Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 9th May 2023 Commons Chamber

[Mr Speaker]

I call the shadow Chancellor.

[Rachel Reeves (Leeds West) (Lab)]

The Conservatives have now had 13 years in office—wages lower, the weekly food shop astronomical, energy bills unprecedented, 24 Tory tax rises and the national debt has ballooned —so can I ask: after 13 years of Conservative Government, does the Minister think that people feel better off, or worse off?

[John Glen]

What I can tell the right hon. Lady is that, since 2010, there has been a 25% increase in real take-home pay for workers on the national living wage and, recently, the national living wage increased to £10.42 an hour—a 9.7% increase—for those over the age of 23. In 2009-10, there was a deficit of £158 billion. Before we got into covid, it was down to £38 billion. We have gone through the most tremendous challenges that this country has seen for about 100 years. I think most people in this country understand that this Government have acted on the challenges we have faced in office.

[Rachel Reeves]

The Government have had 13 years, and the answer to the question “Do people feel better off?” is a resounding no. This morning, I met 22 newly elected council leaders from the Labour party, who are creating emergency plans to help to tackle the cost of living crisis in their communities. Why will the Conservative Government not play their part, do the right thing, close the loopholes in their oil and gas tax and help working people in Britain, as a Labour Government would do?

[John Glen]

I congratulate those successful across the country in last week’s elections, but what business leaders want and what the country wants is steady policy making, delivering growth in the economy, dealing with the biggest scourge on the economy, which is inflation—[Interruption.] The right hon. Lady says from a sedentary position that we have had 13 years. We spent £400 billion when we had a global pandemic, where we had to shut down the economy. When we came out of it, we had high inflation consequential on a war that we have not had in Europe for over 70 years. Those are the realities and that is what this Government have responded to.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 21st March 2023 Commons Chamber

[Mr Speaker]

I call the shadow Chancellor.

[Rachel Reeves (Leeds West) (Lab)]

Confidence has been shaken by the recent bank failures and stock market falls across the world. Is the Chancellor confident that our ringfencing regime is adequate to protect taxpayers and depositors, when we have seen how fast these problems can spread? Can the Chancellor reassure the House that there are no other UK banks or subsidiaries that are vulnerable, and in light of recent developments, is he confident about the Financial Stability Board, or does it need to widen the number of banks regarded as systemically important?

[Jeremy Hunt]

I thank the shadow Chancellor for her question. The Government recognise that there is some volatility in the market, but we believe the UK financial system is fundamentally strong and UK banks are well capitalised. They now have core capital ratios that are three times higher than before the 2008 global financial crisis, but we continue to monitor the situation carefully.

[Rachel Reeves]

I thank the Chancellor for that response, and am pleased that he continues to monitor the situation carefully, but the collapse of Silicon Valley Bank UK shows how our vibrant start-up sector—particularly in life sciences and tech—had become reliant on a single financial institution. The impact of these bank failures may be that other banks become more risk averse, restricting lending and raising interest rates, resulting in a credit squeeze, possibly even beyond the start-up sector. That would damage an already weak economy, so how will the Chancellor monitor the situation there and ensure that businesses have access to the long-term capital that they need to grow and to thrive?

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 7th February 2023 Commons Chamber

[Mr Speaker]

I call the shadow Chancellor of the Exchequer.

[Rachel Reeves (Leeds West) (Lab)]

Last week, Shell announced profits of £32 billion, the highest in its 115-year history. Today, BP announced profits of £23 billion, the highest in its history. Meanwhile, in April, energy bills for households will go up by £500. The cost of living crisis is far from over, so will the Government follow our lead and impose a proper windfall tax to keep people’s energy bills down.

[Jeremy Hunt]

I am glad that the right hon. Lady asked about windfall taxes, because our plans raise more money than she was advocating in the autumn, and they are also balanced and fair. Anything higher will stop investment, increase dependence on Putin and increase energy prices. I am afraid that it is more clean energy with the Conservatives and more expensive bills with Labour.

[Rachel Reeves]

There we go again: the Government shielding the energy companies and asking ordinary families and businesses to pay more. Shell has spent more on share buybacks than it has invested in renewables. Last year, BP’s dividends and share buybacks were 14 times higher than investment in low carbon energy. The Government are allowing energy companies to make profits that are the windfalls of war, while ordinary families and businesses pay the price. Is it not the case that the Tories cannot solve the cost of living crisis because they are the cost of living crisis?

[Jeremy Hunt]

No, Mr Speaker. The total tax take from that sector is £80 billion over five years, which is more than the entire cost of funding the police force. The shadow Chancellor can play politics, but we will be responsible because we want lower bills, more investment in transition and more money for public services, such as the police.

IMF Economic Outlook

Rachel Reeves Excerpts

Tuesday 31st January 2023 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the International Monetary Fund world economic outlook.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

This Government have three economic priorities; our plan for this year is to halve inflation, grow the economy and get debt falling. It is a plan that will alleviate the pressure on businesses and families today, and equip us to become one of the most prosperous countries in Europe. As the International Monetary Fund said in its press conference today, it thinks that the UK is “on the right track'”. It also said that the UK had done well in the last year, with growth revised upwards to 4.1%, which is one of the highest growth rates in Europe for 2022. Since 2010, the UK has grown faster than France, Japan and Italy. Since the European Union referendum, we have grown at about the same rate as Germany. Our cumulative growth over the 2022 to 2024 period is predicted to be higher than that of Germany and Japan, and at a similar rate to that of the United States of America. The Governor of the Bank of England has said that any UK recession this year is likely to be shallower than previously predicted.

The actions we are taking, from unleashing innovation across artificial intelligence, financial services and a host of other sectors, to improving technical education and protecting infrastructure investment, will spur and fuel economic growth in the years to come, benefiting industry and communities alike. However, the figures from the IMF confirm that we are not immune to the pressures hitting nearly all advanced economies. We agree with the IMF’s focus on the high level of inflation in our country, which is why this is our first priority. Inflation is the most insidious tax rise there is, and so the best tax cut now is reducing inflation. That will help families across the country with the cost of living. As the Chancellor has said, short-term challenges, especially ones we are focused on tackling, should not obscure our long-term forecasts. If we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years. That will help us deliver a stronger economy, one that is growing faster and where everywhere across our country people have opportunities for better-paying, good jobs. That is what the people in this country expect and what we are working tirelessly to deliver.

[Rachel Reeves]

Britain has huge potential, but 13 years of Tory failure has been a drag anchor on our prosperity. Today’s IMF assessment holds a mirror up to the wasted opportunities, and it is not a pretty sight: the UK is the only major economy forecast to shrink this year, with weaker growth compared with our competitors for both of the next two years. The world upgraded, but Britain downgraded, with growth even worse than sanctions-hit Russia. The IMF chief economist singles out higher mortgage rates as a reason for Britain’s poor performance. The Tory mortgage penalty is devastating family finances and holding back our economy. British businesses are paying the price for the gaping holes in the Tories’ Brexit deal. It will fall to Labour to clean up this mess.

