Category: Economy

  • Angela Smith – 2022 Speech on the Growth Plan (Baroness Smith of Basildon)

    Angela Smith – 2022 Speech on the Growth Plan (Baroness Smith of Basildon)

    The speech made by Angela Smith, Baroness Smith of Basildon, in the House of Lords on 10 October 2022.

    My Lords, first, I welcome the noble Baroness back to the Front Benches. Many of us were surprised when she was departed from them previously, and I welcome her to her new job. I note that her official title is Minister of State for Government Efficiency. I wish her well; she has never been one to shy away from a challenge, and she has a challenge in that one.

    We look forward very much to the maiden speech of the noble Baroness, Lady Gohir. I am convinced that she will make an important contribution to the work of the House, so I look forward to hearing her and welcome her to this place. It is with slightly less enthusiasm that I look forward to the valedictory speech of the right reverend Prelate. Personally and from these Benches, let me say to him that he has been an asset to the House. We have greatly welcomed his wisdom and wise counsel, and we are going to miss him. I thank him for all he has done and look forward to his speech with some regrets.

    We last met in this Chamber to pay tribute to and remember Her late Majesty Queen Elizabeth. We did so in a spirit of unity and common purpose. With a new monarch and a new Prime Minister, it is a time of significant change. At a time when we most needed stability, instead we had the most extraordinary non-Budget Budget that this country has seen for at least a generation. I listened with interest to the Minister’s speech, and I was surprised that there was no acknowledgement of the turmoil that this country has found itself in in the last couple of weeks since that Statement.

    On Friday 23 September, after this House had risen for the Conference Recess, the new Chancellor made his first Statement to House of Commons—and what a Statement it was. Then, and in the days that followed, Liz Truss and Kwasi Kwarteng set out the package, which ended any pretence of fiscal responsibility or levelling up—or indeed of understanding the pressures on families, individuals and businesses across the UK. The response of experts and the markets was one of incredulity. How could this happen? At a time of high interest rates, the great government plan was to borrow more to pay for tax cuts that would benefit those who had more than anyone else in the first place. There was no absolute cap on energy bills but instead a cap on the unit price, which will see some families still paying well over the £2,500 promised under Labour’s alternative plans. I see that the noble Lord, Lord Callanan, is responding, and I hope that he will address this in his response.

    Following the non-Budget Budget, the pound fell, the markets reacted to the lack of confidence in the Government, and the Bank of England had to step in with a £65 billion commitment to prop up the economy. It clearly did not help confidence in the UK that the Chancellor refused to publish information from the Office for Budget Responsibility. Given the unprecedented market reaction, the Prime Minister should have heeded calls from across the political spectrum to return to Parliament.

    A strong or weak economy is not an academic exercise. It is not just a way to gamble on the markets to see whether you can make any money—it is about people’s lives. When mortgage offers were withdrawn, hundreds of products were pulled only to be replaced with fewer and more expensive alternatives, and some saw their opportunity of owning their own home or keeping the home that they were in disappear overnight. That will also force up rents. The Prime Minister gave her so-called reassurances that they had borrowed money to try to help with energy costs, but so much of that will be swallowed up by increased housing costs, either in mortgage payments or rents. There was a real need and opportunity for the Government to respond and for ministerial accountability to Parliament. Instead, we had over a week of unhelpful distractions, mixed messages and Cabinet infighting.

    The media were briefed that the November “fiscal event” was being brought forward to October, but nobody thought at the time to tell the Chancellor. We now know that it will be the very last day of October. Two Cabinet Ministers joined Back-Bench colleagues in mounting what has been called a “pre-bellion” on the issue of uprating universal credit benefits by inflation. As the Prime Minister turned to BBC local radio to put her case, her lack of empathy as she appeared to be reading out “lines to take” on fuel bills cut little ice with listeners.

    This chaos has come at the worst possible time. Household budgets are under enormous pressure, hitting almost everyone with high petrol prices, spiralling food costs, supply issues and ever-increasing interest rates. Even those who previously felt relatively secure are now nervous for the future. The help with fuel bills will still leave many families paying far more than £2,500.

    It is an expensive package, funded by borrowing, so I fail to understand why—despite Labour’s pleas and some from the Government’s own side as well, and the welcome intervention of Shell’s CEO—the Prime Minister and the Chancellor are so set against taxing the billions of pounds in excess profits, preferring instead costly extra borrowing. It does not make economic sense. The mini-Budget damaged both the economy and confidence in the Government—

    Lord Forsyth of Drumlean (Con)

    Will the noble Baroness give way?

    Baroness Smith of Basildon (Lab)

    It is unusual, but to the noble Lord I will.

