event as significant as the financial crisis of 2008, or perhaps as covid, and in those instances the state unleashed everything it could to try to resolve those issues. Is the Chancellor considering changing any of her rules to ensure that everything that the state can throw at this problem is being done?

[Rachel Reeves]

It is incredibly important to retain cool heads at this moment. The tariffs have been imposed, and we are working closely with our friends and counterparts in the United States to reduce the impact from those, not just in the UK but around the world as well. As I said in my opening remarks, at the same time we are looking to secure better trading relationships with some of our biggest trading partners around the world. Of course, as we did yesterday, we are looking at some of the sectoral responses, including on life sciences, automotives and steel, but the fiscal rules are very important for giving our country the stability it needs. We saw what happened when the previous Government lost control of the public finances: it resulted in interest rates going through the roof, meaning higher costs for businesses and for working families. We will not make those mistakes. That is why the fiscal rules are non-negotiable and stability for this Government is sacrosanct.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Is now not the right time to start trying to make our own luck? In that light, would it not also be the right time for the Chancellor to give the green light to the upgrade of the A66 between Penrith and Scotch Corner? Some 25% of traffic on that A road is freight, which is twice the average for A roads across the country, and it is outrageous that so much of the road is single carriageway. Would it not be great for the economy, as well as save lives, if the Chancellor gave the upgrade the green light today?

[Rachel Reeves]

Impressive. We will be considering all such schemes as part of the spending review, but I agree with the hon. Gentleman that we need to go further and faster to grow our economy. That is why we are spending £113 billion more on capital investment in this Parliament, compared to the plans that we inherited, which means that we can upgrade more roads, rail lines and energy infrastructure, and build the 1.5 million homes our country needs too.

[Mr Speaker]

I call the shadow Minister.

[Richard Fuller (North Bedfordshire) (Con)]

Two weeks ago, the spring statement rushed through changes to disability benefits, or “pocket money” to the Chief Secretary to the Treasury, to help plug the £14 billion gap in public finances created by the first Labour Budget. Now we are already in the Office for Budget Responsibility’s scenario 2 on tariffs, and the Chancellor is once again forecast to be out of room on her fiscal targets. What does she plan to ask the Chief Secretary to the Treasury to do to update departmental budgets in his multi-year spending review in order to avoid punishing businesses and people once again with further taxes?

[Rachel Reeves]

The hon. Gentleman is jumping the gun somewhat. We delivered the spring statement just two weeks ago, in which we were able to restore the fiscal headroom after the change in global bond yields. We will set out the Budget in the autumn, moving to one fiscal event a year, which is very different from the multiple Budgets we had from the previous Government. We have set the spending totals for the spending review and we will be setting out the departmental allocations on 11 June.

[Andrew George (St Ives) (LD)]

3. What assessment she has made of the potential impact of her tax policies on investment in second homes.

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[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

4. What steps she is taking with Cabinet colleagues to increase the affordability of new homes.

[The Chancellor of the Exchequer (Rachel Reeves)]

The Prime Minister and the Deputy Prime Minister have set out our ambitions to build 1.5 million homes during this Parliament as part of our plan for change. At the spring statement I announced steps towards that ambition, with an additional £2 billion investment in social and affordable housing next year as a down payment on further investment at the spending review in June.

[Dr Huq]

I welcome the Chancellor’s “build, build, build” policy, but with temporary housing in London costing £4 million a day, soaring rents and a frozen local housing allowance, it is no wonder that London councils fear going bankrupt and having to rehouse people from outside the capital, where only 5% of homes are affordable. In the comprehensive spending review, will my right hon. Friend look into possibly uprating this stingy Tory legacy, so that Londoners are not forced out of London?

[Rachel Reeves]

The key thing we need to do is build the homes our country desperately needs. That is why I put £600 million of investment into creating 60,000 additional places for people to learn the construction skills we need, and into good jobs, paying decent wages and building the homes we need. That is also why we are reforming the planning system, so that we can actually get those homes built. We are backing the builders, not the blockers, which is what the Conservatives did.

[Alison Bennett (Mid Sussex) (LD)]

At the weekend, The Times revealed the problems in the retirement housing market, in terms of both new builds and resales, and many of my constituents have been experiencing a loss on the houses and flats that they have inherited. Does the Chancellor consider the housing market to be adequately providing decent, affordable homes for those who are downsizing as well as first-time buyers?

[Rachel Reeves]

I would be very happy to arrange a meeting for the hon. Lady with the relevant Minister to discuss some of those specific issues around retirement properties. She makes a really important point. We need to make it easier for people to downsize to free up those properties, including in the private sector, so that more homes are available for families.

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

5. What steps she is taking to increase economic growth in the north-east.

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[Navendu Mishra (Stockport) (Lab)]

9. What steps she is taking through the national wealth fund to increase regional economic growth.

[The Chancellor of the Exchequer (Rachel Reeves)]

The national wealth fund has had constructive meetings with all our mayors, and we have given a mandate to the national wealth fund to work with mayors on tailored offers for their communities. I am meeting Mayor Andy Burnham later today to take forward that shared objective to ensure that growth is generated everywhere and felt in all parts of our country.

[Navendu Mishra]

As a fellow north-western MP, I am sure that you, Mr Speaker, share my pride that the banks of the River Mersey were the birthplace of the industrial revolution, and my constituency of Stockport continues to be a hub for innovation. We have many fantastic businesses in Stockport, including KNDS in the Heatons, which manufactures military bridging systems and the Boxer armoured vehicle for the British Army. Can the Minister outline how the national wealth fund will fuel economic growth in Stockport and the investment we need in our local infrastructure?

[Rachel Reeves]

I visited Stockport with my hon. Friend and the Mayor of Greater Manchester last year to see the regeneration work happening there, linking new investment in housing with transport infrastructure. I thank my hon. Friend for his leadership. Last month, alongside the increase in defence spending to 2.5% of GDP, we also set the national wealth fund’s strategic direction, with a focus on support for the defence sector through dual-use technology, creating more good jobs in all parts of the country, including Stockport.

[Sir John Hayes (South Holland and The Deepings) (Con)]

Economic policy should benefit all regions of Britain, including rural counties such as Lincolnshire, where we grow a disproportionate amount of the food that feeds the nation. Does the Chancellor recognise that, in an age when the two biggest economies in the world are protecting their industries—including agriculture—the time has come to reinvest in manufacturing and to consume more of what we produce here in Britain? To echo the call of the Liberal Democrats’ spokesperson, we should buy British. That means using Government procurement to back British jobs, British projects and British workers.

[Rachel Reeves]

My right hon. Friend the Chancellor of the Duchy of Lancaster has set out new reforms for procurement rules to enable just that. We want more British businesses to win contracts. We want more small businesses in Britain to win contracts—businesses in all parts of the economy, including in food and farming. In farming, we gave a record settlement of £5 billion in the Budget last year to support this important part of our national economy.

[Dr Marie Tidball (Penistone and Stocksbridge) (Lab)]

There is currently no tram network from central Sheffield to Oughtibridge, Wharncliffe Side, Deepcar or Stocksbridge, and no operational train service to those areas. My constituents want the Sheffield tram network to be extended to Stocksbridge and to connect those rural communities with jobs, education and hospitals, as well as supporting the advanced manufacturing district and the steel plant in Stocksbridge. Will the Minister meet me and the Mayor of South Yorkshire before the spending review to discuss the next steps to establish the Stocksbridge extension to the Sheffield tram-train service?

[Rachel Reeves]

The Chief Secretary is working closely with mayors, including Oliver Coppard, to understand their priorities for the places that they represent for the purpose of the spending review in June, and will continue that work. At the same time, as the hon. Member for Grantham and Bourne (Gareth Davies) pointed out, we are backing the airport at Doncaster, bringing more good jobs to South Yorkshire.

[Sammy Wilson (East Antrim) (DUP)]

What discussions has the Chancellor had with the Northern Ireland Executive to ensure that the national wealth fund is used to promote economic growth in Northern Ireland? Does she not agree that the big impediment to growth is the fact that she is taxing businesses to death?

[Rachel Reeves]

The Office for Budget Responsibility has revised growth upwards from next year, and expects the economy to be bigger at the end of the forecast period than it thought at the time of the Budget last year. We are using the national wealth fund, the British Business Bank and UK Export Finance to support businesses throughout the UK, and we were recently able to announce significant investment at Thales in Belfast to create jobs in the defence industry there for the export of goods to Ukraine.

[Anna Sabine (Frome and East Somerset) (LD)]

10. What fiscal steps she is taking to support pensioners with the cost of living.

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[Catherine Atkinson (Derby North) (Lab)]

T5. The defence sector is a vital part of our local economy in Derby, particularly with the landmark £9 billion deal struck with Rolls-Royce, which is supporting the Royal Navy’s submarines and providing a major jobs boost. Does the Chancellor agree that national security goes hand in hand with economic security and, in turn, financial security for households?

[The Chancellor of the Exchequer (Rachel Reeves)]

The first duty of any Government is to keep the nation safe. That is why we are increasing defence spending as a share of GDP to 2.5%—the biggest sustained increase in defence spending since the end of the cold war. Derby has a vital role to play within the UK’s defence sector, particularly in nuclear engineering and aerospace, as demonstrated by the landmark £9 billion deal with Rolls-Royce, which will create up to 1,000 jobs in the city and protect thousands more.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

I welcome the fast action by the Government to convene the automotive industry in reaction to President Trump’s damaging tariffs, but the measures in and of themselves will not create new export markets or stimulate demand here in the UK. Will Ministers look at Liberal Democrat calls to reintroduce the plug-in car grant and equalise VAT for electric vehicle pavement charging? Will the Government instruct the valuation office to scrap business rates for EV charging bays until the transition is complete?

[Rachel Reeves]

The support that we announced yesterday on the phase-out of internal combustion engine cars was very much welcomed by the automotive sector. It will give much more flexibility around the allowances and around plug-in hybrid vehicles. All of that is welcome, but we are keeping a watching brief as well as trying to ensure that there are new markets for cars made in Britain in other countries around the world by securing more trade deals.

[Oliver Ryan (Burnley) (Ind)]

T6. What is the Chancellor doing to support businesses and boost wages in towns such as Burney, Padiham and Brierfield, which were forgotten for 14 years under the previous Government?

[Rachel Reeves]

My hon. Friend is doing great work supporting local businesses in Burnley, including the digital marketing start-up Door4, which I know he has been championing.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

T2. I have been contacted by many local businesses, including the Cross Keys pub in the Holt Heath nature reserve and the BEAR café in Wimborne. They are two different venues in two different locations, but both tell me that these are the most extreme trading conditions ever seen in hospitality. With national insurance, minimum wage and energy and food costs, will the Chancellor consider a reduction in VAT on hospitality sales to protect high streets and local producers and to save our communities?

[Dan Tomlinson (Chipping Barnet) (Lab)]

T7. As a north London MP, I know that tackling the high housing costs in this city is a priority for my constituents. It is my belief that one route to that is investing in the country as a whole, so that we are not just flying on one London-shaped engine. To that end, did you know, Mr Speaker, that Leeds is the largest city in western Europe that does not have a tram or a mass transit system? That is a damning indictment of decades of economic failure. Will the Chancellor do all she can to ensure that the Leeds tram is built as fast as possible so that her constituents and mine can be better off?

[Rachel Reeves]

Hear, hear. I had better declare an interest as a proud Member of Parliament for Leeds West and Pudsey. West Yorkshire combined authority is receiving £830 million for transport spending through round 1 of the city region sustainable transport settlement. That includes £200 million for the development of a mass transport system. For too long Leeds has lacked this. This Government will put that investment in and get those trams running.

[Wendy Morton (Aldridge-Brownhills) (Con)]

T3. With the jobs tax and the increase in business rates, and as a result of US tariffs, it is vital that we stimulate the UK economy. What is the Chancellor’s plan, and can she expect us to see interest rates fall? Perhaps if she was listening to the question, she would be able to answer.

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[Nick Timothy (West Suffolk) (Con)]

The Chancellor talked earlier about the Government’s response to the new US trade policy, but what are the Government doing about China’s abuse of the world trade system? In particular, what will they do to challenge China’s status as a developing country at the World Trade Organisation? That is the means by which China dodges so many of the rules imposed on countries such as Britain and others in the west.

[Rachel Reeves]

Trade issues are for the Secretary of State for Business and Trade, but I will say this. There are rightly concerns about global trade imbalances, but the response of the United States by putting tariffs on all countries—including the UK, which does not have a trade surplus—is a disproportionate response to a genuine problem of global trade imbalances.

[Bill Esterson (Sefton Central) (Lab)]

I very much welcome the Chancellor’s commitment to investing in life sciences in this country. May I encourage her to support the bid for a national mental health diagnostics and research centre in my constituency, not least because poor mental health is estimated to cost this country up to £300 billion a year in lost economic production?

[Rachel Reeves]

Yesterday, the Prime Minister announced reforms to speed up clinical trials to ensure that the best new drugs can come to this country, benefiting from our NHS. On the issue of mental health treatment, I agree with my hon. Friend about the importance of addressing that, both for the health and wellbeing of individuals and because of the economic benefit that he speaks to. I am happy to arrange a meeting with the relevant Minister.

[Carla Lockhart (Upper Bann) (DUP)]

On 30 October, the Chancellor upended our economy through tax rises and punitive death taxes. She has delivered a devastating blow to family farms and small family businesses—the very backbone of our economy. When will the Chancellor recognise that she is elected by the people, for the people? Every day that she avoids engaging with the farming community is another day of wilful neglect. Our farmers are being driven out, not by market forces but by a Government blind to their struggles and deaf to their voices. When will she listen and speak with them?

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Many thousands of my constituents in Paisley and Renfrewshire South work in and rely on public services that are on their knees after 18 years of under-investment by the SNP Government at Holyrood. Will my right hon. Friend set out how the views of my constituents will be reflected in the spending review?

[Rachel Reeves]

Because of the decisions that we made in the Budget last year, we were able to provide a record settlement for Scotland, Wales and Northern Ireland. It is a shame that the SNP MPs are not in the Chamber today. It is now the SNP’s responsibility to spend that money wisely and invest in public services. We are bringing down NHS waiting lists in England and Wales; the same cannot be said of Scotland.

[Tessa Munt (Wells and Mendip Hills) (LD)]

In July 2023, my constituent Alison claimed a refund of overpaid tax that was mistakenly paid twice. In February 2024, she was told that her claim would be assessed by 20 March, in July 2024 she was told that it would be by 22 October, and in December she was told that she could not have a date but that the department had definitely received her claim 16 months previously. She has heard nothing since. Will the Chancellor agree to meet me to discuss this very vexed situation for someone who has very little money, given that this claim is nearly 21 months delayed?

--- Later in debate ---

[Mr Speaker]

We have an urgent question shortly.