If the Chancellor had ideas, answers or courage, he would be here today, but he is not. The question the people of our country are now asking is: are me and my family better off after 13 years of Conservative government? The answer is no and, as the IMF showed today, it does not have to be this way. I am sure the Minister will clutch at straws and say that everything is fine or that the IMF forecasts are just wrong, but can he explain why the UK is still the only G7 economy that is smaller now than it was before the pandemic? Why is the UK the only G7 economy with its growth forecast downgraded this year? Why are we at the bottom of the league table both this year and next year? Can the Minister answer this: why should anyone trust the Conservatives with the economy ever again?

[James Cartlidge]

The right hon. Lady talks about 13 years of failure. Let me just repeat the facts of the matter. Since 2010, the UK has grown faster than France, Japan and Italy. She talks about the next two years. As I have said, the forecast from the IMF says:

“Cumulative growth over the 2022-24 period is predicted to be higher—

in the UK—

“than in Germany and Japan, and at a similar rate to the US.”

I am grateful to the shadow Chancellor for quoting the IMF, because I, too, wish to quote the IMF. Let us go to the IMF press conference at about 3am this morning, which, Mr Speaker, I am sure you were eagerly watching, and quote the economic counsellor Pierre-Olivier Gourinchas who said:

“Let’s start with the good news: the UK economy has actually done relatively well in the last year. We’ve revised”—

growth—

“upwards to 4.1%...that’s one of the highest growth rates in Europe, in that region, for that year”—

2022.

The shadow Chancellor did make a passing reference to the pandemic, but it is usually Labour’s habit to airbrush out of history completely the fact that we as a Government have overseen two of the greatest challenges in the country’s history: a pandemic followed by the invasion of Ukraine. [Interruption.] I know why the shadow Chancellor does not want to talk about the pandemic. Back in December 2021, when the Labour Welsh Administration wanted to lock down in the face of omicron, we took the brave decision as a Government not to lock down in England. Let us remember what the shadow Health and Social Care Secretary said at the time. He said that plan B was “insufficient” and that there were additional measures that were “necessary”. Labour would have kept us locked down for longer. We took the decision to keep our country open. We did so because of the vaccine that we brought forward, which is something that Labour would not have done.

The crucial issue, as I said, is bearing down on inflation, which will give us the best chance of restoring sustainable growth. A key facet of dealing with inflation is fiscal discipline. We have heard from the shadow Chancellor recently that Labour is suddenly the party of sound money. Since the speech—I think it was two weeks ago—in which the leader of the Labour party promised to put away the great big Government cheque book, Labour has made £45 billion of unfunded spending commitments. We all know where that ends. Labour starts writing blank cheques, and it ends with a letter from its Chief Secretary to the Treasury to the rest of the country saying, “There’s no money left.”

Autumn Statement

Rachel Reeves Excerpts

Thursday 17th November 2022 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I thank the Chancellor for his statement.

Here we are, the end of 2022. Three Prime Ministers, four Chancellors and four Budgets later, where do we find ourselves? In a worse place than we started the year, with inflation spiralling, growth plunging and living standards falling. Britain is a great country with fantastic strengths but, because of this Government’s mistakes, we are being held back. What people will ask themselves at the next election is, “Are me and my family better off with a Conservative Government?” And the answer is no.

The mess we are in is the result of 12 weeks of Conservative chaos and 12 years of Conservative economic failure: growth dismal, investment down, wages squeezed and public services crumbling. And what does the Chancellor have to offer today? More of the same, with working people paying the price for his failure. The Chancellor should have come here today to ask for forgiveness. At the very least, he could have offered an apology but, no, instead he says his predecessor was correct in his analysis at the mini-Budget that put our economy into freefall. All the country got today was an invoice for the economic carnage that this Government have created. Never again can the Conservatives be seen as the party of economic competence.

It has been clear for weeks what the Government want to do. Step one: blame global factors. Step two: pretend the mini-Budget has nothing to do with any of them. Step three: portray the Chancellor and the Prime Minister as the people who can clear up the mess of their party’s own making. And step four: attempt to lay some so-called traps for the Labour party. They have even had George Osborne in to advise them on how to party like it is 2010.

But this is not a game. This is about people’s lives and livelihoods. This is about people’s ability to pay the mortgage, to pay the rent and to pay the bills after 12 years of Conservative stagnation that have left our country so much worse off. It is about the fact that, when the global storm hit, we were uniquely exposed because of the choices that the Conservatives made.

Nobody doubts that the covid pandemic and the war in Ukraine have had profound implications, and the whole House is united in its condemnation of Russia’s aggression, but Britain’s problems started before the covid pandemic and before Russia’s illegal invasion of Ukraine. The UK has grown by an average of 1.4% a year under the Conservatives, compared with 2.1% a year in the previous Labour years. We are the only G7 economy that is still poorer than before the pandemic.

As the Governor of the Bank of England told the Treasury Committee yesterday, the US has grown by 4.2% since the pandemic and the GDP of eurozone countries is 2.1% higher, yet the UK is 0.7% smaller than at the start of the pandemic. We are not recovering; we are heading into recession, as the OBR confirmed today. The Governor described these differences as dramatic and stark. How does the Chancellor describe them, and how does he explain them?

This is the price of a decade of Tory choices and economic failure, and it is set to continue, with the IMF forecasting that, of the 38 most industrialised economies, the UK will have the slowest growth of any of them in the next two years. The Chancellor is saying today that he will be honest, so let us be honest. No one was talking about cuts to public spending two months ago, and no other advanced economy is cutting spending or increasing taxes on working people as it heads into recession. This Government have forced our economy into a doom loop, where low growth leads to higher taxes, lower investment and squeezed wages, with the running down of public services, all of which hits economic growth again. Instead of learning from the mistakes of the last decade, they are simply repeating them. We need to break free from this vicious cycle of stagnation, with fairer choices and a proper plan for economic growth.

The Chancellor and Prime Minister are trying to convince us that Britain faces problems that are nothing to do with them and that the mini-Budget, which imposed a Tory mortgage premium, put pensions in peril and trashed our reputation around the world, was all just a bad dream. It is their Bobby Ewing strategy, with Downing Street as “Dallas”. Old cast members return as if nothing has happened, with tangled plot lines to keep the audience, but the truth is that the series has lost all credibility and everyone knows it is long past time that it was cancelled. The problem for the British people is that this is not a dream. This is the everyday nightmare of Tory Britain.

The Conservatives would have us believe that they are not responsible for the last 12 years of failure. In doing so, they take the British people for fools. Millions are already worried sick about how to make ends meet and now face the added stress of higher mortgage payments, the prospect of home ownership becoming more and more remote, and rents going through the roof.

What does that mean? Family holidays cancelled, savings depleted, hopes for the future replaced by sleepless nights, and all of that on top of the fact that the average worker is earning less today than when the Tories came to power 12 years ago. The Government have presided over the biggest wage squeeze in centuries. This was a crisis made in Downing Street and it is ordinary working people who are paying the price.