    Lord Forsyth of Drumlean (Con)

    These are unusual times. Does the noble Baroness accept that the Government’s package of support for people and businesses with their energy bills is far in excess of what the Labour Party was promising? Does she also accept that her proposed tax on the energy companies would have raised a trifling £8 billion compared with the costs of the scheme that has been put forward by the Government? Will she not welcome that?

    Baroness Smith of Basildon (Lab)

    I would welcome a fairer way. The key question is: who pays? The Government had a choice. They could have said that future taxpayers will pay—at a time when borrowing is higher than it has been for years—or they could have said that the energy companies should make a contribution to this. The £8 billion the noble Lord cites is wrong; it is at least £14 billion. I do not dispute the “generosity”—I use inverted commas—of the Government; this is an expensive package. The problem is that it will cost us for years to come and still means that many households will be paying over £2,500, which they cannot afford. The noble Lord makes a brave defence of the Government but it is not one that I can support.

    The Prime Minister, when talking about the economy, spoke about having an

    “iron grip on the nation’s finances”,

    but you do not do that by having a spending spree one day and then slashing your tax base the next. My noble friend Lord Tunnicliffe will talk about the gilt market in his closing remarks later, but the Government’s actions have raised the cost of borrowing at the worst possible time, leaving a bill for future generations. Yet Ministers want us to believe that this crisis is not of their making and that, somehow, the decisions taken in Downing Street are not responsible for these economic problems.

    There is no doubt that international issues have a domestic impact. If proof were ever needed that we are globally interconnected, the war in Ukraine is that proof. However, as with both Brexit and the Covid pandemic, it is not just about the issue but about how Governments respond at the time, as well as the long-term resilience planning to prepare for such events.

    The Prime Minister insists that this is all caused solely by the “global economic crisis” caused by Putin’s invasion of Ukraine. This House knows that supporting Ukraine involves sacrifices. We stand alongside the Ukrainian people and will continue to do so. Of course that conflict brings serious economic impacts, but it is also just plain wrong to insist that recent events are a direct result of it. Did the pound crash against the dollar because of the events in Ukraine? Did the war make UK gilt prices go up? Did Putin force banks to pull hundreds of mortgage deals from the market? No, no, no. These were immediate, emphatic and damning responses to the Government’s announcement.

    When we look at the timeline of what happened and when, we see that the market movements perfectly tracked announcements and media appearances by the Prime Minister and the Chancellor, including last week’s speeches in Birmingham. The Chancellor claimed that the economic chaos was partly the result of the additional “pressure” he experienced following the death of the Queen, as his Statement came just

    “four days after the funeral”.

    But he chose that date. I am sure that I was not alone in my exasperation at the economic turmoil being explained away as policies being badly communicated. That was not the issue. They were the wrong policies, and no amount of communication could disguise that.

    Some excuses were more imaginative than others. Though not a member of the Government, the noble Lord, Lord Hannan—he smiles at me; he probably knows what is coming next—tried his best to help. I look forward to his contribution later. He remarked that the real reason for the pound’s crash was really quite simple. It was not because of decisions taken in Downing Street. The pound’s value collapsed because “the markets are terrified” of Keir Starmer. This time, the party opposite was not blaming the last Labour Government; it was blaming the next one. It might be helpful to reflect that, on average, the last Labour Government achieved higher annual growth than we have seen over the past 12 years of a Conservative Government.

    The Prime Minister and Chancellor now claim to have listened. They say they have listened to the markets, to the public and to their own MPs. After nine days of digging in on the 45p income tax rate, Liz Truss finally announced, in a massive U-turn during the Conservative Party conference, that it would remain. However, most of the mini-budget still stands—but it is only Monday. It is currently still a package aimed at those in the top 5% of income, despite mainstream economic analysis and experience having shown time and time again that trickle-down economics simply does not work. The Government would do well to follow the advice of the noble and learned Lord, Lord Clarke of Nottingham, and others, and just start again. Or, if the Chancellor is convinced that he has, to borrow a phrase from Boris Johnson, “got the big calls right”, he should publish the OBR’s economic forecast. He should publish it today and in full.

    The OBR was set up by a Conservative Chancellor and its forecasts have become a key part of UK fiscal events. Mr Kwarteng says he recognises the OBR’s independence, but the facts speak for themselves: he muzzled it when it was most needed. And it is not just the OBR in the firing line. The former Bank of England Governor, Mark Carney, has accused Liz Truss of “undercutting” the country’s economic institutions and

    “working at some cross purposes with the Bank”.

    Of course, some have argued that this sorry saga might have been avoided had the Prime Minister not dismissed the Treasury’s Permanent Secretary in one of her first acts in office. Getting rid of a senior civil servant for personal or political reasons is a significant departure from our traditions of how to govern. As we see in this House—perhaps the noble Lord, Lord Forsyth, and I are a good example—we know how to disagree agreeably. Instead, in the words of the noble Lord, Lord Macpherson of Earls Court, the Prime Minister chose to fire the

    “only official with serious experience of crisis management and then precipitate a crisis a fortnight later.”