[Rachel Reeves]

We inherited the settlement made by the previous Government, as the hon. and learned Member will know. There is a summit between the UK and the EU on 18 May where we will be looking to reduce the barriers to trade between the whole of the United Kingdom and the European Union. We recognise the specific issues around Northern Ireland, particularly in regard to the response to the tariffs, and we will continue to work with the Executive there to ensure that we get the best outcome for the people of Northern Ireland.

Spring Statement

Rachel Reeves Excerpts

Wednesday 26th March 2025 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

This Labour Government were elected to bring change to our country, to provide security for working people and to deliver a decade of national renewal. That work began in July, and I am proud of what we have delivered in just nine months: restoring stability to our public finances, giving the Bank of England the foundation to cut interest rates three times since the general election, rebuilding our public services, with record investment in our NHS bringing waiting lists down for five months in a row, and increasing the national living wage to give 3 million people a pay rise from next week.

Now our task is to secure Britain’s future in a world that is changing before our eyes. The threat facing our continent was transformed when Putin invaded Ukraine. It has since escalated further and continues to evolve rapidly. At the same time, the global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable and borrowing costs rise for many major economies. The job of a responsible Government is not simply to watch this change. This moment demands an active Government—a Government not stepping back but stepping up, a Government on the side of working people helping Britain reach its potential. We have the strengths to do just that as one of the world’s largest economies, an ally to trading partners across the globe, and a hub for global innovation. These strengths and the progress we have made so far mean that we can act quickly and decisively in a more uncertain world to secure Britain’s future and to deliver prosperity for working people.

As I set out at the Budget last year, I am today returning to the House to provide an update on our public finances, supported by a new forecast from the independent Office for Budget Responsibility, ahead of a full spending review in June. I will then return to the House in the autumn to deliver a Budget in line with our commitment to deliver just one major fiscal event a year.

Let me now turn to the OBR’s forecasts; I want to thank Richard Hughes and his team for their dedicated work. The increased global uncertainty has had two consequences: first on our public finances and secondly on our economy. I will take each in turn.

In the autumn, I set out our new fiscal rules that would guide this Government. These fiscal rules are non-negotiable. They are the embodiment of this Government’s unwavering commitment to bring stability to our economy and to ensure security for working people, because the British people have seen what happens when a Government borrow beyond their means. The mini-Budget delivered by the Conservatives resulted in higher bills, higher rents and higher mortgages, and it was not the wealthy who suffered most when they crashed the economy; it was ordinary working people. They continue to feel the effects two and a half years later of the damage that the Conservatives did.

Let me be clear: there is nothing progressive, there is nothing Labour, about working people paying the price for economic irresponsibility. The British people put their trust in this Labour Government because they knew that we—they knew that I—would never take risks with the public finances and would never do anything to put household finances in danger. We must earn that trust every single day.

I set out two rules at the Budget. The first was our stability rule, which ensures that public spending is under control, balancing the current budget by 2029-30 so that day-to-day spending is met by tax receipts. The second was our investment rule to drive growth in the economy, ensuring that net financial debt falls by the end of the forecast period, while enabling us to invest alongside business.

Turning first to the stability rule, the OBR’s forecast shows that before the steps that I will take in this statement, the current budget would have been in deficit by £4.1 billion in 2029-30, having been projected to be in surplus by £9.9 billion in the autumn, as the UK, alongside our international peers like France and Germany, has seen the cost of borrowing rise during this period of heightened uncertainty in global markets. As a result of the steps that I am taking today, I can confirm that I have restored in full our headroom against the stability rule, moving from a deficit of £36.1 billion in 2025-26 and £13.4 billion in 2026-27 to a surplus of £6 billion in 2027-28, £7.1 billion in 2028-29 and £9.9 billion in 2029-30. That compares with the headroom left by the previous Government of just £6.5 billion. That means that we are continuing to meet the stability rule two years early, building resilience to shocks in this, a more uncertain world.

The OBR forecast that the investment rule would also be met two years early, with net financial debt of 82.9% of GDP in ’25-26 and 83.5% in ’26-27, before falling to 83.4% in ’27-28, to 83.2% in 2028-29 and then to 82.7% in 2029-30, providing headroom of £15.1 billion in the final year of the forecast, broadly unchanged from the autumn forecast.

After the last Government doubled the national debt—[Interruption.] After they doubled the national debt, debt interest payments now stand at £105.2 billion this year. That is more than we allocate to defence, the Home Office and the Ministry of Justice combined. That is the legacy of the Conservative party. The responsible choice is to reduce our levels of debt and borrowing in the years ahead, so that we can spend more on the priorities of working people, and that is exactly what this Government will do. I said that our fiscal rules were non-negotiable and I meant it. I will always deliver economic stability and I will always put working people first. I said it at the election; I said it at the Budget; and I say it again today.

Let me now set out the steps that the Government have taken. At the Budget we protected working people by keeping our promise not to raise their rates of national insurance, income tax or VAT. At the same time, we began to rebuild our public services after the Conservatives left a £22 billion black hole in our public finances. Ours were the right choices: the right choices for stability and the right choices for renewal, funded by the decisions that we took on tax.

As I promised in the autumn, this statement does not contain any further tax increases, but when working people are paying their taxes while still struggling with the cost of living, it cannot be right that others are still evading what they rightly owe in tax. In the Budget, I delivered the most ambitious package of measures we have ever seen to cut down on tax evasion, raising £6.5 billion per year by the end of the forecast. Today I go further, continuing our investment in cutting-edge technology, investing in HMRC’s capacity to crack down on tax avoidance, and setting out plans to increase the number of tax fraudsters charged every year by 20%. These changes raise a further £1 billion, taking the total revenue raised from reducing tax evasion, under this Labour Government, to £7.5 billion. These figures are verified by the Office for Budget Responsibility and I to thank my hon. Friend the Exchequer Secretary for his continued work in this area.

Last week, my right hon. Friend the Secretary of State for Work and Pensions set out this Government’s plans to reform the welfare system. The Labour party is the party of work: we believe that if you can work, you should work, but if you cannot work, you should be properly supported. This Government inherited a broken system: more than 1,000 people every day are qualifying for personal independence payments; one in eight young people are not in employment, education or training. If we do nothing, we are writing off an entire generation. That cannot be right and we will not stand for it. It is a waste of their potential and it is a waste of their futures, and we will change it.

As my right hon. Friend said in her statement last week, the final costings will be subject to the OBR’s assessment. Today, the OBR has said that it estimates that the package will save £4.8 billion in the welfare budget, reflecting its judgments on behavioural effects and wider factors. This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week and the Government’s “Pathways to Work” Green Paper. The universal credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30, while the universal credit health element will be cut for new claimants by around 50% and then frozen.

On top of that, we are investing £1 billion to provide guaranteed, personalised employment support to help people back into work, and £400 million to support the Department for Work and Pensions and our jobcentres to deliver these changes effectively and fairly, taking total savings from the package to £3.4 billion. While spending on disability and sickness benefits will continue to rise, these plans mean that welfare spending as a share of GDP will fall between 2026 and the end of the forecast period, which is very different from what we inherited from the Conservative party. We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and, most importantly, supporting more people back into secure work and lifting them out of poverty.

At the Budget, I fixed the foundations of our economy to deliver on the promise of change. That work has already begun. There are some 2 million extra appointments in our NHS; waiting lists are down; new breakfast clubs are opening across England; there have been the largest settlements in real terms for Scotland, Wales and Northern Ireland in the history of devolution; and asylum costs are falling—promises made, and promises kept, and every single one of them was opposed by Opposition parties.

At the Budget, alongside providing an increase in funding for this year and next, I set the envelope for the spending review, which we will deliver in June, led by the Chief Secretary to the Treasury. That will set departmental budgets until 2028-29 for day-to-day spending, and until 2029-30 for capital spending.

Today’s statement reflects two steps that we have taken on our spending plans. First, because we are living in an uncertain world, as the Prime Minister has set out, we will increase defence spending to 2.5% of GDP and reduce overseas aid to 0.3% of gross national income. That means that we save £2.6 billion in day-to-day spending in 2029-30 to fund our more capital-intensive defence commitments. Secondly, in recent months, we have begun to fundamentally reform the British state, driving efficiency and productivity across Government to deliver tangible savings and improve services across our country.

Earlier this month, the Prime Minister set out our plans to abolish the arm’s length body NHS England, and to ensure that money goes directly to improving the service for patients. The Secretary of State for Health and Social Care is driving forward vital reforms to increase NHS productivity, and is bearing down on costly agency spend to save money so that we can improve patient care.

The Chancellor of the Duchy of Lancaster is taking forward work to reduce the cost of running Government significantly—by 15%. That will be worth £2 billion by the end of the decade. This work shows that we can make our state leaner and more agile, and deliver more resources to the frontline, while ensuring that we control day-to-day spending to meet our fiscal rules.

Today, I build on that work by bringing forward £3.25 billion of investment to deliver the reforms that our public services need through a new transformation fund. That is money brought forward now to bring down the cost of running Government by the end of the forecast period by making public services more efficient, more productive and more focused on the user. I can confirm today the first allocations from this fund, including funding for voluntary exit schemes to reduce the size of the civil service, and for pioneering artificial intelligence tools to modernise the state; investment in technology for the Ministry of Justice to deliver probation services more effectively; and up-front investment so that we can support more children in foster care, to give them the best possible start in life and reduce cost pressures in the future.

Our work to make Government leaner, more productive and more efficient will help deliver a further £3.5 billion of day-to-day savings by 2029-30. Overall, day-to-day spending will be reduced by £6.1 billion by 2029-30, and it will now grow by an average of 1.2% a year above inflation; for comparison, in the autumn, that figure was 1.3%. I can confirm to the House that day-to-day spending will increase in real terms above inflation in every single year of the forecast. In the spending review, apart from the reductions in overseas aid, day-to-day spending across Government has been fully protected.

I can also confirm our approach to capital investment. In the autumn Budget, I announced £100 billion of additional capital spending to crowd in investment from the private sector, in order to fix our crumbling infrastructure and create jobs in every corner of our country. Today, I am not cutting capital spending, as the Conservative party did time and again, because that choked off growth and left our school roofs literally crumbling. That was the wrong choice. It was the irresponsible choice. It was the Tory choice. Today, I am instead increasing capital spending by an average of £2 billion per year, compared with in the autumn, to drive growth in our economy and to deliver in full our vital commitments on defence. This Government will ensure that every pound we spend will deliver for the British people by increasing productivity, driving growth in our economy and improving our frontline public services.

Let me turn to the impact of increased uncertainty on our economy. To deliver economic stability, we must work closely with the Bank of England, supporting the independent Monetary Policy Committee to meet the 2% inflation target. There have been three interest rate cuts since the general election, and today’s data shows that inflation fell in February, having peaked at 11% under the previous Government. The Office for Budget Responsibility forecasts that consumer prices index inflation will average 3.2% this year, before falling rapidly to 2.1% in 2026 and meeting the 2% target from 2027 onwards, giving families and businesses the security that they need, and providing our economy with the stable platform that it needs to grow.

Earlier this month, the OECD downgraded this year’s growth forecast for every G7 economy, including the UK, and the OBR has today revised down our growth forecast for 2025 from 2% in the autumn to 1% today. I am not satisfied with these numbers. We Labour Members are serious about taking the action needed to grow our economy; we are backing the builders, not the blockers, with a third runway at Heathrow airport and through the Planning and Infrastructure Bill. We are increasing investment with reforms to our pension system and a new national wealth fund, and tearing down regulatory barriers in every sector of our economy. That is a serious plan for growth. That is a serious plan to improve living standards. That is a serious plan to renew our country.

A changing world presents challenges, but also opportunities for new jobs and new contracts in our world-class defence industrial centres from Belfast to Deeside, and from Plymouth to Rosyth. In February, the Prime Minister set out our Government’s commitment to increasing spending on defence to 2.5% of GDP from April 2027—the biggest sustained increase in defence spending since the end of the cold war—and an ambition to spend 3% of GDP on defence in the next Parliament. That was the right decision in a more insecure world—we are putting an extra £6.4 billion into defence spending by 2027—but we have to move quickly in this changing world, and that starts with investment. Today, I can confirm that I will provide an additional £2.2 billion for the Ministry of Defence in the next financial year—a further down payment on our plan to deliver 2.5% of GDP by 2027. This additional investment is about increasing not just our national security, but our economic security.

As defence spending rises, I want the whole country to feel its benefits, so I will now set out the immediate steps that we are taking to boost Britain’s defence industry, and to make the UK a defence industrial superpower. We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on new, novel technologies, including drones and artificial intelligence-enabled technology, driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly skilled engineers and scientists, and delivering new business opportunities for UK tech firms and start-ups. We will establish a protected budget of £400 million in the Ministry of Defence—a budget that will rise over time—for UK defence innovation, and a clear mandate to bring innovative technology to the frontline at speed.

We will reform our broken defence procurement system, making it quicker, more agile and more streamlined, and giving small businesses across the UK better access to Ministry of Defence contracts—something welcomed by the Federation of Small Businesses. We will take forward our plan for Barrow, a town at the heart of our nuclear security, working with my hon. Friend the Member for Barrow and Furness (Michelle Scrogham). We are providing £200 million to support the creation of thousands of jobs there. We will regenerate Portsmouth naval base, securing its future, as called for by my hon. Friend the Member for Portsmouth South (Stephen Morgan). We will secure better homes for thousands of military families—the homes that they deserve, which were denied to them by the previous Government—in the constituencies of my hon. Friends the Members for Plymouth Moor View (Fred Thomas), for Plymouth Sutton and Devonport (Luke Pollard) and for York Outer (Mr Charters) and in Aldershot. That is the difference that this Labour Government are making.

Finally, we will provide £2 billion of increased capacity for UK Export Finance to provide loans for overseas buyers of UK defence goods and services. I want to do more with our defence budget, so that we can buy, make and sell things here in Britain. I want to give our world-leading defence companies and those who work in them further opportunities to grow, and to create jobs in Britain, as military spending rightly increases all across Europe. To oversee all this vital work, my right hon. Friend the Defence Secretary and I will establish a new defence growth board to maximise the benefits from every pound of taxpayers’ money that we spend, and we will put defence at the heart of our modern industrial strategy to drive innovation, which can deliver huge benefits for the British economy. That is how we make our country a defence industrial superpower, so that the skills, jobs and opportunities of the future can be found right here in the United Kingdom.

As the previous Government learned to their detriment, there are no shortcuts to economic growth. It will take long-term decisions. It will take our putting in the hard yards. It will take time for the effect of the reforms that we are introducing to be felt in the everyday economy. It is right that the Office for Budget Responsibility should consider the evidence and look carefully at measures before recognising a growth impact in its forecast, but I can announce to the House that the OBR has considered and has scored one of the central planks of our plan for growth.