As I was coming into Westminster today, I read a timely warning from the police about pickpockets in the area. They warn:

“You may have an idea of what a pickpocket looks like but they’re far less likely to stand out in a crowd than you might think…they may work in teams to distract the target…One of their tactics is…where a thief will appear to be over-friendly…while pickpocketing you.”

I must report that in the last hour the Conservatives have picked the pockets, purses and wallets of the entire country, as the Chancellor has deployed a raft of stealth taxes taking billions of pounds from ordinary working people—a Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people’s wages.

Just one of those freezes in the personal allowance will cost the average earner more than £600, making it even harder to make ends meet. At the same time, the Government are forcing local councils to put up council tax. The Chancellor seems to have confirmed today a council tax bombshell worth £100 for a typical band D property, taking council tax for such properties above £2,000 for the first time. Local people, including those with Conservative councils, will be forced to pay more because of the destruction that the Conservatives have wreaked on our economy.

This comes at a time when councils are already in dire straits because of cuts made by Conservative Governments. They probably sat around the tables in Downing Street thinking that this was some clever trick, but no one is to blame except the Government that have been in power for 12 years—not local authorities, but this Tory Government—for more taxes, more inflation and higher mortgages. Instead of tricks and stealth taxes, why do they not have a proper economic plan for Britain that puts working people at its heart? Why do they refuse to have a real industrial strategy that gives business certainty, unlocks investment and means that Britain can once again lead the world in the industries of the future?

The Chancellor is trying to claim that today’s statement is fair, yet we learn that of all the things that he could save from the wreckage of the kamikaze Budget that he chooses to press ahead with, it is their plan to lift the cap on bankers’ bonuses. At a time when he is urging wage constraints for everybody else, how can he remotely claim that that is fair?

After weeks of, “Will he? Won’t he?”, we learn today that the Chancellor will not, after all, be clamping down on non-doms—tax free income for millionaires while millions face frozen tax allowances and council tax highs. How can he possibly claim that this is fair? He refuses to act, and I wonder why. Maybe that was the only policy that he cannot get signed off by No. 10 Downing Street. I say if you make Britain your home, you should pay your taxes here.

What about the private equity managers, earning millions, who benefit from a tax break on their bonuses, which means that they pay far less tax as a proportion of their incomes than ordinary hardworking people? Did the Chancellor close that loophole today and make sure that they pay their fair share of tax? He did not. He made ordinary working people pay the price instead.

Time and again we have seen how quick the Conservatives are to raise taxes on working people. The Chancellor has even compared himself to Scrooge. He is asking working people to take the hit, with less money in their pockets in the run up to Christmas, but also for years to come. But if you are a banker, a non-dom or a private equity manager, do not worry: Scrooge has not cancelled your Christmas. [Interruption.]An hon. Member asks from a sedentary position, “What about taxes?” Well, non-doms do not pay taxes—that is the whole point. The Government could close that loophole today.

And that is before we even get on to the energy giants. After months of resistance from this Prime Minister, the Government have finally been dragged, kicking and screaming, to extend the windfall tax that Labour has been calling for since January. Yet they still leave billions of pounds on the table, profits that are the windfalls of war, because they have failed to close a huge loophole that they created that hands out massive tax breaks to those oil and gas giants for doing the things that they were going to do anyway.

For those wondering why some energy giants have paid no windfall tax in the last quarter, despite record profits and eye-watering bills for consumers, the answer is that decisions that this Prime Minister made when he was Chancellor, confirmed by the current Chancellor, let the energy giants off the hook once again.

The Government have announced plans for energy bills next year, but bill payers will still see prices go up next spring, leaving far too many people wondering how they will make ends meet. For every pound of windfall tax left on the table, people are faced with higher prices on their bills. The Tories’ failure on energy goes back much further. They closed down gas storage, blocked onshore wind and solar, and slashed support for home insulation.

Today the Chancellor says that he will act on energy efficiency, but I am afraid that is all far too late. We called for the insulation of 2 million homes a year more than 12 months ago. That could cut bills by £1,000 not just for one year, but for every year to come, and they did nothing. Insulation levels in 2021 were 20 times lower than in 2010 because of their neglect, and now he proposes a package, but we have to wait until 2025 for them to act. Why? People are facing a bills crisis now. Years and years will have gone by while he sits back. Millions of families could have been helped and they have not been.

And still the Government block renewable power, such as onshore wind, that could bring energy bills down, create good jobs in all parts of the country, and ensure that Britain can lead the way in the industries of the future. Clean power is the right solution to the energy price crisis, but, yet again, the Conservatives have failed. They have failed to protect us from future shocks, failed to tackle the cost of living crisis, and failed to take the decisions in our country’s national interest. It is because they have failed to grow the economy that they are having to bring forward yet another statement with tax rises and spending cuts.

The last Prime Minister and Chancellor embarked on a reckless sugar rush that abandoned fiscal rectitude, and the Conservatives all cheered for it, but the current Prime Minister and Chancellor have given up on growth altogether. How do we know? It is because the Office for Budget Responsibility has seen their plans and downgraded growth in the months and years ahead. Achieving the levels of growth that this country needs is not like flicking on a switch. We need a serious long-term plan to get our economy growing again, powered by the talents and efforts of millions of ordinary working people and thousands of businesses. We need a fairer, greener, more dynamic economy, creating good jobs in every part of the country—in homegrown renewables, in green hydrogen, in carbon capture and storage—with Labour’s green prosperity plan and a modern industrial strategy where Government work hand in hand with business, properly fixing business rates so that small businesses and our high street businesses thrive again, fixing the holes in the Government’s Brexit deal to help UK businesses to trade and compete in the world, and ensuring that Britain is the best place in which to start and grow a business. That is what a Labour Government will do.

While our public services are struggling and working people are being stretched, the rampant waste and cronyism from this Government continue apace. It does not seem to concern the Chancellor that his Government dished out £3.5 billion of contracts to friends and donors of the Conservative party. The latest Prime Minister spent so much time when he was Chancellor practising his signature for his glossy Instagram graphics that he failed to put in place even the most simple checks on covid support. That is why the former Treasury Minister, Lord Agnew, described the current Prime Minister’s fraud failures as “schoolboy errors”. The Prime Minister left the doors to the vaults wide open to organised criminals and drugs gangs who helped themselves to £6.7 billion of taxpayers’ money—money that the Government are failing to retrieve.

Last month, it was slipped out that the Taxpayer Protection Taskforce, set up to get this money back, is being wound down. The Government have just given up and the Conservatives are turning yet again to our crucial public services to make up the money. The fraudsters may think that they have got away with it, but a Labour Government will hunt them down for everything that they have taken from the taxpayer. The country is sick of being ripped off by the Tories; we want our money back.

It is because of Tory failure that our crumbling public services are set to suffer even more. Ordinary people lose yet again. Never before have people paid so much in tax and yet got so little in return. At the weekend, the Chancellor admitted that the NHS was already on the brink of collapse. With 7 million people on NHS waiting lists, how much longer will that list get? Three in 10 people are leaving education without GCSE English and maths. What will that do to our society and our future economy? Why do the Tories have an ideological objection to putting VAT on school fees, which the Chancellor himself admits would raise £1.7 billion? By their actions it is clear that the Government do not value our public services or the contribution of those working in them. What do we hear today? Reviews on schools, the NHS workforce, social care and waste, but what we need is action. Now is the time for delivery, not more reviews.