    I hope that the Government are not just going to listen to, and surround themselves with, those who will always agree, whatever the issue. That is no way to run an economy and no way to run a country.

    A strong economy is one in which a Government play their full part in supporting and unleashing the potential for growth. That sits alongside strong public services that enhance our social fabric and our economy. A first-rate health service and the best training and educational opportunities are not just items to be ticked off in the “Nice to have” category; they are essential for a modern economy. An incoming Labour Government will implement a genuine plan for growth, creating the biggest partnerships between businesses, government and communities that this country has ever seen. We will ensure greater fairness in the tax system and, by making us a global leader in green technologies, we will secure investment and resilience in our energy markets.

    It is not just in the green economy where we have to be ambitious. We will work together across manufacturing and service industries to find solutions to the ongoing skills crisis, to which this Government have no answer. We will also change how politics is conducted in this country, taking responsibility for our decisions and the consequences they have for people across the nation—because when we look at everything said by the Prime Minister, the Chancellor and the rest of the Cabinet last week, one word is conspicuous by its absence, and that word is “sorry.”

  • Lucy Neville-Rolfe – 2022 Speech on the Growth Plan (Baroness Neville-Rolfe)

    Lucy Neville-Rolfe – 2022 Speech on the Growth Plan (Baroness Neville-Rolfe)

    The speech made by Lucy Neville-Rolfe, Baroness Neville-Rolfe, in the House of Lords on 10 October 2022.

    My Lords, I start by welcoming the noble Baroness, Lady Gohir, to today’s debate. I very much look forward to hearing her maiden speech and to her future contributions. On a sad note, we are also hearing the valedictory speech from the right reverend Prelate the Bishop of Birmingham, who has provided so many mature, sensible and considered contributions to the House over the past 12 years.

    It is a great privilege to open the debate on the economy. When the new Prime Minister was forming her Administration, I was honoured to be offered the post of Minister of State in the Cabinet Office, in effect replacing my noble friend Lord True, now the Leader of the House. I take this opportunity to express my admiration for his brilliant eulogy to Her late Majesty. I was briefed that most Cabinet Office work was, in the main, worthy, so I anticipated a future dealing with the humdrum detail of government work—below the radar, as it were. In the event—it is sometimes surprising how things turn out—I first come before your Lordships to outline the Government’s economic growth plan.

    As the Prime Minister has made abundantly clear, growth is the core economic mission of this Government. With economic growth, everyone benefits. We cannot have, say, a strong NHS, good schools or effective defence without it. We have three priorities: cutting taxes to boost growth, reforming the supply side of the economy and maintaining a responsible approach to the public finances.

    I will come to the details of the plan shortly, but first I will touch briefly on another important recent development that is an integral part of our whole economic package: our action on energy bills. The Prime Minister rightly took action on this crisis facing households within 48 hours of taking office. The energy price guarantee will limit the unit price that consumers pay for electricity and gas, so that for the next two years the typical annual household bill will be £2,500, in contrast to the £6,000 or so that some predicted. Millions of the most vulnerable households will also receive additional payments.

    We are also helping businesses. The energy bill relief scheme, providing an equivalent guarantee to that for households, will reduce gas and electricity prices for all UK businesses, charities and the public sector, especially schools and hospitals. Finally, to support the market, we have announced the energy markets financing scheme, providing a 100% guarantee for commercial banks to offer emergency liquidity to energy firms in otherwise sound financial health that face high margin calls.

    While early estimates suggested that our package could have cost as much as £160 billion, more recent estimates are much lower. The key point is that we are giving relief and confidence to a large section of the British people, something that will particularly matter to those at the lower end of the scale. Significantly, the measures have been designed to provide an incentive for fuel economy. There is a reduction in cost per unit, not an overall cap, so that it encourages people and businesses to minimise their energy use. More importantly, without this package it would have been a very brutal winter for millions of households and small businesses.

    Our growth plan sets out our vision for a simpler, lower-tax economy. This Government believe that high taxes reduce the incentive to work, encourage tax evasion, deter investment and hinder enterprise. Hence we are cutting the basic rate of income tax to 19p in April 2023—that is, one year early—which will benefit virtually all taxpayers.

    Noble Lords will have heard that the abolition of the 45% band will no longer go ahead. The Prime Minister and Chancellor have accepted that it had become a distraction from our growth plan. I point out, however, that 40% was the top rate from the date of the Thatcher reforms and all through the Major, Blair, and most of the Brown eras. Also, the top rate is 40% in the Republic of Ireland and 39% in Norway.