In my first week as Chancellor, I announced that we were pursuing the most ambitious set of planning reforms in decades to get Britain building again, and in December we published changes to the national planning policy framework, driven forward tirelessly by my right hon. Friend the Deputy Prime Minister. We are reintroducing mandatory housing targets, and bringing grey-belt land into scope. The OBR has today concluded that these reforms will permanently increase the level of real GDP by 0.2% in ’29-30—an additional £6.8 billion for our economy—and by 0.4% of GDP within 10 years, which is an additional £15.1 billion in the British economy. That is the biggest positive growth impact that the OBR has ever reflected in its forecast, for a policy with no fiscal cost. Taken together with our plans to increase capital spending, which we set out in the Budget last year, this Government’s policies will increase the level of real GDP by 0.6% in the next 10 years. That is the difference that this Labour Government are making. Those are policies to grow our economy promised by a Labour Government, delivered by a Labour Government and opposed by the parties opposite.

The planning system that we inherited was far too slow. The OBR has concluded that our reforms will lead to house building reaching a 40-year high, with 305,000 homes a year by the end of the forecast period. Changes to the national planning policy framework alone will help build over 1.3 million homes in the UK over the next five years, taking us within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this Parliament. Those are homes promised by this Labour Government, homes built by this Labour Government and homes opposed by the parties opposite.

The impact on our economy goes further still. I said at the election that we could not simply tax and spend our way to prosperity. We need economic growth, so I can today confirm that the effect of our growth policies, including our planning reforms, means an additional £3.4 billion to support our public finances and our public services by 2029-30. Those are the proceeds of growth, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.

Earlier this week, we provided an additional £2 billion of investment in social and affordable homes next year, delivering up to 18,000 new homes, and allowing local areas to bid for new development across our country, including sites in Thanet, Sunderland and Swindon. That is more security for families across the country, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.

To build these new homes, we need people with the right skills. Earlier this week, my right hon. Friend the Education Secretary announced more than £600 million to train up 60,000 more construction workers, including through 10 new technical excellence colleges across every region of the country, giving working people the chance to fulfil their potential. Those are new opportunities for our young people, promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.

All this is just the start. The Planning and Infrastructure Bill passed its Second Reading on Monday. That was no thanks to the parties opposite. Once that Bill completes its passage, it will help deliver the homes and infrastructure our country badly needs. I say to the parties opposite: the British people will be watching. If the parties opposite do not support these reforms, let us be clear about what that would mean: they are opposing economic growth, they are opposing more homes for families and they are opposing good jobs across our country. We on the Government Benches are clear about whose side we are on; the parties opposite must decide, too.

This Labour Government are taking the right decisions now to secure Britain’s future. Today, I can confirm to the House that the OBR has upgraded its growth forecast next year and every single year thereafter, with GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. By the end of the forecast, our economy will be larger compared with the OBR’s forecast at the time of the Budget. That is the difference that this Labour Government are making.

This is not just about lines on a graph; it is about improving people’s lives. Working people are still feeling the pinch after a cost of living crisis caused by the Conservatives that caused interest rates and inflation to go through the roof, so I am pleased that the OBR confirms today that real household disposable income will now grow this year at almost twice the rate expected in the autumn. Compared with the forecast in the final Budget delivered by the Conservatives, and after taking inflation into account, the OBR says today that households will be on average more than £500 a year better off under this Labour Government. That will mean more money in the pockets of working people and higher living standards—promised by this Labour Government, delivered by this Labour Government and opposed by the parties opposite.

The world is changing. We can see that, and we can feel it. A changing world demands a Government who are on the side of working people, acting in their interest, acting in the national interest, not retreating from challenges, and not stepping back. It demands a Government with the courage to step up to secure Britain’s future and to seize the opportunities that are out there and before us. I am impatient for change. The British people are impatient for change after 14 years of failure, and we are beginning to see change happen. Our plan for change is working. Defence spending is rising. Waiting lists are falling. Wages are up and interest rates are cut. That is the difference that this Labour Government are making.

Today, the OBR confirms that our plan to get Britain building will drive growth in our economy and put more money in people’s pockets. There are no quick fixes, but we have taken the right choices: returning stability to our economy after years of mismanagement by the party opposite, and delivering security for our country and security for working people. That is what drives this Government; that is what drives me as Chancellor; and, that is what drives the choices I have set out today. I commend this statement to the House.

[Mr Speaker]

I call the shadow Chancellor.

--- Later in debate ---

[Mel Stride]

May I just point out that all the Chancellor’s fiscal headroom disappeared, not just some of it? In fact, she went underwater to the tune of £4.1 billion. Reeling from one fiscal event to the next is not a way to run the public finances, and breaking your fiscal rules to the extent that the right hon. Lady has in just six months is a public humiliation.

May I now focus briefly on defence spending? We on this side of the House welcome the fact that the Government will reach 2.5% of GDP by 2027, as we pressed them to do, and we note the stepping stone along the way that the right hon. Lady has just announced, but we should go further than that. The 3% target should be brought forward to this Parliament. So may I ask the right hon. Lady: given the geopolitical tensions that she has raised, what provision she has made in her headroom, in her fiscal plans, for increasing defence spending more quickly in this Parliament, if that proves necessary? May I also ask her this: would she scrap the absurd Chagos deal, and put that money behind our armed forces?

The economy is in a perilous state, but there was a different way. There were different choices on taxing and spending and borrowing, and on productivity, and on welfare. Let me just say a few words about welfare. It was the privilege of my life to serve as the Secretary of State for Work and Pensions, and when it came to welfare reform, with that privilege came a deep responsibility: the responsibility for welfare reform to be properly thought through, with a very clear plan—[Interruption]—I know that Labour Members do not like it, because it is an alien idea to their party—so that we could be fair to the taxpayer, but equally fair to the many people up and down the country, some of whom are highly vulnerable. That was an approach, on our watch, that led to £5 million of savings across the forecast period, and 450,000 fewer people going on to long-term sickness and disability benefits as a direct consequence.

We would have gone further—much further—and we set out a clear plan in our manifesto to do exactly that, but those in the party opposite rushed their changes. They had no plan. There was not a single mention of the personal independence payment in the Labour party manifesto, and when they got into office, the Labour Government pussyfooted around and dithered. Why? Because it is deeply divisive within their rank and file. Then suddenly, when the Chancellor decided that she had run out of money, out went the word to find some savings in welfare, to scrabble around, to yank every lever possible.

Then there was the spectacle, frankly, of what the OBR has said about the simply shambolic changes that were announced only last week by the Secretary of State for Work and Pensions. We have gone from incompetence to chaos. There have been more changes to this policy than there were at the last minute to the right hon. Lady’s LinkedIn profile. The result is the worst of all worlds: a wholly inadequate level of savings on welfare, with welfare costs spiralling ever higher, and changes that are likely to harm many vulnerable people. May I ask the right hon. Lady: when the Secretary of State for Work and Pensions came to the House last week with these changes, she did not provide an impact assessment, but was this because the OBR had not signed off the numbers, was it because the Department did not have enough time to produce one, or was it only provided today, as many of us suspect, because this was thought to be a good time to bury bad news?

The forecast for growth is down, the forecasts for borrowing costs and inflation are up, and business confidence has been smashed into a million pieces. This Chancellor is constantly trying to blame forces beyond her control. The right response is not to duck responsibility, but to build a resilient economy. The right hon. Lady would have us believe that that is what she is doing, but how can we believe this Chancellor? How can we trust this Chancellor? She is the Chancellor who said she would not increase borrowing, but she did. She said she would not change her fiscal rules, but she did. She said she would not put up national insurance, but she did. She said she would not cut the winter fuel payment, but she did. She said she would not tax farmers, but she did, and she said she would not move to more than one fiscal event a year, and she just has. Now we are all paying the price of her broken promises. Today’s numbers confirm it. We are poorer and we are weaker. To govern is to choose, and this Chancellor has made all the wrong choices.

[Rachel Reeves]

I know that the shadow Chancellor has not been in his role for very long, but at least he is not misquoting Shakespeare today. If this was a Budget, it would be the Leader of the Opposition responding. I am glad that she is still in her place, but I know she will want to get back to her office for a lunchtime steak soon.

The right hon. Gentleman talks about Budgets. Let me remind the Conservative party that the only emergency Budget we have seen in recent years was in response to their party’s disastrous mini-Budget—a mini-Budget that crashed the economy, sent mortgage bills spiralling and left a £22 billion black hole in our nation’s finances. Conservative Members may have forgotten about the damage that they did to our country, but the British people never will.

As always, the shadow Chancellor talked a lot, but he did not offer a single alternative. He says he opposes our tax rises, but he cannot tell us whether he would cut the NHS to reverse them. He says he wants economic growth, but Conservative Members abstained on the very planning reforms that the OBR has said will kick-start growth. Mr Speaker, you do not change the country by abstaining or by sitting on the fence; you change the country by leading and by taking action, and that is what this Government are doing. The shadow Chancellor says he wants businesses to trade, but he does not want us to talk to the second largest economy in the world or, indeed, our biggest trading partners in the European Union. He simply is not serious. Four months into the job, and he has got no clue.

The right hon. Gentleman wants to talk about growth, but he does not say anything about the fact that the OBR has upgraded growth next year and every single year after. He talks about pensioners, but he forgets that it is his party’s policy to scrap the triple lock, which we are protecting and which will mean the state pension rising next month by over £400. He talks about wages, but he forgets the fact that we are boosting wages by boosting the national living wage from next month. The shadow Chancellor says nothing about living standards or this morning’s fall in inflation, because the last Parliament was the worst on record, and the OBR has today revised up its forecast for family finances. Working people are always better off with Labour.

The right hon. Gentleman is learning something, because at least this time he has asked a couple of questions, so let me respond to them. He asked what the markets should make of this. What the markets should see is that, when I have been tested with a deterioration in the headroom, we have restored that headroom in full. That is one of the choices that I made. He says that it is a sliver of a headroom. Well, it is 50% more headroom than I inherited from the Conservative party. When I was left with a sliver of headroom, I rebuilt it after the last Government eroded it. That is the difference that we have made. While they left the public finances and the public services in a mess, we wiped the slate clean, which means that we have the flexibility now to increase defence spending, as the leader of the Labour party has done. The Conservatives had 14 years to increase defence spending, and now they lately come to the party.

The shadow Chancellor mentions welfare reform and his time at the Department for Work and Pensions. What a legacy: one in eight young people not in education, employment or training, and 1,000 people a day going on to personal independence payments. The OBR says today that welfare spending as a share of GDP will now start falling—a far cry from what we had under the Conservative party. The shadow Chancellor speaks about employment. The OBR says that employment will increase, that wages will increase and that living standards will increase. What a change, after 14 years of the Conservative party.

The world is changing, and no one can be in any doubt about it, but the Conservative party is stuck in the past—divided, out of touch and carping from the sidelines. Conservative Members have no plan: no plan to kick-start growth, no plan to fix our public services and no plan to keep our country safe. The only plan for change they are working on is a plan to change their party leader, and we cannot blame them for that.

If the Opposition have no plan, let me remind them about ours. The minimum wage up, real wages up, house building up, NHS investment up, investment in our schools up, investment in our roads up, defence spending up—and every single one of those policies is opposed by the party opposite. They are opposed by the Conservatives, opposed by Reform, opposed by the SNP, opposed by the Liberal Democrats and opposed by the Greens. It is the anti-growth coalition in action. They are the blockers. We are the builders—securing Britain’s future, protecting working people and delivering change.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

My right hon. Friend inherited a very difficult challenge when she became Chancellor of the Exchequer last July, and she is absolutely right that the books need to balance. This is not other people’s money we are spending, but taxpayers’ money—our constituents’ hard-earned money—and she is right to be tough as Chancellor. We look forward to quizzing her at the Treasury Committee next week, and I am sure she is looking forward to it just as much.

The Chancellor announced an extra £2 billion a year in capital spending, and she talked about extra defence spending. Could she give some more detail about where she hopes that extra £2 billion a year will go?

[Rachel Reeves]

I thank my hon. Friend for that question, and I do indeed look forward to attending the Treasury Committee next week. I was pleased to serve on the Treasury Committee in the past, and it is a pleasure to give evidence to it.

We will set out in the spending review—my right hon. Friend the Chief Secretary will set out in the spending review—the allocation of the additional capital money. However, I was able to announce today the £2.2 billion for defence from next year, as well as the £2 billion as a downpayment to build the affordable and social housing that we need. Those are two examples of the priorities of this Government to get Britain building and to secure our national security.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

The people of this country are crying out for change, but they feel they are just getting more of the same. Of course, it was the Conservative party that wrecked the public finances, but we are eight months into the new Government and people are left wondering, “Where is the change that was promised?” The Chancellor says that the world is changing, so why will she not change course with it? The Chancellor said she wanted a dash for growth, but with her national insurance jobs tax she shot herself in the foot before she even crossed the start line.

After the Government’s disastrous Budget, the Government had the chance today to change direction, fix our finances, kick-start growth and deliver a small business Budget. The Government could have scrapped the jobs tax, which will hammer our high streets, and instead ask the big banks, social media giants and online gambling companies to pay their fair share instead. The Government could have changed their approach to trade, launching talks to boost growth through a new trading deal with our European neighbours. Instead, the Government have made the wrong decisions to cut public services, hit disabled people and inflict more pain on our small businesses and high streets. In doing so, they have delivered no change and almost no growth at all.

After years of Conservative mismanagement, people can see just how broken our public services are. They cannot see a GP, they cannot see a dentist, they are fighting for an education plan and, they are picking up the pieces of a broken social care system. Everything is broken. Nothing works. That is why people are impatient for the change they were promised.

We have to bring the welfare bill down and support more people into work. That is right for people and our economy, but cutting support for someone who needs help getting dressed and washed in the morning is not just wrong; it does absolutely nothing to support that person into work. If anything, it does the exact opposite. It will also have knock-on impacts for the entitlements of their family carers, too. Will the Chancellor come clean about this? If the Government are serious about cutting welfare spending, they must get serious about fixing health and social care. Will the Chancellor speed up the social care review and ensure that it concludes no later than the end of this year?

In the Chancellor’s quest to slim down the civil service, I wonder why she has not looked at the mountain of red tape created by the previous Government’s terrible trade deal with Europe. A whopping 2 billion extra pieces of paper have had to be completed by businesses since Brexit, enough to wrap around the world 15 times. If we manage to cut the red tape, we can give British businesses a tailwind, deliver far more growth than is currently predicted, increase the fiscal headroom to deal with global headwinds, and free up precious time and money in our civil service. That would be real change.