The Chancellor had previously said that one of his biggest regrets as Health Secretary was failing to fix social care. Today, he has further delayed the Government’s much-promised social care cap. This is yet another broken promise, after 12 years of Tory failure on social care. The Tories have trashed our public services and the statement today has proved that they are doing nothing to turn that around.

The Conservatives have crashed our economy, given up on growth and sent inflation through the roof and, as usual, it is ordinary working people who are paying the price. It is a familiar tune. Every mortgage they raise, every cut they make, every tax they hike, the Conservatives are costing you. What have we heard today? Yet more excuses and unfair choices. They have failed to tackle the cost of living crisis. They have failed to show how they will fix our public services. They have failed to show how they will deliver growth. They have no plan for the future of our country. After everything we have heard today, and after 12 long years of Tory failure, the conclusion we must come to is that Britain can no long afford a Conservative Government.

[Jeremy Hunt]

Today, we have announced tax rises and spending cuts of £55 billion. We can debate the reasons, but to govern is to choose and the shadow Chancellor did not answer the simplest of questions: does she back the need for a package of this size to bring down inflation? If Labour cannot answer, it is not fit to govern.

The shadow Chancellor says that it is the Government’s fault, but with a made-in-Russia recession, a once-in-a-century pandemic, higher inflation in Europe, bigger cuts to growth in Germany, bigger interest-rate hikes in America, to blame this on a mini-Budget that was cancelled in three weeks is just not credible. Nor are her facts right. She said that the Government are making the recession worse. Well, today, the independent Office for Budget Responsibility says that we are making it shallower, saving 70,000 jobs.

The shadow Chancellor says that this is austerity 2.0, but, in the 2010 Parliament, spending fell about 3% a year. In this Parliament, even in the next two years, it will rise 3% a year. There is £11 billion for the NHS and schools. It is not just more for our public services; it is massively more than she has ever promised. Then she talked about our record over 12 years, so let us do that: growth higher than Germany, France, Italy or Japan; the lowest unemployment for nearly 50 years; good or outstanding schools up by a quarter; and 4 million more patients in good or outstanding hospitals. In other words, growth up, employment up, school standards up and NHS funding up. Because she will not back this package, the British people today know that, under Labour, it is inflation worse, cost of living worse, unemployment worse and competitiveness worse. If we want stability, growth and funding for public services, the choice is plan or no plan. We have a plan. Where is hers?

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 15th November 2022 Commons Chamber

[Mr Speaker]

I call the shadow Chancellor, Rachel Reeves.

[Rachel Reeves (Leeds West) (Lab)]

Today’s numbers show that real wages are down £1,000 a year. The Chancellor himself has admitted that the NHS is on the brink of collapse, and he is preparing for more stealth taxes on working people later this week. Getting our economy firing on all cylinders is essential for fixing this mess, so will the Chancellor tell the House where the UK is projected to finish in OECD growth rates over the next year?

[Jeremy Hunt]

May I say what a pleasure it is to do my first questions session with the right hon. Lady? I will very happily tell her about the international situation. Inflation is higher in Germany, the Netherlands, the eurozone and Italy. Our growth forecasts are falling less than the forecasts in Germany. Interest rates since the pandemic have gone up less here than in America, Canada and New Zealand.

“Despite what some…suggest, the recession has not been restricted to the UK, nor did it begin here.”—[Official Report, 24 March 2010; Vol. 508, c. 249.]

Those are not my words, but those of Alistair Darling in 2010. If the right hon. Lady wants to be the next Chancellor, she should listen to the last Labour Chancellor.

[Rachel Reeves]

It would be nice if the Chancellor tried to answer some of the questions.

Out of 38 advanced OECD economies, the UK is forecast to finish last. That is 38th out of 38. All industrialised economies have had to face covid and the consequences of Russia’s illegal war, yet our country is trailing behind because of Conservative choices and Conservative failure. There is an alternative. Why does not the Chancellor match Labour’s ambitions for British industries in hydrogen, insulation, carbon capture, solar, nuclear and wind power to create new jobs here in Britain?

[Jeremy Hunt]

We will have many exchanges, so I ask the hon. Lady, when she picks a statistic about next year’s growth, not to do so too selectively because this year, we have the fastest growth in the G7. Since 2010, we have had the third highest growth rate in the G7, and we have the lowest unemployment for more than 40 years. That is because Conservatives take the difficult decisions that are necessary to make our economy thrive.

Economic Responsibility and a Plan for Growth

Rachel Reeves Excerpts

Wednesday 19th October 2022 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House regrets the long-term damage to the economy as a direct result of the mini budget, where mortgage rates for households have risen and the stability of pension funds has come under threat; notes that despite substantial U-turns in policy since the mini budget, the Government’s funding position has deteriorated, the cost of borrowing is expected to be higher for many years and the UK’s fiscal credibility has been undermined, all while many energy producers continue to make record windfall profits; therefore calls on the Government to take all necessary steps to stabilise the economy and make it work for ordinary working people and business through a plan for growth that puts them at its heart; and further calls on the Government to publish the Office for Budget Responsibility forecasts immediately alongside Government estimates of windfall profits for the next two years from energy producers in the UK.

We are here because of a Tory crisis made in Downing Street but paid for by ordinary working people. The Conservative mini-Budget of 23 September will go down in history as the day that the British Government chose to sabotage their own economy. We saw the Conservatives hurl unfunded tax cuts towards the wealthiest, with excessive borrowing and yet more Government debt. The Government set our economy ablaze and, as a direct result, in the past four weeks we have experienced chaos in financial markets, repeated emergency interventions from the Bank of England, warnings from the ratings agencies and rebukes from the International Monetary Fund. Those costs are passed directly on to working people.

[Justin Tomlinson (North Swindon) (Con)]

I thank the hon. Member for being generous in giving way so early. Does she join me in welcoming last week’s employment statistics, with the highest rate since 1974? In my constituency alone, 920 extra people were in work compared with 12 months ago.

[Rachel Reeves]

The truth is that a million people are missing from the labour market and half of those have long-term health conditions. We need to do much more to get those people back to work. One reason why unemployment is low is that so many people are not even looking for work because they are waiting for NHS operations, with waiting times at an all-time high.

Today, we learn that inflation has gone above 10% again; food inflation is at more than 14%; and in the last year alone, electricity prices are up 45% and gas prices have doubled. Despite all the extraordinary and unprecedented U-turns in recent days, the damage has been done. This Conservative Government have wrecked people’s finances and snuffed out the dream of home ownership for millions. Some 1.8 million people across the UK will pay higher mortgage bills by the end of next year—on average, they will pay £580 extra every single month—because of the reckless actions of the Government. In my Yorkshire constituency, the cost will be £360 extra a month. In the constituency of the Financial Secretary to the Treasury, the hon. Member for Arundel and South Downs (Andrew Griffith)—who is about to respond to me—it will cost people £640 extra every single month in higher mortgage payments. Families cannot afford to pay those higher mortgage costs, and they certainly cannot pay them with apologies from the Prime Minister. The public will not accept that the arsonists who inflicted this damage can put out the fire. The Tories can never be trusted with our economy again.