Business was promised change too. Today’s statement should have been a small business Budget. We Liberal Democrats have repeatedly raised the alarm about the impending damage of the national insurance jobs tax, bigger business rates bills and changes to reliefs for family farms and family businesses. Those changes will be a hammer blow to small and family businesses, leaving communities facing the prospect of an epidemic of boarded-up shopfronts. They will be a hammer blow to community health and care providers who stop our NHS from falling over. This is not the change that was promised. Instead, I say again that the Chancellor should look again at much fairer ways to raise the tax revenue our public services desperately need by reforming capital gains tax more fairly and asking the big banks, the social media giants and the online gambling companies to pay their fair share.

I know the Chancellor must contend with President Trump’s trade war, which is causing global economic turmoil, but our response to Trump’s bullying cannot be to cower in the corner and just hope that he is nice to us. We cannot sit on our hands while British steel is hit with Trump’s tariffs. We Liberal Democrats warmly welcome the Chancellor’s move to raise defence spending to 2.5% of GDP, but instead of cutting the aid budget, which abandons the world’s poor and damages our soft power, she should be covering the cost by raising the digital services tax, handing the tab to Elon Musk and Trump’s other billionaire backers. At the very least, can the Chancellor categorically rule out any reduction in the tech tax in an attempt to appease the White House, especially when disabled people in Britain face eye-watering cuts?

To conclude, I have a series of questions. Will the Chancellor recognise that cutting public services that are already stretched is a false economy? Will she accept that trying to bring down the welfare bill without fixing health and social care is a road to nowhere? Will she listen to the warnings of small and family businesses that her jobs tax will do more harm than good? Will she look at the fairer ways of raising revenue that we Liberal Democrats have put forward? And will she take the bold action we need to grow our economy by rebuilding our broken trading relationship with Europe? The public were promised change. Where on earth is it?

[Rachel Reeves]

The hon. Lady says, “Where is the change?” Let me tell her: more money into our NHS, with 2 million additional appointments and waiting lists falling five months in a row; rolling out breakfast clubs in primary schools from April this year; increasing defence spending to protect us in a more uncertain world; additional support for carers, the living wage up, the Employment Rights Bill and so much more. That is the difference we have made in nine months, and we have only just got started.

The hon. Lady talks about trade. We believe in free trade. We are an open trading economy and we benefit from trade links around the world, including with our single biggest trading partner, the United States of America. It is right that we work with our allies in the United States to ensure that that free and open trade continues. That is in our national interest and this Government will always act in our national interest. At the same time, there will, as the hon. Lady knows, be a summit between the UK and the EU in May, where we will look to re-set our relationship, so we can see more free trade and the better flow of trade, especially for our smaller businesses to be able to export around Europe.

The hon. Lady talks about welfare. She has not admitted that there is a single problem in the welfare system as it exists today. I am not willing, and this party is not willing, to write off one in eight young people who are not in education, employment or training. It is why, for example, we announced this week, with my right hon. Friend the Secretary of State for Education, an additional 60,000 training places to train people up in the construction industries of the future, and a £1 billion package of personalised targeted support because there are many disabled people—the hon. Lady knows this—who are desperate to work but are not getting the support and were denied support by the previous Government. That is why we have said there will be additional support for the most sick and disabled, and that personal support for getting people back into work. That is the right approach, so that we have protections for those who need it, work for those who can, and a sustainable system that is here for generations into the future.

I want to take on the hon. Lady’s main point. She wants all the money for public services, but she does not want to raise the taxes to pay for them. At the moment, we spend £105 billion a year in interest on Government debt. It seems that she would just like more of that debt. She says that people cannot see a GP or a dentist. How does she and the Opposition parties think that we pay for those things? They cannot object to the tax increases and support the money we have invested in our public services. To say otherwise, I am afraid, is fairytales and the magic money tree—it just does not add up. The difference on the Labour Benches is that we will put money into our public services, explain where it comes from, and ensure that the public finances are on a firm footing. That is the difference between our party and the Opposition parties.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Young people in my constituency, and indeed across the country, have had an incredibly difficult time growing up: austerity saw their further education budgets cut by 14%, then there was a pandemic and now war in Europe. Will the Chancellor please set out how her plans to get Britain building again will help my young constituents get the good, non-graduate jobs they need in Loughborough, Shepshed and the villages?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of his constituents in Loughborough. The 1.5 million additional homes the Government are building will ensure that families in Loughborough have a chance of getting on the housing ladder and that young people in Loughborough will have the opportunities to help build those homes. That is the difference we are making: more jobs, paying decent wages, and more homes for our families.

[John Glen (Salisbury) (Con)]

I hope the Chancellor, next Wednesday in front of the Treasury Committee, will reiterate her commitment not to come back with more tax increases. On page five of the OBR report, paragraph 1.2 states:

“While the Government’s planning reforms deliver a modest boost to the level of potential output of 0.2 per cent in 2029, its cumulative growth between 2023 and 2029 is still ½ a percentage point lower than we projected in October, and the level of productivity is over 1 per cent lower.”

I would like to know what the Chancellor thinks about that, and can she confirm that the Employment Rights Bill has not been evaluated by the OBR?

[Rachel Reeves]

The key point in what the right hon. Gentleman says is that cumulative growth is lower from 2023 to the end of the forecast. Of course, this Government did not come into power in 2023; we came into power in July 2024. The OBR numbers show that the economy is bigger because of the changes we have made—it is just a difference in the dates. I look forward to coming to the Treasury Committee next week, and I am sure I will take more questions from the right hon. Gentleman then.

[Yuan Yang (Earley and Woodley) (Lab)]

The Chancellor has rightly championed economic stability, in stark contrast to the previous Government—indeed, in stark contrast to the previous five Chancellors. Yet, as she has said, the world is becoming more unstable, and that global instability feeds through to rapid changes in official projections, which can constrain our room for action. Can the Chancellor reaffirm to us that she will keep her focus on fiscal stability, despite these challenges, to meet the long-term missions of this Government: to defend our country, improve living standards and protect the most vulnerable in our society?

[Rachel Reeves]

My hon. Friend is absolutely right that her constituents—all our constituents—depend on economic stability. It ensures that they know how much they will pay on their rent and mortgages; it ensures that they are not caught out, when they go to the shops, by prices constantly rising. That is why, as a Government, we have said that the No. 1 thing we need to achieve in order to grow our economy is economic stability, which is why I am so pleased that the Bank of England has been able to cut interest rates three times since the general election and the OBR has forecast that inflation will fall rapidly to 2.1% next year, and then 2% in the years after that.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

Schools face a huge rise in costs imminently due to the rise in national insurance contributions. Headteachers had been reassured by the Government that schools would be recompensed with money to cover these costs, yet Sir Robert Pattinson academy in my constituency—a great school—finds itself £33,000 short. Will the Chancellor commit to ensuring that Sir Robert Pattinson, and indeed all the schools in my constituency, is given enough money to cover her jobs tax?

[Rachel Reeves]

Public services, including schools, have been compensated for the increase in national insurance, but I am happy for the hon. Lady to get in touch with me or the Education Secretary to set out the case of that school.

The only reason we have been able to put record investment into our schools is because of the stability we have returned to the economy, including the tax increases that we had to bring forward last year in order to provide that extra money for our public services, including the schools in the hon. Lady’s constituency.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I recognise the difficulties that my right hon. Friend is facing, with the fiscal challenges and so on that she inherited. I also support the reforms that my right hon. Friend the Work and Pensions Secretary has set out. However, all the evidence points to the fact that the cuts to health and disability benefits will lead to increased poverty, including severe poverty, and worsened health conditions. How will making people sicker and poorer help to drive our economy up and get people into jobs?

[Rachel Reeves]

As my hon. Friend knows, we set out in the Green Paper that we are consulting on a premium payment for the most severely sick and disabled, because, as a Government, we believe that those who need support should get it. Like my hon. Friend, I recognise that there are many people who are sick and disabled. However, there are also many young people who could be working, but were written off by the previous Government, and that is why we are putting record investment into helping those people to get back into work with guaranteed personalised, targeted support. Someone is half as likely to be in poverty if they move from welfare into work. We are determined to lift people out of poverty by ensuring that there are good jobs that pay decent wages and with security guaranteed through the Employment Rights Bill.

[Bobby Dean (Carshalton and Wallington) (LD)]

The OBR said that the information it received on the package of welfare cuts was late, contained insufficient detail and that the estimates are highly uncertain, and it will now have to certify them in the next forecast. Can the Chancellor confirm whether that means the Government will have to go further, with even deeper cuts to welfare than they have so far announced?

[Rachel Reeves]

The OBR has not taken into account any of the package of measures to get people back into work or looked at any behavioural effects of people making that switch into work. It said in that document that it will spend the summer looking at the entirety of the package, including the efforts we are making with a huge package to get people back into work. I am confident that that personalised, targeted support will get more people into work and lift them out of poverty, so that they can support their families and so that the economy can benefit from their contribution.

[Rachael Maskell (York Central) (Lab/Co-op)]

Fiscal responsibility under this Government, unlike the previous Administration, ensures that people are paying less and keeps the cost of living down. However, as the Labour party, we have an additional social responsibility, so can we look at those DWP changes again? Of course we have to protect the most vulnerable, but we are really worried about the people just above that band who are set to lose out.

[Rachel Reeves]

I thank my hon. Friend for that question, and I share the deep concern felt by everyone on the Government Benches—in fact, everyone in this Chamber—about the most sick and disabled, who need support. That is why we have set out in the Green Paper that we are consulting on an additional premium payment to the most severely disabled. It is also why, instead of writing people off and not providing the support that they need to do a job that matches their abilities and needs, we are providing that personalised, targeted support. I was at a jobcentre last week in Pudsey, in my constituency, where I heard amazing stories of work coaches helping people into work who are far from the labour market. We want to see more of that. We want to lift people out of poverty and help them to achieve their potential.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

At the general election, the Chancellor promised growth and no increase in taxes, but as Chancellor, she has delivered no growth and a record increase in taxes. Now, the Office for Budget Responsibility is halving her growth forecast this year, with cumulatively half a percent less over the forecast period. More worryingly, it is forecasting a more than 1% reduction in productivity growth. Why does she think that is?

[Rachel Reeves]

I have huge respect for the hon. Lady, but that question does not do her justice. As I said to the right hon. Member for Salisbury (John Glen) earlier, with the starting point of 2023, cumulative growth is lower. However, the general election did not take place in 2023—it took place in 2024. The economy is bigger at the end of this Parliament than the OBR forecast previously. Those are the numbers and the facts, and that is the difference that this Labour Government are making.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I also congratulate the Chancellor on her excellent statement, which addresses the challenge the previous Government left her with. In order to drive growth across the UK, new heavy and light rail infrastructure is badly needed. What work is the Chancellor doing to develop new models of funding to deliver those important projects?

[Rachel Reeves]

I thank my hon. Friend for that question. One of the reasons we have put an additional £13 billion into capital spending over the forecast period is to invest in the infrastructure that our country needs, including transport infrastructure, which I know my hon. Friend, as Chair of the Transport Committee, has a keen interest in. She is absolutely right: we do need to look more at how we can leverage in private sector funding for a whole range of projects, including the lower Thames crossing.

[Chris Coghlan (Dorking and Horley) (LD)]

I declare an interest as an alumnus of London Business School. The Chancellor will recall that in November, when she came to the Treasury Committee, I asked her to look at a London Business School paper on using specific public R&D on defence spending to boost economic growth. I was delighted to hear that the Treasury did evaluate that paper by Professor Paolo Surico as part of the spring statement, and has listened to me and the Liberal Democrats. Does the Chancellor agree that using defence spending focused on public R&D is one way to not only keep us safe, but raise productivity and boost economic growth?

[Rachel Reeves]

I thank the hon. Gentleman for his question, and look forward to taking more questions from him at the Treasury Committee next week. When I visit defence companies or meet our armed forces, they tell me about the amazing abilities of new technology and innovation to help them to better do their jobs and keep our country safe. As we invest more in defence and get to 2.5% of GDP, it is absolutely right, as I have set out today, that more of that money is used for innovation, R&D and new technologies.

[Dr Zubir Ahmed (Glasgow South West) (Lab)]

I congratulate my right hon. Friend on grasping the challenges and opportunities that this new world presents us with. Those opportunities will mean that, in my constituency of Glasgow South West, there will be more investment in the defence sector, which is timely, because after 18 years of SNP Government, one in six people in my constituency is economically inactive. Does she agree that this investment will finally raise their ambitions and their pay packets?

[Rachel Reeves]

Unlike the SNP, Labour supports investment and jobs in the defence sector in Scotland, which, in turn, supports people in Glasgow South West and across Scotland. There will be more good jobs for young people—more jobs paying decent wages— that will keep our country safe. That is what this party believes in. It is a shame that the SNP believes in something entirely different.

[Martin Vickers (Brigg and Immingham) (Con)]

A cloud hangs over the economy in northern Lincolnshire at the moment with potentially significant job losses at the Scunthorpe steelworks. In view of that, can the Chancellor assure us that funding will be available not only to look after any redundant workers, but to attract new business and provide retraining for existing workers?

[Rachel Reeves]

At the general election, we set out our plan for a steel fund as part of the National Wealth Fund. I understand the concern of hon. Members across the House about the future of the steel industry in this country. We were able to improve the deal for Tata, to protect more jobs in south Wales. We want a thriving steel sector right across the UK, and we will continue to work with the company and the trade unions to achieve just that.

[Richard Burgon (Leeds East) (Lab)]

Making cuts instead of taxing wealth is a political choice, and taking away the personal independence payments from so many disabled people is an especially cruel choice. A disabled person who cannot cut up their own food without assistance, cannot go to the toilet without assistance and cannot wash themselves without assistance will lose their personal independence payment. Have not the Government taken the easy option of cutting support for disabled people rather than the braver option, which would be to tax the wealthiest through a wealth tax?

[Rachel Reeves]

There is nothing progressive, nothing Labour, about not supporting people who are disabled or sick or who are young to do jobs that are commensurate with what they are able to do. One in eight young people has been effectively written off by the Conservative party, and we are not willing to leave them in that position. We are consulting in the Green Paper on an additional premium to pay to the most sick and disabled people, because we recognise that they need support from the state, but too many people are not given the opportunities to fulfil their potential, and we are not willing to carry on like that. In the Budget last year, we got rid of the non-dom tax status, increased capital gains tax, introduced VAT on private schools and changed the rules on inheritance tax, so I do not recognise what my hon. Friend says.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The Chancellor tells us that the world has changed. If that is true and it allows her to stick the boot into disabled people, it must also be true to allow her to review her income tax rates, perhaps making them commensurate with those in Scotland, which saw the Scottish economy grow in January by 0.3%, while the UK economy contracted by 0.1%. She could also choose to revise the Government’s position on re-accessing the European Union single market, which would allow a £30 billion recurring return with no compensation required. She could impose a 1% tax on assets over £10 million— a wealth tax, as the hon. Member for Leeds East (Richard Burgon) has just highlighted—which would allow a £40 billion recurring return every year with no need for compensation. If she has the disabled, the WASPI women, pensioners and hospices in her cross hairs, why can she not tap up multi-millionaires for a few quid?