[Mr Toby Perkins (Chesterfield) (Lab)]

I congratulate my hon. Friend on the motion that she has tabled. It seems utterly unarguable that the crisis being wrought upon our constituents is to be laid squarely at the feet of the Government. It would appear that the Government agree, because according to briefings on Twitter, they do not intend to vote against the motion. Does my hon. Friend agree that the fact that the Chancellor has not turned up to defend the record and that Conservative Members do not even seem to disagree with the motion means that we can all agree that this is the Government’s fault?

[Rachel Reeves]

I agree that it is a shame that October’s Chancellor is not in his place today. This crisis has been co-written by every single member of the Cabinet and every single member of the Government. The Minister for the Armed Forces and Veterans was crystal clear yesterday in pointing out that all Cabinet Ministers had approved and are responsible for Government decisions, including the disastrous mini-Budget. There is no credibility or stability with this Government, just a shambles. All the time, businesses are looking at the state of the Government and deciding where and whether to invest. The Tories’ recklessness and enduring incompetence will cost jobs and investment here in Britain. The Conservatives should not be put in charge of a tombola, let alone the British economy.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for what she is saying. Let me back up her comments on economic growth. We need small and medium-sized enterprises to be able to survive and to get through this period. In my constituency, a business—a Japanese restaurant—opened some two months ago. It is doing really well and it employs staff, but its bills are going up from £900 to £3,000. It is clear that unless something happens soon for businesses that are productive and create jobs, they will no longer be there. Does the hon. Lady agree that we need to have a process that helps businesses?

[Rachel Reeves]

I thank the hon. Gentleman for that intervention. Small businesses, such as the restaurant that he mentions in his constituency, are the backbone of all our constituencies and our economy more widely. An energy bill increase from £900 to £3,000 is not affordable for small businesses. The Government need to do more to help.

[David Rutley (Macclesfield) (Con)]

I know that the hon. Member takes economic issues very seriously. Protecting pensioners will obviously be a key priority. Does she join me in welcoming the Prime Minister’s confirmation that the triple lock will be protected, and can she set out Labour’s policy on that vital area?

--- Later in debate ---

[Rachel Reeves]

On Monday, the Chancellor said that he could not rule out breaking the triple lock, and on Wednesday, the Prime Minister said something else. We do not know which one speaks for the Government, but Labour is clear that we support the triple lock. It was in our manifesto and, unlike the Conservative party, in government we would stick by what we promised.

Strong and independent economic institutions are essential for making Britain a great place to invest. That is why undermining the Bank of England, sacking the respected permanent secretary at the Treasury and gagging the Office for Budget Responsibility have all added to borrowing costs for Britain—for Government and for families.

On Monday, we saw yet again the ridiculous spectacle of a Conservative Chancellor coming to the House of Commons to announce huge changes in Government economic policy without any sort of independent forecast. Failing to publish a forecast was a significant contributor to the lack of market confidence when the Government unleashed their mini-Budget three and a half weeks ago, yet no lessons have been learned.

The Government cannot build confidence in Britain by flying blind. That is why we are asking all MPs to vote today to publish immediately the current assessments and forecasts from the Office for Budget Responsibility. For the sake of our economic stability, they must not remain hidden for a further two weeks. If the Chancellor refuses, the country will rightly ask, “What have they got to hide?”

[Sir Stephen Timms (East Ham) (Lab)]

My hon. Friend touched on the point that one of the new Prime Minister’s very first decisions was to sack the permanent secretary to the Treasury. Can my hon. Friend shed any light on why that decision was made? Was it, as appears very likely, because he was set to warn the new Chancellor about the consequences of the policies that he wanted to announce?

[Rachel Reeves]

As a former Treasury Minister, my right hon. Friend knows how things are supposed to be done. We cannot ask September’s Chancellor why he sacked the respected permanent secretary, because he is no longer in his place, but a Labour Government would respect the Bank of England, respect the independent civil service and remove the gag on the Office for Budget Responsibility.

Today’s inflation numbers show the impact that higher gas and electricity bills are having on family finances. The Government’s mistake when they announced their package a month ago was putting its entire cost on Government borrowing. Under Labour’s plans, energy producers—including the oil and gas industries, which have said themselves that they have more money than they know what to do with—would have been asked to pay their fair share. Our plan did what a responsible Government should: it put forward a fully costed and fully funded package to freeze bills this autumn and winter.

The Conservatives have left tens of billions of pounds on the table and have pushed all the costs on to current and future taxpayers for years to come. Now, because of their irresponsible and reckless approach, they have gone back on their word. According to the Resolution Foundation, that could mean that a typical bill will rise to at least £4,000 from next April.

[James Cartlidge (South Suffolk) (Con)]

The hon. Lady is being very generous in giving way. Can she confirm that whatever her policy on windfall tax is, the overwhelming majority of her energy support package would have been paid for by borrowing?

[Rachel Reeves]

The point is that the Government are leaving billions of pounds of unneeded and unnecessary borrowing on the table. Why leave that money on the table when even the energy giants are saying that they have more money than they know what to do with? All that money has been put on borrowing and debt to be paid back by current taxpayers. Tens of billions of pounds have been left on the table by this Tory Government.

It has always been a question of who pays for support with bills. The Conservatives always put it on the never-never, but in the end it is working people who pay the price. In August, Bloomberg reported that the Government’s estimates of energy company windfall profits in the UK over the next two years could be £170 billion. The last Chancellor disputed that and so did the one before, but neither of them confirmed the actual figure. Why not?

Labour’s fiscal rules would protect the economy and protect families. We should not borrow a penny more than is absolutely necessary. That is why our motion

“calls on the Government to publish the Office for Budget Responsibility forecasts immediately alongside Government estimates of windfall profits for the next two years from energy producers in the UK.”

Doing so is in the public interest. Refusal to publish will only confirm that the Government are again putting the profits of energy giants ahead of the sky-high bills for families, pensioners and businesses.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does my hon. Friend agree that the Government have still not learned a single thing? If they had learned anything from their mismanagement, the Prime Minister and the new Chancellor would have committed to using the profits of energy companies. That is what they should be doing: as my hon. Friend says, the companies want to be taxed to pay for the Government’s failures, rather than the Government cutting public services and hiking mortgage interest. Does she also agree that the Government need to get their priorities straight when it comes to getting rid of the cap on bankers’ bonuses?

[Rachel Reeves]

As a member of the Treasury Committee, my hon. Friend understands the issues well. The chief executive of BP says that his company is like a cash machine at the moment. We should be ensuring that companies pay their fair share. The war in Ukraine and the illegal invasion of Ukraine mean windfall profits that they could never have dreamed of, but they also mean the highest bills ever for families and pensioners, so the energy companies should pay their fair share.

[Anna McMorrin (Cardiff North) (Lab)]

My hon. Friend is making an excellent speech. Professor Sinha, the author of the Institute of Health Equity’s report on fuel poverty, has said that there is no doubt that children will die this winter. In July alone, 12,000 more people phoned the Samaritans. Those are the dire consequences of these political actions, yet our energy companies are taking the profits.

--- Later in debate ---

[Rachel Reeves]

My hon. Friend leads me on to the important issue of public services, which the Chancellor has been quick to put in his sights. This week, the respected Institute for Government gave its assessment of the state of public services after 12 years of Conservative Governments:

“Public services are in a fragile state…Patients are waiting half a day in A&E, weeks for GP appointments and a year or more for elective treatments. Few crimes result in charges…Pupils have lost months of learning”.

What an absolutely devastating verdict on the Government’s stewardship of our public services.

Even the Home Secretary, when she is not arguing with tofu, admits that police forces are so stretched that they cannot respond to the victims of crime. The Tories are living on another planet if they think that after a decade of imposing austerity they can come back with season 2, wildly swinging the axe over the country’s already struggling public services.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

My hon. Friend is spot on and Conservative Members should be listening to her speech. We have seen 12 years of cuts to our public services and facilities, but one small glimmer of hope for people in my city was the successful levelling-up bid for a leisure centre in the outer west of Newcastle. However, the project has now been undermined because of the disastrous economic outlook and soaring inflation costs, which are partly a result of the mini-Budget. Does my hon. Friend agree that the Government must not backtrack on their promises? They must support such projects despite the rising inflation costs that are now undermining local government’s ability to deliver them.

[Rachel Reeves]

Levelling up has truly been replaced by trickle down, and my hon. Friend’s constituents are paying the price.

We need strong public services focused on early intervention and prevention, reducing greater demand with better outcomes for people. We need the Government to stick to their manifesto commitments, including uprating benefits and pensions in line with inflation. It should not be working families, pensioners and the most vulnerable who pay the price for these Tory mistakes.

[Mr Richard Holden (North West Durham) (Con)]

Will the hon. Lady give way?

[Rachel Reeves]

I will make a bit more progress.

Labour will get value for every pound of taxpayers’ money. That is why I announced last year that a Labour Government will introduce an office for value for money, tackling the endemic waste that we have seen under the Tories. Under the Conservatives, £11.8 billion of public money was handed to fraudsters and organised criminals because of a refusal to include the most basic security checks for covid support. That is before we get to the £7 billion spent on unusable personal protective equipment, the £13 billion wasted on failed defence procurements and the millions and millions flushed down the drain by this Government’s outsourced Serco test and trace system.

This week, we have read reports that the Treasury is shutting down the taxpayer protection taskforce that it belatedly set up in March to try to retrieve the money that the Government gave to the fraudsters. The taskforce should not be shut down; it should be empowered to get taxpayers’ money back.

As for the £3.5 billion handed out to friends of and donors to the Conservative party, many of whom failed to deliver on those contracts, in business if you award a contract and it does not deliver, you claw the money back. The Government must now strain every sinew to get that money back, because taxpayers demand it, and that comes before the cuts and the austerity that this Government are about to unleash.

The Government say that working people now have to put up with eye-wateringly difficult decisions, but there are so many easy decisions that the Government could make to stop families feeling the pain. Why keep in place an outdated and unjustifiable non-dom tax status loophole which means that some of the wealthiest pay no tax on their incomes while ordinary working people face the highest tax burden in 70 years in this low-growth, high-tax economy? Labour’s principle is clear: if you make Britain your home, you should pay your taxes here. Research carried out at the London School of Economics and Warwick University has shown that the UK’s non-dom system costs us £3.2 billion a year.

Look at the tax break for private equity managers, which was cooked up in the 1980s by a Conservative Government—a tax break of nearly £200,000 each for 2,000 private equity bosses every single year! It is not right that bosses pay a lower rate of tax on their bonuses than workers do on their wages. It is indefensible, so Labour will abolish it. At present, private schools enjoy charitable status which makes them exempt from both business rates and VAT at a cost of £1.7 billion every year, but here is the truth: private schools are not charities. We will end that exemption, and put that money back into our state schools.

That is what a fair tax system looks like, and that is what Britain will get with a Labour Government: fiscal responsibility, and a fair tax system that puts working people first. Labour will stabilise the economy by being responsible with public finances through our strong fiscal rules. It is on that foundation that our green prosperity plan will invest in the jobs and industries of tomorrow as we meet our climate obligations and secure our energy supply here in Britain. There are great opportunities for the industries of the future, and opportunities for Government to partner with industry and invest in, for instance, domestic renewables such as wind, hydrogen and carbon capture, and nuclear as well. Labour will create a national wealth fund so that when we build British industry, the public will have a stake and receive a return on those investments. The next Labour Government will buy, make and sell more here in Britain, with an industrial strategy that is pro-worker and pro-business. We will breathe new life into our high streets by calling time on the outdated model of business rates. That is a real plan for the future, not lurching from crisis to crisis like the Conservatives.

[Mr Holden]

Will the hon. Lady give way?

[Rachel Reeves]

No. I have almost run out of time. I have been speaking for 20 minutes, and I have taken a great many interventions.

So much damage has been done to our economy by the Conservatives’ reckless mini-Budget, but the Government can prevent things from becoming even worse. Today they can show that they have listened, and publish the OBR forecasts and assessments that they are sitting on so we can know the true state of our public finances and our economy. They should publish the assessments that they already have of the windfall profits of the energy giants in the next two years, and then set out clear steps to introduce a proper windfall tax. It is a sign of how far off the road of competence and responsibility this Conservative Government are that they have not already done those basic things.

People can no longer afford the cost of Tory failure. We need a stronger and fairer economy from a Government committed to financial responsibility, and a serious plan for growth that puts working people first. The very least the Government can do is publish the numbers, and I urge all Members to support this motion to ensure that they do exactly that.

Economic Update

Rachel Reeves Excerpts

Monday 17th October 2022 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

As I regularly say now, I welcome the new Chancellor to his place. He is the fourth in four months of chaos and fiasco as this Conservative Government spiral down the political plughole. But the damage has been done: this is a Tory crisis made in Downing Street, but ordinary working people are paying the price. All that is left, after these humiliating U-turns, are higher mortgages for working people and higher bonuses for bankers. The Government’s climbdown on energy support begs the question yet again why they will not extend the windfall tax on energy producers to help to foot the bill.

It is good to finally see the Prime Minister in her place and not, as the Leader of the House had to assure us earlier, under a desk. But what is she left with? She has no authority, no credibility and no plan for growth. It is clear to see that the people who caused the chaos cannot be the people to fix the chaos. They are out of ideas, out of touch and out of time.