[Rachel Reeves]

The world has changed, and we can see that all around us, which is why our defence is more important than other things. That is why it is so astonishing that the SNP continues to oppose the nuclear deterrent.

[Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)]

I commend the Chancellor for her statement. Does she agree that the Conservative party does not understand the link between its total failure to build houses and infrastructure, which our constituents desperately want, and the economic constraints that we face today?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of her constituents in Birmingham. We need to build the homes that all our constituents are crying out for. The level of home ownership declined under the previous Government and we are determined to turn that around, as well as to build the affordable and social houses that our country needs. As we build those homes, there will be more good jobs for young people who take pride in their work. Those good jobs, which will pay decent wages, will be backed by the increase in the national living wage and by our Employment Rights Bill.

[Mr James Cleverly (Braintree) (Con)]

The Transport Secretary failed to stand up to the transport unions, the Health and Social Care Secretary failed to stand up to the health unions, and the Work and Pensions Secretary failed to stand up to the Back Benchers of her own party. The Chancellor’s savings are predicated on getting rid of a whole tranche of civil servants. How can we have any confidence that she or the Prime Minister will stand up to the civil service unions?

[Rachel Reeves]

Today, as part of the transformation fund, we have set aside £150 million next year for redundancy costs for a voluntary exit settlement, which shows how serious we are about reducing the size of the civil service, after it increased to record levels under the Conservative party.

[Michelle Scrogham (Barrow and Furness) (Lab)]

Communities such as mine in Barrow and Furness feel very acutely the failures of the previous Government, as they left us in a dreadful state. Does the Chancellor agree that it is through this Government’s commitment to, and funding in, Barrow and Furness and our defence sector that we can transform things on the ground, which will mean that Barrow can be a blueprint for how the defence pound can be better spent across our constituencies?

[Rachel Reeves]

I know that my hon. Friend is incredibly proud to represent Barrow and Furness and that her constituents are incredibly proud to work on our nuclear deterrent. This Government will always stand with them, putting in place our new plan for Barrow for new jobs and new investment in the town, so that we get value for money for taxpayers and, critically, ensure our country’s national security.

[Sir John Hayes (South Holland and The Deepings) (Con)]

The Chancellor was right to highlight productivity as an issue, and right, too, to focus on skills shortages, although she did not explicitly note the implicit link between them. She failed, however, to say that her productivity ambitions have been scaled back and that the number of young people not in education, employment or training is growing. Will she set out—perhaps in a note in the Library of the House or in a statement—by how much she expects apprenticeships to grow year on year? When I was a Minister, we reached the highest level in modern times, and the numbers are much lower now. We need to grow apprenticeships to build our skills and to grow productivity. If she does not do that, we will feel that hope exceeds expectation.

[Rachel Reeves]

I thank the right hon. Gentleman for that question. He speaks powerfully about something that he knows a huge amount about. Let me answer three parts of that question. First, the OBR has revised up our productivity in its forecast. Secondly, we have a massive problem with young people not in education, employment or training—it involves one in eight young people. However, as I said in answer to a previous question, the OBR has not taken into account the impact of our back to work programme. It will work on that over the summer with the DWP and the Treasury, because we want to make sure that we design that in a way that gets as many young people back into work, contributing to the economy and contributing to our society.

We were able to announce, just a couple of weeks ago in National Apprenticeship Week, an expansion of the apprenticeship programme, particularly through foundation apprenticeships and by relaxing some of the maths and English requirements. If we want to build the homes that our country needs, we need to get people into construction jobs and not say, “I’m sorry, you didn’t get a grade C in maths and English, so you’re not welcome on the construction site.” That makes no sense at all, which is why we are reforming how apprenticeship works, to get more people with the skills they need so that they can contribute to their families and the economy. We want those numbers going up.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Our fiscal rules were designed to ensure that we did not repeat the damaging austerity of the Conservative party, which harmed my constituents so much. Does my right hon. Friend agree that it is only because of those fiscal rules that the OBR has today confirmed that people in Paisley and Renfrewshire South will be, on average, £500 a year better off with this Labour Government?

[Rachel Reeves]

To ensure that people are better off, we need to control inflation, which is why stability is so important; bring interest rates down, and the Bank of England has had the confidence to cut interest rates three times since the election; and boost wages, which we are beginning to see, with real wages growing at twice the rate of inflation. That benefits my hon. Friend’s constituents and people up and down the country. That is why we welcome the fact that, today, the OBR has revised up real household disposable income per person by £500.

[Steve Darling (Torbay) (LD)]

Today and last week the Chancellor rushed through severe cuts to the benefits system that will hit some of the most vulnerable in our society. Although we should have considered benefit reform, this is ill conceived. Can the Chancellor explain to the Chamber why she is choosing to balance the books of the nation on the backs of some of the most vulnerable in our society?

[Rachel Reeves]

I have huge respect for the hon. Gentleman, but everybody in this House and across the country can see that the welfare system is just not working. One in eight young people are not in education, employment or training and 1,000 people are going on to personal independence payments every single day, and we cannot carry on like that. The basic principles of this Government are that people who need support should be protected; that those who can work should work and will be supported with personalised, targeted support; and that we need a system that is sustainable. That is what the reforms set out by my right hon. Friend the Work and Pensions Secretary last week deliver. Alongside that, there will be further consultation on the Green Paper to make sure that those with the most severe need get the additional support that they are rightly entitled to.

[Several hon. Members rose—]

--- Later in debate ---

[Rachel Reeves]

My hon. Friend represents the constituency that neighbours mine. He knows as I do that there are far too many people in both our constituencies in Leeds and Bradford who are written off. There are people who are not working who are quite capable of working if they are given support. People may be disabled, but it does not mean that they cannot work and contribute if they are given the proper support. That is what the Conservative party failed to do, and that is what our Government are determined to deliver. We will work with disabled groups and jobcentres, including the one in Pudsey, where I was last week, to make sure that we support people to fulfil their potential and do not just write them off like the Conservatives did.

[Sir Julian Lewis (New Forest East) (Con)]

I welcome the Chancellor’s emphasis on defence expenditure and her support for the nuclear deterrent, but does she agree that, by his actions in Ukraine, Putin has restarted the cold war? Will she bear in mind that during the 1980s, up to the end of the cold war, we were regularly spending between 4.5% and 5% of GDP on defence? That is the sort of scale that is required.

[Rachel Reeves]

The right hon. Gentleman has long been an advocate of spending properly on defence. We have set out a fully funded and costed plan to get to 2.5% of GDP in the next two years and to 3% in the next Parliament. The world has changed. We can see that all around us. This Government will always put our national security and defence first, and as the situation evolves, of course so will we.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I thank the Chancellor for her statement. She is absolutely right to highlight the stimulus that the Employment Rights Bill will bring to our economy, but I respectfully say that the impact of the cuts to welfare payments will be reduced incomes for some of my poorest constituents. That contrasts with the easy ride that the very wealthy get from lower margins of tax on their assets and gains than my constituents face through income tax. The world indeed has changed since the Chancellor set her fiscal rules, so will she consider putting capital gains tax on an equal footing with income tax or implementing a wealth tax of 2% on assets worth over £10 million in order to improve the country’s finances?

[Rachel Reeves]

At the Budget last autumn, we increased taxes by £40 billion without asking working people to pay more. We did that by abolishing the non-dom tax status, increasing the rates of capital gains tax, tightening the rules around inheritance tax and, yes, by asking businesses to pay more as well. We have already raised taxes to put more money into our health service, reduce NHS waiting lists and provide free breakfast clubs at primary schools. Today’s spring statement shows that we can grow the size of our economy through planning reforms and therefore ensure more money for our public services. The Government’s No. 1 priority is growth, so I am so pleased that the OBR has said that by the end of this Parliament the economy will be bigger than that we inherited it from the Conservatives.

[Sammy Wilson (East Antrim) (DUP)]

The Chancellor has claimed today that she is building foundations for the economy, but sadly those foundations are built on sand—increased borrowing, higher inflation, lower growth, jobs taxes and so on. How will such structures stand against the economic forces that will be affecting the United Kingdom, as she has described today? Specifically, what proportion of the transformation fund will be available to the Northern Ireland Executive for the important transformation of public services in Northern Ireland?

[Rachel Reeves]

I thank the right hon. Gentleman for his question. The OBR is clear that the economy at the end of this Parliament will be bigger than it previously envisaged—bigger than the plans we inherited from the previous Government—and the average person with real household disposable income will see their income rise by £500. We are already beginning to deliver the change that we promised. At the Budget last year I was able to announce the biggest ever settlements for Scotland, Wales and Northern Ireland. That continues to be the case after today’s spring statement.

[John Grady (Glasgow East) (Lab)]

Reckless management of public finances leads to higher costs of Government borrowing. As any economist will say, that increases the cost of capital across the British economy, putting at risk and increasing the cost of the essential investments in housing and infrastructure that my constituents desperately need. Does my right hon. Friend agree that that is a very important reason why it is essential to manage public finances carefully, unlike the last Conservative Government, and unlike the Government in Scotland, who are overfamiliar with emergency Budgets?

[Rachel Reeves]

My hon. Friend is absolutely right about the importance of robust fiscal rules which, even in difficult economic circumstances, we will continue to meet through the decisions that I have set out today. The reason that economic stability is so important can be seen in what happened in the last Parliament, where a Government borrowed beyond their means. The people who lost out were not the wealthy but ordinary working people, who paid more in the shops and more on their mortgages and rents. This Government will never repeat the mistakes of Liz Truss and the Conservatives.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The Chancellor has created a storm and is now complaining about the rain. She increased spending to £70 billion, she increased borrowing by £30 billion, and she increased tax by £40 billion, yet the economy shrank in January. She talked about change and the abolition of NHS England. In a written question I asked the Department how much that would cost, and it said that there would be some up-front costs but could not specify what they would be. Could she tell me the estimated cost of this top-down change to abolish NHS England?

[Rachel Reeves]

It is really difficult to understand what the Conservative party want. Do they want to reduce the cost of admin and bureaucracy, or do they want to carry on with everything the way it was? We want to change things. That is why the transformation fund that I set out today includes £150 million for a voluntary exit scheme. We want more money on the frontline, not in the back office in a bloated bureaucracy that was left by the Conservatives.

[Rebecca Long Bailey (Salford) (Lab)]

There is so much to welcome in today’s statement, but the Chancellor will be aware of serious concerns regarding welfare reform. A constituent told me last week:

“I’m terrified of what will happen to me if I can’t work. I’m already having thoughts of suicide at the prospect of these changes and what they will mean for disabled people.”

Today’s impact assessment shows a 250,000 increase in the number of people living in relative poverty and a 50,000 increase in children living in relative poverty. What will the Chancellor do to stop this from happening?

[Rachel Reeves]

My hon. Friend speaks about a constituent who is in work. I am sure that she and others will welcome the work that Charlie Mayfield has done on ensuring that people with sickness and disability can stay in work. We know that the best place for people is in work—for both their physical and mental health—and that too often when people drop out of the labour market they really struggle to get back into it. Alongside the targeted support to get people back into work, we are determined to work with businesses and ensure that more people with sickness and disability can stay in work, contributing to their family finances and to the wider economy.

[Nigel Farage (Clacton) (Reform)]

Does the Chancellor agree that GDP as a measure of growth and relative wealth is not the most relevant number to our constituents? As we are living in an age of mass immigration and a rising population, surely, what matters to our constituents is GDP per capita, which has fallen consistently for the past two years and is falling still. Should we not tell people that, actually, they are getting poorer?

[Rachel Reeves]

The OBR forecast that GDP per capita will increase by 5.6% during this Parliament, having fallen under the previous Government. If the hon. Gentleman ever gets to Clacton, he can tell his constituents that.

[Matthew Patrick (Wirral West) (Lab)]

I welcome the Chancellor’s £3 billion investment into a transformation fund to sort out how government is run. Does the Chancellor agree that the Tories ducked that reform—they should have done it but did not—and their failure to address it put pressure on frontline services and stretched the public finances?

[Rachel Reeves]

The transformation fund, worth £3.25 billion, is about trying to reduce further the costs of failure. We are putting more money into recruiting foster carers, because we want to ensure that more children get the best possible start in life. We also know that children ending up in poor-quality children’s homes has consequences not just at the start of their life but later on. We are also putting more money into technology in the Probation Service so that probation works better to rehabilitate offenders and ensure that people pay for the crimes that they commit.

[Alberto Costa (South Leicestershire) (Con)]

The Chancellor rightly reminded the House that the British public are watching. Among them are tens of thousands of the most vulnerable pensioners in our society. Will she please explain what is Labour about removing the winter fuel payment from those on £13,500 a year?

--- Later in debate ---

[Rachel Reeves]

As a result of the triple lock, which we have been able to protect, next month the basic state pension will increase by more than £400. By the end of this Parliament, the triple lock, which the shadow Chancellor opposes, will cost an additional £31 billion. That is the protection that we are giving to pensioners, as well as record investment in our NHS, which older people use with greater frequency than anyone else.

[Zarah Sultana (Coventry South) (Ind)]

The UK is the 6th richest country in the world, yet more than one in three children and 25% of adults live in poverty. Since Labour came into power, 25,000 more children have been pushed into poverty due to the two-child benefit cap. Now, according to the Government’s own impact assessment, more than 250,000 people will be pushed into poverty as a result of these cuts, including 50,000 children. I ask the Chancellor, who earns over £150,000 annually, who has accepted £7,500-worth of free clothing and who recently took freebie tickets to see Sabrina Carpenter, does she think that austerity 2.0 is the change that people really voted for?

[Rachel Reeves]

There is nothing progressive and nothing Labour about pouring more money into a broken system. The changes that we are making will help young people who are not in education, employment or training, through targeted support. As I set out, the OBR has not scored any of our back to work programme—the biggest programme for many years—and it will do so in the autumn. The best way to lift people out of poverty is to get them into good, secure work that pays a decent wage. From next month we are increasing the national living wage by £1,400 for someone working full time. The Employment Rights Bill will ensure that people have security at work. That is the difference that this Labour Government are making.

[Adrian Ramsay (Waveney Valley) (Green)]

The Chancellor knows that our economy has been driven to the edge over the past 15 years, with ordinary people forced to bear the burden while a small minority have amassed extreme wealth. She could change that. Her own Back Benchers are lining up to argue for a wealth tax. Why will she not do the fair and right thing and introduce a tax on the very wealthiest, rather than launching austerity 2.0 and removing vital support from disabled and ill people?

[Rachel Reeves]

The best thing that we can do for our constituents is build the homes that they desperately need. I have no understanding of why Green party Members voted against the Planning and Infrastructure Bill this week. What do they have against families getting homes and young people getting jobs?