The Prime Minister should have spoken to the House today, but we know that she could not do that with a shred of credibility, given that the survival of this Government now depends on smashing to smithereens everything that she stands for. Now she is attempting to reverse everything that she campaigned on—it is not just impossible; it is absurd. The Prime Minister is barely in office and she is certainly not in power. Only five days ago, the Prime Minister said at Prime Minister’s questions that there would be “absolutely” no public spending reductions, but after what we heard from the Chancellor today, every single public service is again at risk from the Conservatives—from our NHS nurses to our schools and our servicemen and women—with the country paying the price for the Conservatives’ incompetence.

The Prime Minister said that she had an energy package for two years. Now that is being withdrawn on the very day it is supposed to be legislated for. She insisted that her Conservative mini-Budget would lead the country to the promised land. Instead it has led to the highest mortgages in 15 years and emergency interventions by the Bank of England to protect pensions. Then on Friday, there was the unedifying spectacle of the then Chancellor being dragged back from the IMF before he could do any more damage to our economy. So she has turned to a new Chancellor, who finished eighth out of eight in the Tory leadership contest, winning just 18 votes from MPs. The Tories have run out of credibility and now they are running out of Chancellors.

The latest office holder has been in the Cabinet for nine of the past 12 years, at the centre of a Government responsible for low growth and weakened public services, with him responsible for helping run the NHS into the ground. He was a big part of austerity season 1, and now he says the cure is austerity season 2. What was the Chancellor’s flagship policy in his own short-lived leadership contest? It was to reduce corporation tax in a totally unfunded manner, and not from 25% to 19%. The right hon. Gentleman called for it to be lowered to 15%, with not a single explanation of how it was to be paid for. The truth is that had he won the contest and implemented these policies, we would be in an even worse place than we are now. There is no mandate and no authority for any of this.

The Conservatives have put a lasting premium on people’s mortgages. Uncosted borrowing has sent interest rates spiralling. Millions of people’s mortgage deals will be coming to an end in the next few months, leaving many families forking out £500 more a month. People will be paying a Tory mortgage premium for years to come, so how does the Chancellor think ordinary people can possibly afford any more of this Conservative Government? We have heard no answers today. The Chancellor has said that growth requires “confidence and stability”. I agree, but where does he think the lack of confidence and stability has come from? It did not come from the sky; it came from the mini-Budget three weeks ago.

What does it say about our country that we are watching borrowing costs hour by hour? That is not the sign of a strong G7 economy; it is the exact opposite. Businesses are now saying that things are so unstable they are pausing investment here in Britain. The former deputy governor of the Bank of England Charles Bean has outlined the extraordinary damage that the Conservatives have done to our standing. In his words,

“we’ve moved from looking not too dissimilar from the US or Germany…to looking more like Italy and Greece.”

What a mess.

Where is the Office for Budget Responsibility forecast? Have this Government learnt nothing? Does the Chancellor really expect the country to take everything from him at face value? Last week, the Business Secretary was busy undermining the Office for Budget Responsibility. Today, we have received another massive fiscal statement with no forecast. What have this Government got to hide? They should publish the numbers so that we know the true state of the public finances after 40 days of this Prime Minister and after 12 years of Conservative Governments.

Today, the Chancellor has scaled back help with energy bills for families and pensioners. It prompts the question yet again: why will the Government not bring in a proper windfall tax on energy producers to help foot the bill for consumers, and when will the current Chancellor publish in full the Government’s estimates of the windfall profits of the energy giants over the next two years?

No one was talking about spending cuts until the Tories crashed the economy with their mini-Budget, so I ask the Chancellor: why should the British people pay the economic price for the Tories’ mistakes, and what spending cuts do the Government plan to make? We believe that the Government must honour their commitments to uprate benefits and pensions in line with inflation. Will the Chancellor make it clear today that is what he intends to do? What a contrast that cuts to benefits are still on the table, but the one thing the Chancellor could not bring himself to reverse today was lifting the cap on bankers’ bonuses. Why is this the last policy standing in this disastrous mini-Budget?

Let me come to credibility. Does the Chancellor accept that once credibility and trust have been destroyed, they cannot simply be regained by a series of zig-zagging, chaotic U-turns? Will he and the Prime Minister apologise for the costs and anxieties laid on families? Can he admit once and for all that the market turmoil we are in was directly caused by the disastrous decisions of his predecessor and of the Prime Minister? Can he guarantee that the Bank of England will not have to intervene again to save the Government, and what guarantee can he give people about their pensions, their mortgages and their household bills?

The Chancellor said today that everything is now on the table, but is that really the case? We know that abolishing the non-dom tax status will raise £3 billion a year, yet there was no mention of that. How can it be right that some of the richest individuals in society are allowed to buy their way out of paying the tax that should be paid here Britain? This would not be an eye-wateringly difficult decision, so why do not the Government just do it?

There is lasting damage which these policy U-turns will not change. They have set fire to everything; now they insist it is all fine. The truth is that an arsonist is still an arsonist even if he runs back into a burning building with a bucket of water. Because they cannot be trusted; the Tories are clinging on for themselves, regardless of the cost to the country.

Trickle-down economics will always fail; what drives forward our economy are the talents and efforts of millions of working people and thousands of ordinary businesses. The Government’s economic credibility has been destroyed. They have harmed our economic institutions, people are paying higher mortgages; the same set of people doing U-turns is not going to fix it. The only way to change this is a real change of Government.

[Jeremy Hunt]

I thank the hon. Lady for her questions, and I am sorry that, given the speed with which things moved at the weekend, I have not had time to sit down with her one to one as would normally be the practice before parliamentary exchanges.

I understand the role Opposition parties play—I have stood at that Dispatch Box myself—but behind the rhetoric, and I was listening very carefully, I do not think the hon. Lady disagreed with a single one of the decisions I announced to Parliament, and that is important for the country and markets to know. I think there is also agreement on the process of policy making. I support the independence of the Bank of England, introduced by Gordon Brown, and I know the hon. Lady supports the independence of the Office for Budget Responsibility, set up by George Osborne. The whole Government support the independence of those two important institutions.

I fully accept—I do not think I could have been clearer—that we have had to change some decisions made in the last few weeks, but I reject wholeheartedly the hon. Lady’s broader narrative about Conservative economic management. Let me remind her that the UK’s unemployment rate is the lowest since 1974; it is lower than that of France, Italy, Canada, Belgium, Sweden, Spain and the Netherlands and is massively lower than in 2010. Let me remind her that since 2010 our growth rate has been the third highest in the G7 —[Interruption.] She may not want to hear this, but these are the economic facts. Our growth rate since this party came into power has been higher than that of Germany, France, Italy and Japan and has been faster than that of any G7 country this year. Looking to the future, we have the largest technology sector in Europe and more foreign direct investment than anywhere in Europe bar one country. That is a legacy to be proud of.

I was listening carefully for some questions about the measures I announced, but the hon. Lady did not ask any and I think she agrees with them. I will pick her up on one point, however. She talked about the NHS; let me tell her—[Interruption.] Maybe they do not want to listen about the NHS. She talked about the NHS: because of the global financial crisis, which happened on her party’s watch, the NHS went through one of its most difficult periods ever, yet this party protected the NHS budget, and then in 2017 we were able to give it its biggest single increase in funding, because of the difficult decisions we took and the hon. Lady’s party opposed.

In conclusion, we inherited the financial crisis, we dealt with the global pandemic, and we have led the world in support of Ukraine, all possible because of difficult decisions taken over the last 12 years, each and every one opposed by the party opposite. So if the hon. Lady is preaching today the need for fiscal credibility, which I warmly welcome, may I just tell her this: the true test will be in two weeks’ time, to see whether she supports public spending restraint? I have showed Conservatives can raise taxes; will she show Labour is willing to restrain spending?

Economic Situation

Rachel Reeves Excerpts

Wednesday 12th October 2022 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the current economic crisis.

[The Chief Secretary to the Treasury (Chris Philp)]

The Chancellor of the Exchequer is in Washington, having meetings with the IMF, and is—[Interruption.]—which have been—[Interruption.]—routine meetings, which have been long scheduled.

[Chris Philp]

Thank you, Mr Speaker. They are routine meetings that have been long scheduled, and are certainly not a cause for exuberance or over-excitement from the Opposition.

As we know, the world has faced surging energy prices since Putin’s illegal invasion of Ukraine. We have seen very high inflation across the western world, and we have seen a cycle of increasing interest rates across western economies as well—across many western economies. But let me reassure the House that the fundamentals of the United Kingdom’s economy remain resilient. Unemployment, at 3.5%, is the lowest it has been in my lifetime—and for the record, I was born in 1976. Economic growth last year, the calendar year 2021, was the highest of any G7 country—7.5%. Just yesterday the IMF forecast that economic growth—GDP growth—this current year in the UK would be at 3.6%—once again, for the second consecutive year, the highest of any G7 country. So our economy is in resilient condition.

But I know that many families are worried about the challenges we face, and that is why, just a few weeks ago—two or three weeks ago—we introduced the energy price guarantee. Families were genuinely fearful that they might face this winter energy bills of three, four, five, six or even seven thousand pounds per year, but that energy price guarantee will ensure that the average household sees energy prices no higher than £2,500 on average—not for six months, like the Labour plan, but for two years.

We also introduced a growth plan to get our economy growing, to see wages sustainably rising, to see good jobs created and to create a sustainable tax base to fund our public services. This Government have a growth plan; the Opposition have no plan.

We intend to do this in a way that is fiscally responsible, and that is why—[Interruption.]—and that is why, on 31 October, in less than three weeks’ time, the Chancellor of the Exchequer will set out the medium-term fiscal plan, explaining to the House exactly how he will do that, and how we will continue the UK’s track record of having the highest growth in the G7, not just last year but this year as well.

[Rachel Reeves]

People are facing insecurity, instability and deep anxiety and they deserve answers. Conservative economic policy has caused mayhem with financial markets, pushed up mortgage costs and put pension funds in peril, and it has wiped £300 billion off the UK’s stock and bond markets—all directly caused by the choices of this Government. The mini-Budget, just 19 days ago, was a bonfire made up of unfunded tax cuts, excessive borrowing and repeated undermining of economic institutions. It was built and then set ablaze by a Conservative party totally out of control—not “disrupters” but pyromaniacs. And that fire has now spread. Yet Government deny all responsibility.

So will the Minister tell the House, what guarantees will the Government give that the currency slide will stop, and that people’s pensions are safe? How do they expect people to pay £500 more a month, on average, on their mortgages? How many more repossessions of family homes will there be if the Government do not change course? How much more are the Government spending on debt interest because of higher borrowing costs?

While Ministers desperately try to blame global conditions, why is it that no other central bank in the world has had to step in three times in less than three weeks to protect financial stability?

The country now faces a very serious situation. Ahead of the ending of the Bank of England’s emergency operations this Friday, what action will the Government take to ensure that their Budget does not have further consequences for financial stability, or for people’s pensions?

This is a Tory crisis made in Downing Street, but it is ordinary working people who are paying the price. It can be resolved only when the Conservatives put aside their pride and reverse this catastrophic mini-Budget, and they must do so now.

[Chris Philp]

The shadow Chancellor calls for a reversal of the growth plan, yet at the first opportunity—last night—the Labour party voted for it. She asks about mortgage rates, so let me point out to her that mortgage rates around the world have been on an upward trajectory all year. In fact, if we compare base rates in the United Kingdom with those in the United States, we see that in both countries, as she will be aware, the base rate started this year at 0.25%. In the UK the base rate is currently 2.25%, and in the US it is 3.25%, a full percentage point higher.

The shadow Chancellor referenced borrowing costs. I am sure she is aware that two-year Government bond yields are about the same in the US as they are in the UK—US bond yields have been going up over the course of this year as well. She referenced the currency: the dollar has shown strength against a basket of currencies throughout this calendar year. If she looks at the dollar strengthening against the euro, she will see that it strengthened about 15% this calendar year, and strengthened about 15% against sterling—very similar figures.

The shadow Chancellor also asked about the cost of living. We are very mindful of that, which is why we have introduced a £37 billion package to help people, disproportionately targeted at those on lower incomes, so that people on the lowest third of incomes receive £1,200. It is why we introduced the energy price guarantee on our second or third day in office, ensuring that people do not pay, on average, more than £2,500, instead of facing bills of £5,000 or £6,000—and not for six months, as the Labour party offered, but for two years. It is why the national minimum wage was increased by a large amount last April. It is why the national insurance threshold was increased to £12,500 in July, so people on lower incomes now pay virtually no national insurance or income tax. That is the package of measures that this Government have introduced, because we stand on the side of working people and have taken the steps needed to support them.

Oral Answers to Questions

Rachel Reeves Excerpts

Tuesday 11th October 2022 Commons Chamber

[Mr Speaker]

I call the shadow Chancellor, Rachel Reeves.

[Rachel Reeves (Leeds West) (Lab)]

Since the Chancellor’s disastrous mini-Budget just 18 days ago, we have seen wild swings in the value of the pound, gilt yields up 100 basis points in a single day and the Bank of England stepping in because of, in its words,

“a material risk to UK financial stability”.

The International Monetary Fund has now said that UK growth is to slow further next year. This is a British crisis, made in Downing Street; no Government are sabotaging their own country’s economic credibility as this Government are. Are the Chancellor and the Prime Minister the last people left on Earth who think their plan is working?

[Kwasi Kwarteng]

To pick up on a point, the IMF said today that the plan—the mini-Budget—has increased the forecast for growth. That is precisely the opposite of what the hon. Lady has said. It is very clear where we stand on this. We have pro-growth, pro-enterprise, pro-business Conservatives on one side and the anti-growth coalition on the other—they want to tax more and commit us to low growth.

[Rachel Reeves]

The Chancellor is in a dangerous state of denial, but the costs of these mistakes are all too real for everyone else: borrowing costs up; growth down; and mortgage payments set to increase by £500 a month. Now the Government scrabble around looking for cuts, hitting the most vulnerable and our public services. It does not need to be this way. Will the Chancellor put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the Budget?