[Amanda Martin (Portsmouth North) (Lab)]

Today’s defence announcement by my right hon. Friend the Chancellor is fantastic news for my city. It delivers security for working people across the country and cements Portsmouth’s reputation as not just the historic home but the future home of the Royal Navy. After 14 years in which the Conservative party decimated all areas of our armed services, imposed three Portsmouth Ministers on my city and axed shipbuilding, it has fallen to this Government to once again fix the mess inherited from you—the people over there. Sorry, I almost said “you lot”. Does she agree that the announcement will secure the future of the naval base and those serving our country?

[Rachel Reeves]

My hon. Friend is a proud advocate for her city, and this Government are a proud advocate for the people of Portsmouth. That is why we have put investment in the Portsmouth naval base in today’s statement. As we grow our defence spending to keep our country safe and secure, we want to ensure more good jobs that pay decent wages, to make Britain a defence industrial superpower, and to support those who serve on the frontline.

[Wendy Morton (Aldridge-Brownhills) (Con)]

Today, the Chancellor could have taken action to reverse the damage that she has done to people and businesses in my constituency and beyond, but she failed; she chose not to. What does she say to all the pensioners, farmers, businesses, charities, hospices and hard-working people who face her huge tax rises?

[Rachel Reeves]

When I became Chancellor, I inherited from the Conservative party a £22 billion black hole, which we have taken action to address. I would say to the right hon. Lady’s constituents that they will now see a doctor or nurse more quickly than under the last Government, because NHS waiting lists have fallen for five months in a row.

[John Slinger (Rugby) (Lab)]

Does my right hon. Friend agree that the main contrast between this Government and the last one is strength versus weakness? They were too weak to crack down on wasteful spending, to address the tax breaks and loopholes for the wealthy, and to take on the blockers in the planning system. Does she further agree that while the Conservatives—the party of vested interests—seek to conserve what has failed, this Labour Government have the strength to take the tough, long-term decisions to build a better and much fairer Britain?

[Rachel Reeves]

Today, the OBR has scored some of our planning measures, which will make the economy £6.8 billion bigger by the end of the Parliament, contributing £3.4 billion to our public finances and services. That is possible only because we are taking on the vested interests, and are getting Britain building by backing the builders, not the blockers. We are the Government increasing defence spending to 2.5% of GDP. The Tories had 14 years to do that, but they failed. This Labour Government have done that in our first year.

[Josh Babarinde (Eastbourne) (LD)]

Heartbreakingly, last week St Wilfrid’s Hospice in Eastbourne announced many redundancies, citing the national insurance increase as a reason. I have just received a message from Mrs Robinson at Motcombe school, which faces increased costs due to a catering supplier passing on the cost of the NIC hike. If the Chancellor will not increase the digital services tax to fund a reversal of that hike, how will these organisations be supported to keep doing their great work?

[Rachel Reeves]

At the Budget, we set out tax increases on the wealthiest and on businesses to properly fund our public services. Constituents in Eastbourne will get to see a doctor or nurse a little more quickly, and will benefit from the breakfast clubs that we are rolling out because we had the money to. Hon. Members cannot back increased investment in our public services, including the settlement for hospices, if they oppose raising the money to pay for it.

[Nadia Whittome (Nottingham East) (Lab)]

I understand that this Government inherited from the Conservative party a huge financial mess, caused by over a decade of austerity. However, what is the justification for cutting disability benefits—a third of disabled people are already in poverty—instead of taxing the growing wealth of the super-rich? A 2% tax on assets over £10 million could raise £24 billion a year.

[Rachel Reeves]

At the Budget, we set out £40 billion-worth of tax increases; we got rid of the non-dom tax status, increased capital gains tax, put VAT on private schools and tightened the rules around inheritance tax. We made those decisions so that we could invest more in our public services, including in our schools and our hospitals. Indeed, we have now committed to lifting defence spending within the next two years to 2.5% of GDP. On welfare spending, there is nothing progressive about writing off a generation of young people, so our targeted, personalised support will help people get back into work, lift them out of poverty, and help them to contribute both to their family finances and to our nation’s finances.

[Katie Lam (Weald of Kent) (Con)]

The right hon. Lady talks of financial responsibility, but will she please tell us when Government bond yields hit their highest levels since the global financial crisis, and who was the Chancellor of the Exchequer then? If she needs a clue, we can bring her a mirror.

[Rachel Reeves]

If we look at financial markets and follow them closely, we can see that the increases in bond yields in the UK, France and Germany have closely tracked each other. Global financial instability has affected countries around the world, and that is why it is so important that we continue to meet our fiscal rules, as I have set out today.

[Sam Rushworth (Bishop Auckland) (Lab)]

A moment ago, the hon. Member for Clacton (Nigel Farage) mentioned GDP per capita; I see that he asked his question and ran away. The truth is that GDP per capita increased by only 4.3% in the past 16 years, compared with 46% in the years prior. What matters to my constituents in the left-behind towns and villages of Bishop Auckland is not just growth, but growth that they can feel, and which has an impact for their pockets. What will the Chancellor do to ensure that working people feel the growth?

[Rachel Reeves]

My hon. Friend is absolutely right. The Government want people in Bishop Auckland and constituents in all parts of our country to feel the benefits of growth through good jobs paying decent wages. That is why we are increasing the national living wage; making work pay; and backing the builders—not the blockers—who are creating new jobs, new homes for families, new transport infrastructure and new energy infrastructure. The OBR has said today that, compared with the plans we inherited, real household disposable income per person is set to rise by £500 by the end of this Parliament. That shows the difference that the Government are making.

[Llinos Medi (Ynys Môn) (PC)]

Wales has a higher percentage of disabled people and a larger public sector workforce than the UK, so we will be hit hardest by these cruel cuts. All that damage for self-imposed fiscal rules. There have been five major changes to fiscal rules since 1997. Will the Chancellor change the fiscal rules now, so that she does not impose further austerity?

[Rachel Reeves]

Last year in the Budget, we provided the biggest ever settlement for the Welsh Government, yet Plaid voted against that. I do not understand why the hon. Member does not want money to go to Wales and to her constituents.

[Ms Polly Billington (East Thanet) (Lab)]

I thank my right hon. Friend for her statement, and in particular her recognition of the excellent work of Labour-run Thanet district council, which is building more social homes with local firms and employing local people, including local apprentices. The Government’s recent planning changes mean not only council homes for local people, but growth. Will she confirm that the Office for Budget Responsibility has scored only the effect of the national planning policy framework changes, and not the effect of the upcoming Planning and Infrastructure Bill?

[Rachel Reeves]

I was pleased to note in my statement that Thanet has already come forward with plans to build affordable housing under the affordable housing plan, for which I set out more money. Opposition parties that abstain or vote against the Planning and Infrastructure Bill are voting against homes for our constituents and jobs for our young people. On the Government side of the House, we back the builders, not the blockers. We back opportunities for young people and housing for our constituents. It is a shame that those parties do not do the same.

[Graham Stuart (Beverley and Holderness) (Con)]

The Chancellor claimed that growth was her top priority, yet she has taken the fastest-growing economy in the G7 and brought it to a shuddering halt. She promised that there would be no tax rises, but next week’s jobs tax will put tax rises on ordinary working people. Today, she has cut the housing numbers by 200,000 and put up borrowing by £18 billion in the next two years. Is it not time that the Prime Minister invited the Chancellor next door and said, “Rachel, you’re fired”?

[Rachel Reeves]

The plans that we inherited from the previous Government saw the OECD forecast that the UK would have the slowest growth in the G7 this year. It is now forecasting us to have the second-highest growth. That is the difference that this Labour Government are making, moving us up the league tables.

[David Burton-Sampson (Southend West and Leigh) (Lab)]

I thank the Chancellor and her team for the prudent work that they are doing to restore stability to our economy. Figures show that wages are already increasing in my constituency under this Labour Government, and inflation is falling. Does my right hon. Friend agree that that, alongside the new living wage, worth £1,400 a year, will make work pay and start to lift more people out of poverty?

[Rachel Reeves]

I was pleased to be able to announce in the Budget last year a 6.7% increase in the national living wage, as well as a record increase in the youth rate of the minimum wage. That will help lift working people—working families—out of poverty. That comes alongside our Employment Rights Bill, which will ensure greater security for those who go out to work.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

Growth is not the word on the lips of farmers, whose confidence in the Government is at a low ebb following the family farm tax, the abrupt closure of the sustainable farming incentive, and now possible departmental cuts, which could reduce the farming budget further. Charlie from Upton Bridge farm in Long Sutton told me that he is contemplating leaving his ground fallow due to the risk of a failed crop putting his farm further into debt. Will the Chancellor assure farmers in Glastonbury and Somerton, and across the country, that following the spending review, the Government are still committed to championing British farming while protecting the environment?

[Rachel Reeves]

At the Budget, we put record investment into our farming sector, after being left plans by the previous Government that did not even involve their using all their farming budget. We are determined to give farmers the support that they need.

[Nesil Caliskan (Barking) (Lab)]

I thank the Chancellor for her statement. I represent Barking, which she will know has some of the highest deprivation figures in the country, and where 20% of working adults have no qualifications whatsoever. Does she agree that it is only by our creating jobs and those people getting the qualifications that they need that those people can ever improve their life chances?

[Rachel Reeves]

My hon. Friend speaks passionately about expanding opportunities for her constituents in Barking. The changes to the apprenticeship levy and the growth and skills levy are about ensuring that more people, including her constituents, can access apprenticeship courses and foundation courses. Just this weekend, we were able to announce an additional 60,000 places on construction courses to help people get jobs that pay a decent wage and offer security. That is what the Government are all about.

[David Reed (Exmouth and Exeter East) (Con)]

Given that the Chancellor chose not to mention Chagos in her statement, and that she chose not to answer the shadow Chancellor’s question on Chagos, can the House assume that this disastrous deal will not be going ahead, and that, more importantly, the UK taxpayer will not be footing the bill?

[Rachel Reeves]

As the hon. Gentleman will know, our Prime Minister and President Trump discussed these issues when our Prime Minister was at the White House recently. We continue to work on those plans. The most important thing is that we protect our national security and can continue to operate out of that important base.

[Neil Duncan-Jordan (Poole) (Lab)]

Paragraph 1.14 of the OBR report outlines that the planned cuts to disability benefits will reduce personal independence payments for 800,000 claimants, and cut health-related universal credit for 3 million families. Is it not time that we asked those with the broadest shoulders to carry the heaviest burden, rather than the poorest in our society?

[Rachel Reeves]

As I have set out, the Office for Budget Responsibility does not assume in its numbers any changes in people going back to work. That is what we are going to work on, between the OBR, the DWP and the Treasury, over the summer, so that we develop those plans to ensure that people are not worse off but better off because they can progress into jobs that suit their abilities and needs. We want more people to have the fulfilment of a good job, with security, that pays a decent wage.

[Alex Brewer (North East Hampshire) (LD)]

In a statement with significant problems, I welcome the Chancellor’s commitment to better military homes, which the Liberal Democrats have been calling for. Will she clarify how much and by when, and will that commitment include RAF Odiham in my constituency—or is it just for the constituencies that she listed, which happen to have Labour MPs?

[Rachel Reeves]

We support military families wherever they are based in the United Kingdom. We will set out more detail in the spending review in June. In the past few months, we have already taken back into the public sector homes that were previously contracted out to the private sector so that we can make improvements to military accommodation, which I know will be welcomed in the hon. Lady’s constituency and by military families across our country.

[Sarah Coombes (West Bromwich) (Lab)]

My West Brom constituents work hard and pay their taxes, and they want to know that the Government treat that money with respect. I am glad that we finally have a Chancellor who is being careful with every pound of taxpayers’ money so that we can invest in the NHS, which has seen a 10% cut to the waiting list in my area. How is she drawing a line under the waste and chaos of the previous Government and finally putting our public finances back on a stable footing?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of her constituents, ensuring that the people of West Bromwich get a good deal from their public services and value for money when they pay their taxes. There was too much waste under the previous Government. That was exemplified during the pandemic, when so many contracts went to friends and donors. We have appointed a covid corruption commissioner because we want that money back in our public services, not in the hands of Tory friends and donors.

[Jeremy Corbyn (Islington North) (Ind)]

There are 4.3 million children living in poverty in our society, and 1.2 million people in receipt of PIP are about to lose it following the statement last week. The Chancellor has put a huge amount of money into defence. Could she not think for a moment of reversing the decision last week to take £5 billion out of the welfare budget, and of ending the two-child benefit cap, which has driven so many children and families into really desperate poverty?

[Rachel Reeves]

I will not make any apologies for putting more money in defence. This Labour Government take the defence of our country seriously, and so we should. We are the party that created NATO, and the leadership of the Labour party today will always defend our country.

[David Pinto-Duschinsky (Hendon) (Lab)]

I congratulate my right hon. Friend on her statement and on her action to end austerity by investing £26 billion in the NHS and £3 billion in education, raising defence budgets, and unleashing over £100 billion of additional capital investment to build the foundations of our economy. On the day after this Government voted through a pay rise for 3 million working people by raising the minimum wage, does she agree that it is only by making the tough decisions to restore stability and push ahead with our bold plans for reform that the Government can repair the terrible damage done by the Conservative party, deliver strong public services and get more money in people’s pockets?

[Rachel Reeves]

I thank my hon. Friend for that question and for all his work to back growth and improve living standards for working people. I was pleased to announce in the spring statement £13 billion extra for capital spending during the course of this Parliament. We know that the previous Government always made the easy choice to cut capital spending, and the deterioration of infrastructure is why we are in the mess that we are today. We will not make those short-term decisions; we will invest to grow our economy, working with business to do so.

[Nick Timothy (West Suffolk) (Con)]

The Chancellor’s trouble is that although her manifesto promised to limit spending increases to £9.5 billion a year, her Budget increased spending by £76 billion a year—eight times as much. She has previously said that she will not come back asking for more tax rises or more borrowing. Will she rule out both in the Budget later this year?

[Rachel Reeves]

The Budget in autumn last year wiped the slate clean after 14 years of economic mismanagement by the Conservative party. We will not have to repeat a Budget like that because we are not going to inherit anything like that ever again. We have changed the rules so that the OBR always gets information now, rather than the information being hidden as it was by the previous Government.

[Clive Jones (Wokingham) (LD)]

My hon. Friend the Member for St Albans (Daisy Cooper) gave examples of alternative taxes to Labour’s national insurance increases, asking that big banks, social media giants and online gambling companies pay their fair share of tax. Can the Chancellor confirm that she has heard those Liberal Democrat alternatives, and will she explain why she is not listening to those fair and sensible proposals?

--- Later in debate ---

[Rachel Reeves]

One thing that is scored in the OBR document today is the gambling levy that the Government have introduced. That money will be used to ensure that we regulate gambling properly in our country, and rightly so.

[Gregor Poynton (Livingston) (Lab)]

For defence companies in Scotland, UK Export Finance plays a crucial role in financing sales to our allies around the world, including Ukraine. Will the Chancellor outline how the increase in capacity for UK Export Finance will help defence companies in Scotland to create jobs in my Livingston constituency and strengthen our national defence?

[Rachel Reeves]

Just two week ago, I was able to announce £2 billion extra for UK Export Finance specifically to help defence companies in the UK to export. As countries around the world, particularly in Europe, increase defence spending, I want to ensure that we get those contracts here in Britain to support our proud defence industry, including in places such as Livingston and Rosyth, where I met Babcock just a couple of weeks ago.

[Robin Swann (South Antrim) (UUP)]

The Chancellor’s statement referred to people who were listening. The president of the Ulster Farmers Union was in the Public Gallery to hear her statement, which did not reference agriculture or farming at all. It talked about the country’s security and safety, but there was nothing on food safety. It spoke of not writing off a generation of young people, but her family farm tax will write off a generation of young farmers. What confidence can she give our agricultural sector?

[Rachel Reeves]

With specific reference to agricultural property relief, people will not pay extra tax unless they have a farm worth around £3 million. More than two thirds of farms are not affected at all by the changes in that relief. For those who do pay the tax, it is at half the rate that anybody else pays, and they can pay it, interest-free, over a period of 10 years. That is very different from the inheritance tax bills that anybody else pays.

[Mark Ferguson (Gateshead Central and Whickham) (Lab)]

I welcome the Chancellor’s reference to the £13 billion of additional capital expenditure announced today. Will she put today’s statement into the context of the significant investments that have already been made and those that are forthcoming, and contrast that with the previous Government, who did not have a plan for long-term growth and abandoned communities like mine?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of his constituents in Gateshead, who rely on the infrastructure that our country needs, be it energy, digital or transport infrastructure, or the houses that all our constituents need. In the Budget last year I put £100 billion extra into capital spending during the course of this Parliament, and I have been able to announce an additional £13 billion today. Unlike the Conservative party, I am not willing to cut capital investment, because it is absolutely crucial to grow the economy and leverage the private sector investment that we need.

[Ben Obese-Jecty (Huntingdon) (Con)]

The Chancellor has made much of the Government’s investment in defence and desire to make the country a defence industrial superpower. I am keen to pitch for a slice of the protected £400 million for UK defence innovation. Huntingdon is the home of our defence intelligence capability, the US air force’s joint intelligence operations centre Europe, and the NATO Intelligence Fusion Centre. There is huge investment in sites such as the Alconbury Weald enterprise campus and Brampton Cross, and the potential redevelopment of Ministry of Defence land around RAF Wyton. It is the perfect location for defence start-ups, and with the arrival of several already in flight, the US Government are investing north of £500 million in Huntingdon alone. Will she make a similar commitment to Huntingdon and include it in her list of defence sites?

[Rachel Reeves]

What a great pitch! I am sure that one of the Ministers from the Ministry of Defence will be pleased to meet the hon. Gentleman to discuss those opportunities. As we move to 2.5% of GDP spent on defence and 3% in the next Parliament, I am determined that that money benefits our troops in the UK but also supports us becoming a defence industrial superpower. I am sure that we can work with the hon. Gentleman to realise those ambitions for Huntingdon.

[Rosie Wrighting (Kettering) (Lab)]

The Conservatives left a £22 billion hole in our public finances and they continue to oppose every decision made by the Chancellor to clean up their mess. Can the Chancellor tell us how things would look now if the Conservatives had their way?

[Rachel Reeves]

What it would mean for people in Kettering and around the country if we had continued under the plans of the previous Government is that interest rates would have remained high, inflation would have remained high and growth would continue to flatline, whereas the OBR today has forecast that real household disposable incomes will rise, growth will be higher and living standards will be higher because we have returned stability to the economy and we are backing the builders, not the blockers. [Interruption.]

[Max Wilkinson (Cheltenham) (LD)]

I do not wish to interrupt the discussion on the Front Benches. I have another opportunity for the Chancellor. In Cheltenham, we have a scheme that can produce jobs and growth and will support the defence industry: the Golden Valley development next to GCHQ, which will be a key part of this country’s defence investment over the coming years. Will the Chancellor take it upon herself to work with Ministers in other Departments who already know about that to ensure that we get the investment that we deserve and that GCHQ workers deserve too?

[Rachel Reeves]

I am proud of what GCHQ does to keep our country safe. Part of what we are doing around the defence budget, above the lift to 2.5%, is including some of the work of the Security Service that, increasingly, is crucial for our national security and defence. That is on top of the 2.5%. As we protect defence spending, it is right that we take into account GCHQ and other security agencies as well. I am very happy to work with the hon. Gentleman to ensure that we maximise the benefits for so many constituencies, including Cheltenham.

[Graeme Downie (Dunfermline and Dollar) (Lab)]

May I thank the Chancellor for her statement and welcome the increase in defence spending, which represents a huge opportunity for Scottish workers? I was delighted to have her visit Rosyth in my constituency recently. Will she work to ensure a continuous shipbuilding programme in this country to maximise the opportunities for Scottish workers? Does she agree that it is utterly shameful that those workers have been ignored by the SNP for the past 18 years? Also, will she confirm that this Labour Government will always value the role of shipbuilding for our economy and our national defence?

[Rachel Reeves]

I could not agree more with my hon. Friend. It is just a shame that there are no SNP members in the Chamber—although there are so few of them—to hear what he said. Perhaps my hon. Friend would write to the SNP and ask them why they refuse to back the defence sector in the United Kingdom and specifically in Scotland.

[Mr Adnan Hussain (Blackburn) (Ind)]

It is estimated that in under five years there will be more than 3 million families in receipt of disability benefits who will lose financially as a result of today’s announcement, with an average loss of £1,720 per year compared to inflation. Is the Chancellor comfortable knowing that she has brought despair and horror to disabled people and their families across the country?

[Rachel Reeves]

We have a very basic principle that people who deserve to be protected should be, that those who can work should and that we need a system that is sustainable. We do not have any of those three things today. That is why we are reforming our welfare system to give additional support for those with the highest needs, to give personalised, targeted and guaranteed support to help people back into work and to ensure that we have a system that is sustainable so that it is there for generations to come.

[Louise Jones (North East Derbyshire) (Lab)]

As the Chancellor will know, the east midlands is often at the bottom of investment league tables and we suffer through a lack of transport planning. Will the Chancellor outline how the extra public investment and the national wealth fund will change that and deliver for people in North East Derbyshire?

[Rachel Reeves]

I thank my hon. Friend for that question. People in North East Derbyshire will benefit from the additional homes, whether they are able to buy those homes, rent those homes or, indeed, build those homes, as we expand the number of construction apprenticeships and construct 10 new technical excellence colleges. They will also benefit from the increases in real household disposable income. When the economy grows, we want to have more money in people’s pockets and that is what the OBR today confirms will happen.

[Helen Morgan (North Shropshire) (LD)]

Pharmacies such as Green End pharmacy in Whitchurch in my constituency are struggling with the impending hike in employer national insurance and business rates. In fact, they do not know what they are being paid for NHS services this financial year, let alone next. Will the Chancellor confirm whether Pharmacy First will continue beyond the end of next week?

[Rachel Reeves]

I am sure that the relevant Health Minister will be willing to meet with the hon. Lady to talk about that. Because of the investment that we put into our national health service at the Budget last year—more than £20 billion of additional funding—we are able to start to rebuild our NHS and reduce waiting lists. Indeed, we have done that now for five months in a row.

[Alex Baker (Aldershot) (Lab)]

As we secure Britain’s role in a changing world, I welcome the Chancellor’s focus on defence innovation and I thank her for referencing my community, Aldershot and Farnborough. We are ready to serve.

When it comes to defence innovation, too many small and medium defence businesses in my community struggle to get access to the banking and finance facilities they need, often on the basis of self-imposed environmental, social and governance criteria. Will the Chancellor join me in welcoming the investors and financial institutions that have responded to the campaign that I am leading with my hon. Friend the Member for York Outer (Mr Charters), calling on our banks and our fund managers to broaden their approach so that we can defend our country, support Ukraine and fire up our industrial base?

[Rachel Reeves]

I was pleased to mention my hon. Friend’s constituency in my statement. As the home of the British Army, on behalf of this Government, we thank the people of Aldershot and Farnborough for the service that they give our country every single day.

My hon. Friend is right to mention the importance of companies in the defence sector, whether big or small, being able to access finance. That has never been more important than it is today, when the threats posed by Putin continue to grow. I therefore urge everyone in financial services to do their part to make sure that our fantastic defence start-ups have the money that they need to grow and help defend our country and our values.

[Madam Deputy Speaker]

For the final question, I call Jim Allister.

[Jim Allister (North Antrim) (TUV)]

Will the Chancellor better explain how the civil service cuts will translate into the devolved regions and the impact on future block grant allocations? Are there lessons to be learnt from the fact that in 2015, the Northern Ireland Executive had a voluntary exit scheme, upon which it spent £700 million, and then proceeded to re-engage hundreds of civil servants as agency workers?

[Rachel Reeves]

The hon. Gentleman makes a really important point. That is why we have not set a number for the reduction in the size of the civil service and instead have made it an admin target. We do not want the number of civil servants to fall and then the number of agency workers and consultancies to increase. Absolutely, this Government will learn from failed efforts, both of the UK Government under the Conservatives and other Administrations in the past.

New Approach to Ensure Regulations and Regulators Support Growth

Rachel Reeves Excerpts

Monday 17th March 2025 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

The Government are today publishing an action plan, setting out a new approach to ensure regulations and regulators support growth.

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.

When used effectively, regulation provides a mechanism to address economic, societal, and environmental risks and deliver positive outcomes in our communities, for example it safeguards employees from harm at work and it can uphold vital standards in building safety.

However, under our current system, businesses tell us that regulation can be too complex and duplicative, stifling progress and innovation. Businesses endure slow processes and a lack of predictability, and our regulatory approach has become too risk averse.

These challenges manifest themselves in costs on business, which means that they have less time and money to invest and create jobs. Over the last 20 years, billions of pounds of regulatory costs have contributed to our economy being less attractive for new investment. Previous studies suggested that the impact of red tape costs could be as high as 3% to 4% of GDP.

The Government will reform the regulatory system to ensure the UK’s position of global competitive leadership and go further and faster to secure and sustain growth, supporting the objectives of our new industrial strategy and the wider growth mission.

This action plan builds on the Prime Minister’s (Keir Starmer) commitment last week to cut bureaucracy for business, reducing administrative costs of regulation for business by a quarter by the end of the Parliament. It sets out a vision to overhaul our regulatory system so that it:

Supports growth. We want a regulatory system that not only protects consumers and supports competition, but also encourages new investment, innovation, and growth. When regulation is designed well, and when it is implemented well by regulators, it can protect consumers while supporting investment and growth.

Is targeted and proportionate. We should regulate only where necessary and allow space for discretion and good behaviour, in most cases, businesses operate in a responsible and sensible manner. The current system too often focuses on regulations and regulatory practices designed to prevent a few bad actors, or very low probability events, rather than trusting and helping most businesses that want to comply.

Is transparent and predictable. To foster the certainty essential for investment, it is vital that our regulatory regime is stable, predictable, and consistent. Regulation will need to change where it is not fit for purpose; but we must be clear about where that is the case and give business the necessary time to adapt to new rules.

Adapts to keep pace with innovation. Our approach to regulation must allow the UK to take advantage of new technologies and innovations, including artificial intelligence, digitalisation, decarbonisation, and increased automation. Effective regulation can create the environment and clarity for innovation to take place. Regulators attuned to the challenges facing business should also be able to adapt to new industries and to the challenges posed by new technologies and avoid disproportionate risk averse behaviour.

To reset the UK’s regulatory landscape and achieve this vision, the Government will implement a package of reforms over the Parliament that focus on:

Tackling complexity and reducing the burden of regulation, including that the Government will commit to reducing the administrative costs of regulation for businesses by 25% by the end of this Parliament; that the Payment Systems Regulator will be consolidated primarily within the Financial Conduct Authority; that the Government will work with regulators to improve areas where regulation is most complex starting with environmental and planning regulation.

Reducing uncertainty across our regulatory system, including that the Government will simplify the duties of key regulators including through the reviews of Ofgem and Ofwat; that it will work with regulators to strengthen transparency, so that business and the public can see how regulators are performing; and that the Government will bring forward packages of reform, including, if necessary, legislation to improve the effectiveness of environmental regulation.

Challenging and shifting excessive risk aversion in the system, including that the Government will overhaul accountability, formalising and strengthening performance reviews which will be conducted by all sponsoring Government Departments, and setting out the next stage of commitments secured by the Regulatory Innovation Office, working alongside Departments and regulators.

The reforms in the action plan are relevant to regulators across sectors such as business, finance, energy, and the environment. Though there is not currently a legal definition of a regulator, the reforms will apply to all bodies exercising regulatory powers and functions.

The Government have worked with a set of key regulators over the past few months to develop measures which will have a tangible effect on driving growth and investment and are implementable within the next 12 months, listed in the action plan. Some of them, such as the Competition and Markets Authority, have already taken substantial action such as taking forward applying the “4Ps” across its digital markets work.

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 action plan is available on gov.uk:

https://www.gov.uk/government/publications/a-new-approach-to-ensure-regulators-and-regulation-support-growth/new-approach-to-ensure-regulators-and-regulation-support-growth-html



A copy will also be placed in the Libraries of both Houses.

[HCWS528]

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 4th March 2025 Commons Chamber

[The Chancellor of the Exchequer (Rachel Reeves)]

Economic growth is the No. 1 mission of this Government. Putting more money in people’s pockets and ensuring growth is felt in all regions of the UK is a core part of our mission. The Government have a clear focus on investing in the infrastructure needed to support cities and regions to grow and thrive. In January, the Government announced a partnership between East Midlands airport and Prologis to build a new advanced manufacturing and logistics park, unlocking up to £1 billion of private investment and 2,000 jobs at the airport site.

[Louise Jones]

The town of Staveley in my constituency of North East Derbyshire hosts one of the three sites for the east midlands investment zone, which is a fantastic opportunity for us. The Chesterfield-Staveley regeneration route is, however, vital to making the most of the site and it has been long campaigned for by my hon. Friend the Member for Chesterfield (Mr Perkins). It is a huge priority for my constituents. Will the Treasury work with us and our excellent Mayor of the East Midlands, Claire Ward, to bring this hugely beneficial project to fruition?

[Rachel Reeves]

I thank my hon. Friend for the work that she does alongside my hon. Friend the Member for Chesterfield in campaigning for developments that will boost growth in both North East Derbyshire and Chesterfield. The Department for Transport is considering the scheme for the Chesterfield Staveley regeneration route, and I will suggest to the Roads Minister that he meet the relevant Members as well as the Mayor of the East Midlands, Claire Ward.

[Jen Craft]

The Government’s decision to increase defence spending is not only an ironclad commitment to national security in the face of generational challenges but an investment in British industry, able to unlock new jobs and opportunities across the country. Industry in the east of England has a significant defence sector, which received £1.5 billion of Government investment last year. Can the Chancellor explain how the additional defence funding has the potential to benefit my constituents in Thurrock as well as those in the wider region?

[Rachel Reeves]

As my hon. Friend says, defence has an important role to play in the growth mission as well as keeping our country safe and secure, and on Friday the Defence Secretary and I hosted a roundtable at RAF Waddington in Lincoln to announce a new defence innovation hub to harness that potential. Defence has a strong presence in many of our constituencies—indeed, according to the most recent data, Ministry of Defence spending in the east of England accounted for £1.5 billion—and down the road from my hon. Friend’s constituency is the historic MOD Shoeburyness range, which, along with other sites, is operated by the MOD and QinetiQ as part of a long-term partnership worth more than £5 billion. In the years to come, there will be more investment in defence from both the public and the private sector.

[Bradley Thomas (Bromsgrove) (Con)]

As part of their pursuit of the ever-elusive goal of economic growth, the Government have rebranded the UK Infrastructure Bank as the National Wealth Fund. Even the Office for Budget Responsibility has cast doubt on the effectiveness of that as a driver of economic growth. Can the Chancellor tell the House how much the rebrand has cost?

[Rachel Reeves]

The National Wealth Fund is doing important work in enabling us to leverage in private sector investment. The most recent of those investments include mining in Cornwall and energy charging points in our roads. At the end of last week, I announced that the fund would play a more important role in funding and supporting investments in the defence sector, which will become even more important in the years ahead.

[Lee Anderson (Ashfield) (Reform)]

I recently visited a business in Kirkby-in-Ashfield in the east midlands—funnily enough, I did not see the hon. Member for Strangford (Jim Shannon) there—where I was told that the increase in national insurance contributions would cost the business £240 a year, which will prevent it from recruiting people and giving its employees a pay rise next year. Does the Chancellor agree that it is time to reverse this ridiculous decision and help to drive growth in the east midlands?

[Rachel Reeves]

In the Budget in October I had to fill the £22 billion black hole left by the previous Government, but there are huge opportunities to grow the economy in the east midlands. We recently agreed the £9 billion Unity deal with Rolls-Royce to support the Royal Navy submarine fleet, which will provide a major boost for economic growth in the east midlands, creating and maintaining 5,000 long-term jobs. That is good for our country’s security, and good for the people of the east midlands.

[Monica Harding (Esher and Walton) (LD)]

3. What assessment she has made of the potential impact of the planned increase in employer national insurance contributions on economic growth.

--- Later in debate ---

[Sir Desmond Swayne (New Forest West) (Con)]

10. What assessment she has made of the implications for her policies of the most recent figures for Government borrowing.

[The Chancellor of the Exchequer (Rachel Reeves)]

In the autumn I took the decisions to put our public finances back on a firm footing. The most recent GDP data showed that the economy grew by 0.4% in the final month of last year. As I have said on many occasions, our fiscal rules are non-negotiable. The Conservative party sent mortgage rates and business borrowing costs spiralling; we have returned stability to the public finances to give families and businesses the stability that they need.

[Sir Desmond Swayne]

The servicing cost is now twice what we are spending on defence, which the Chancellor is right to be increasing. What is her ambition for finding savings in the welfare budget?

[Rachel Reeves]

I agree that we need to get a grip of the welfare budget, which got out of control under the previous Conservative Government. Frankly, I am not going to take lectures from the Conservative party, which crashed the economy. Let me remind the House what the right hon. Gentleman said about the disastrous mini-Budget:

“I share entirely the free-market ideology that underpins the Chancellor’s statement…The Chancellor was right to be radical.”

He added:

“I rejoice at the two fingers the Chancellor has raised to socialist dogma and envy.”

I think that the financial markets and the British public have united in their view on the previous Government.

[Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)]

11. What steps she has taken to help increase economic growth in Scotland.

--- Later in debate ---

[The Chancellor of the Exchequer (Rachel Reeves)]

Economic stability and growth are vital to help businesses across the UK to grow. The Lloyds business barometer published last week showed business confidence up 12 points, building on recent surveys by EY and PwC that show that business and investor confidence is rising. The Government are partnering with business to unlock investment and to drive growth.

[John Cooper]

The Chancellor, with her unimpeachable record in the sector, will know that economics is known as the dismal science. As a member of the Business and Trade Committee, rather than using second-hand statistics, I have spoken directly with businesses one to one and found that the mood is indeed dismal. After her dud Budget, can she think again and go back on this desperate jobs tax? She is in danger of becoming tough on growth and tough on the causes of growth.

[Rachel Reeves]

Conservative Members welcome the additional money for the NHS, but they never welcome the means to pay for it, which is why we are in the mess that we are with the £22 billion black hole we inherited from the previous Government. The hon. Member says that these are backward-looking surveys. The EY survey of UK CEOs found that 82% felt optimistic. PwC’s latest global CEO survey ranked the UK as the second-most attractive global destination for international investment, and last week the Lloyds survey showed a boost in business confidence. Those are the facts. People are choosing Britain as a place to invest and to locate their businesses. On the Government side of the House, we welcome that.

[Josh Newbury (Cannock Chase) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Chancellor of the Exchequer (Rachel Reeves)]

It is clear that the world is changing, which is why we must bring about a new era of security and renewal to keep our country safe. Last week, I convened European Finance Ministers at the G20 to discuss our shared challenges. I set out that national security will always be the first responsibility of this Government as well as national security being the bedrock for economic prosperity.

I was also proud to welcome President Zelensky to Downing Street alongside the Prime Minister at the weekend, where we signed a loan agreement that will deliver £2.26 billion in funding to Ukraine above our other commitments to bolster its military capacity, repaid by the profits from frozen Russian sovereign assets. We will use the additional investment in defence to create more good jobs paying decent wages in all parts of the UK. That is why we are giving the National Wealth Fund a new strategic steer to invest in technologies that better support our security and defence. Britain is a strong country with strong defences, and I know that we can weather this changing world.

[Josh Newbury]

As the father of five-year-old, I know at first hand how important indoor play facilities are. Providers in Cannock Chase, such as the Beach Hut in Norton Canes and the Kids Rule Play Cafe in Cannock, have written to me asking for consideration for a sector-specific VAT reduction and the opportunity to shape the reform of business rates. Is Treasury Minister willing to meet me, local providers and the Association of Indoor Play to discuss the sector’s priorities?

[Rachel Reeves]

The Government have no plans to consider zero rating indoor play facilities for VAT. All tax breaks must provide value for money and evidence suggests that such savings are only partially passed on. I would, however, welcome my hon. Friend engaging with us as we look to inform our “Transforming Business Rates” paper ahead of the Budget later this year.

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

[Mel Stride (Central Devon) (Con)]

How many jobs will the right hon. Lady destroy as a result of her jobs tax?

[Rachel Reeves]

I know that the right hon. Gentleman will have looked at the OBR forecast from the Budget last year, which forecasted that employment will rise in this Parliament, unemployment will fall and real household disposable income will increase. That is a far cry from the last Parliament, which was the worst on record for living standards.

[Mel Stride]

I am surprised that the right hon. Lady did not reference the fact that the OBR also said that there would be 50,000 fewer jobs as a result of the NICs increase; indeed, Bloomberg put that figure at 130,000 jobs. It does not need to be that way. On 26 March, the right hon. Lady should come to this House with a spring statement containing a clear plan around welfare savings, which we had when we were in Government. Will she now confirm that she is prepared to do that with our support and put an end to the pernicious tax increase?

[Rachel Reeves]

The right hon. Gentleman and his party had 14 years to reform the welfare system. They failed to do so, but this Government will. We are turning the British economy round after the disaster left to us by the previous Government: three cuts in interest rates since the general election, real wages rising at their fastest rate for three years, fuel duty frozen, the payslips of working people protected, and millions getting a pay rise through an increase in the national living wage. That is the change that this Government are delivering; that is the change that the Opposition are blocking.

[Mr Speaker]

Order. I call Jacob Collier.

--- Later in debate ---

[Perran Moon (Camborne and Redruth) (Lab)]

T4. Meur ras, Mr Speaker. Under this Labour Government, Cornish tin mining is back. Following the recent National Wealth Fund investment in South Crofty tin mine at the centre of my Camborne, Redruth and Hayle constituency, does the Chancellor agree that, in doubling the National Wealth Fund investment, that is a perfect example of how public funding should be used to unlock private investment in a strategically vital industry?

[Rachel Reeves]

Unlike the Conservatives, we believe that investing alongside private industry is good for jobs and good for economic growth. I visited the National Wealth Fund’s offices last month where I heard at first hand about its equity investment in Cornish Metals. This will help to finance the reopening of Cornwall’s South Crofty tin mine, creating more than 300 local jobs, and—

[Mr Speaker]

Order. Look, enough is enough. I have to get Members in from both sides. I am sorry that the Front Bench does not want to get these Members in, but I am determined to. These are called topical questions, which means I want quick questions and certainly short answers. I call the Father of the House, Sir Edward Leigh.

[Sir Edward Leigh (Gainsborough) (Con)]

T5. I hope that I will not damage the Chancellor if I commend the fiscally conservative way in which she is increasing defence spending. Given that if every European country matched our 2.5% commitment, we could release over £150 billion of defence spending, does she agree that we can crack this, because war and peace are always won, ultimately, by the size the economy?

[Rachel Reeves]

I very much agree with the right hon. Gentleman. This is why I met my fellow European Finance Ministers in Cape Town at the G20 last week. All of Europe needs to step up. The British Government are doing so and we need to see that from other countries, too.

[David Taylor (Hemel Hempstead) (Lab)]

T6. Acknowledging that official development assistance will go down to 0.3% of GNI in 2027, can the Minister confirm whether it will remain at 0.5% for the calendar year of 2026, which will help ensure that UK aid keeps the maximum number of people alive for the longest possible time?

--- Later in debate ---

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I congratulate the Government on announcing the greatest level of financial sanctions last week. Does the Chancellor agree that keeping dirty money out of the City of London and homes and communities across our country is vital for our national security, as well as our economic stability?

[Rachel Reeves]

It is absolutely right that we increased and stepped up the sanctions last week. Also, under the loan agreement we made with Ukraine last week, the loan will be repaid with the profits on foreign sovereign Russian assets. Russia should pay for the damage it has done.

[Wera Hobhouse (Bath) (LD)]

My constituent is one of hundreds of people who suffered from the collapse of Collateral. While the Financial Conduct Authority has apologised to investors for failing to act faster to stop Collateral’s fraudulent activities, I am concerned that, without internal changes, the FCA will make similar mistakes again. Should there not be an investigation into the FCA’s handling of the case?

--- Later in debate ---

[Rishi Sunak (Richmond and Northallerton) (Con)]

I commend the Government for their international leadership at this challenging time. Events overnight make it even clearer that Europe must find considerably more resources for Ukraine. The Chancellor has rightly continued our policy of using the interest on frozen Russian state assets to benefit Ukraine, but I believe that now is the moment to go further by actually seizing those assets. Russia’s invasion of Ukraine violates the principle of sovereign equality, providing a basis in international law for such a policy, and by acting in concert with our allies, we can ensure that there are no risks to financial stability. May I urge the Chancellor to push for co-ordinated action to seize those frozen Russian state assets and give that money to the Ukrainians so that they can defend and rebuild their country?

[Rachel Reeves]

I thank the right hon. Gentleman for his words about this Government stepping up the funding for defence. Last week, we expanded sanctions on Russia, including by looking at financial services. This week, we have signed off a UK Export Finance package to provide more military support, above and beyond our defence spending and as well as the loan repaid using the profit on those assets. As the Prime Minister said yesterday, we would look at going further but, as the right hon. Gentleman knows, it is incredibly complicated to do that in line with international law. However, we keep all options on the table, because, as he is absolutely right to say, Russia should pay for the damage that Russia has caused.

Ukraine

Rachel Reeves Excerpts

Monday 3rd March 2025 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

Three years on from the onset of the war in Ukraine, the Government remain steadfast in their support for Ukraine. The UK’s total military, budgetary and humanitarian support now stands at £12.8 billion, and the Government have committed to contributing £3 billion in guaranteed military support each year for as long as it takes.

The Government have on Saturday 1 March 2025 signed a loan agreement with Ukraine, setting out the terms by which the UK will provide our contribution of £2.26 billion under the G7 extraordinary revenue acceleration loans to Ukraine scheme. The loan will be limited recourse. The UK’s contribution is additional to all previous commitments to Ukraine. This agreement enables the Government to begin disbursing ERA funding to Ukraine shortly.

The G7 ERA initiative is set to collectively provide approximately $50 billion in loans to Ukraine. This crucial funding will be repaid using future flows of extraordinary profits generated from immobilised Russian sovereign assets.

On 16 January 2025, The Financial Assistance to Ukraine Act 2025 achieved Royal Assent. This Act provides HM Treasury with the authority to allocate funding towards the UK’s contribution to the ERA. The Government intend to disburse this contribution in three equal tranches over the next three fiscal years, starting in the current fiscal year 2024-25.

Given the urgent needs of Ukraine and the significant public interest in Ukraine’s defence of its territory and our shared aim of peace through strength, as well as the broader security of Europe and the UK, it is imperative that the first tranche of UK support under this scheme is distributed to Ukraine as soon as possible.

Parliamentary approval for additional capital of £752,667,000 for this new expenditure has been sought in a supplementary estimate for HM Treasury. Urgent expenditure estimated at £752,667,000 will be met by repayable cash advances from the Contingencies Fund.

The second and third tranches, payable in future financial years, will be funded in the usual way through the estimates process.

[HCWS485]

Charter for Budget Responsibility

Rachel Reeves Excerpts

Wednesday 22nd January 2025 Written Statements

[The Chancellor of the Exchequer (Rachel Reeves)]

Today I have laid before Parliament the charter for budget responsibility. The charter sets out the new fiscal framework announced at autumn Budget 2024.

The new fiscal rules will put the public finances on a sustainable path and prioritise investment to support long-term growth. The charter also strengthens fiscal stability and transparency via a series of reforms including enhancing the role of the OBR in scrutinising the Government’s fiscal policy.

In accordance with the Budget Responsibility and National Audit Act 2011, the charter was first published in draft alongside the Budget on 30 October as it includes modified guidance to the Office for Budget Responsibility. No further changes have been made to the charter since it was published in draft.

A debate and votes in the House of Commons on the charter and the level of the welfare cap, will be scheduled in due course.

[HCWS381]