    International competitiveness must remain a vital objective, so next year’s planned increase in corporation tax will be cancelled. That means that the rate will remain at 19%, the lowest in the G20, enhancing the attractiveness of the UK as a place to do business. We are also confirming that the annual investment allowance will be set permanently at £1 million, and we have introduced legislation to cancel the health and social care levy. Reversing the levy delivers a tax cut for 28 million people, worth on average £330 every year, and a tax cut for nearly a million businesses.

    Planned increases in the duty rates for beer, cider, wine and spirits will also be cancelled. In addition, we want to help families aspiring to buy a home of their own. We have therefore proposed a series of reductions in the thresholds for stamp duty land tax, which will assist buyers, particularly first-time buyers.

    Simplification is close to my heart. We are embedding tax simplification into the institutions of government and repealing recent changes to off-payroll working rules—the infamous IR35—which added complexity and cost for many businesses that engage contractors. I know that this will be particularly welcome to our Economic Affairs Committee.

    We are introducing a VAT-free shopping scheme. We want our high streets, airports, ports and shopping centres to feel the economic benefit of the millions of tourists who visit our wonderful country each year. While the Government believe in lowering taxes wherever possible, achieving growth will take more than that. With more vacancies than unemployed people to fill them, we need to encourage people to join the labour market—getting more people into work by, for example, incentivising those claiming universal credit to secure more or better-paid work. We will also legislate to ensure that strikes can be called only once negotiations have genuinely broken down.

    To drive growth, we need new sources of capital investment. We want to unlock billions of pounds to help British businesses—for example, in developing new technologies that can scale up. Hence we will reform the pensions cap and launch the long-term investment for technology and science fund.

    We need global banks to create jobs here, invest here and pay their taxes here in London, not in Paris or New York, so we are scrapping the cap on bankers’ bonuses. To reaffirm the UK’s status as the world’s financial services centre, we will set out a package of regulatory reforms in the coming months.

    We must also see our way to simplifying regulation and cutting red tape in key areas such as planning and procurement. The weight of complexity and compliance is absorbing precious resources and holding back productivity. I know from my time with the other noble Lords on our Built Environment Committee how important housing and infrastructure are to our growth and success. Sadly, our planning system for major infrastructure is too slow and fragmented. For that reason, we are accelerating infrastructure delivery in energy, road, rail and gigabit-capable broadband, with new legislation that will unpick the complex patchwork of planning restrictions and EU-derived laws that constrain our growth, and we are getting the housing market moving by promoting the disposal of surplus public sector land for housing.

    Finally, and of great significance across our country, we are creating a series of new investment zones. We will liberalise planning rules on agreed sites, releasing land and accelerating development. We are introducing an unprecedented set of tax and national insurance incentives for business to invest, build and create jobs in these zones.

    The steps that the Government are taking add up to a radical and concerted effort to boost growth. In the coming months we will continue to work to bring forward further measures, with announcements on agriculture, business regulation, childcare, immigration and digital infrastructure.

    Crucially, the Government understand that growth and sustainable finances must go hand in hand. I remind noble Lords that in 2021 the UK had the second lowest debt-to-GDP ratio of any G7 country, lower than Japan, Italy, France, Canada and the US. Even so, only continued fiscal discipline will provide the confidence and stability to underpin long-term growth.

    Accordingly, as announced this morning, on 31 October —three weeks from now—the Chancellor will publish a medium-term fiscal plan setting out our responsible fiscal approach and how we plan to reduce debt as a percentage of GDP over the medium term. Further, he has asked the OBR to set out a full economic and fiscal forecast soon, and he continues to work closely with the Governor of the Bank of England.

    In conclusion, I passionately want—we all want—our country to succeed and to live up to our past achievements. To achieve that, economic success is essential. To that end, we must get the economy growing again. We must do so while still dealing with the effects of the Covid pandemic and its impact on our public services. We are also rightly engaged in giving significant help to Ukraine—obviously at a cost. Success will not be easy.

    Today we are here to listen to views from across the House and look forward to engaging in a constructive debate—but, however one looks at matters, achieving economic growth is vital if we are to achieve our ambitions. We need to do things differently and better. That is what the growth plan is all about.

  • John Swinney – 2022 Comments on Scottish Budget Date Being 15 December

    John Swinney – 2022 Comments on Scottish Budget Date Being 15 December

    The comments made by John Swinney, the Deputy First Minister in Scotland, on 6 October 2022.

    There is no doubt that the challenges and obstacles of recent times have heavily impacted the way we live. Our continued recovery from the pandemic, the current cost of living crisis, the ongoing turmoil and uncertainty regarding the UK Government’s plans for its Autumn budget and Russia’s illegal war in Ukraine all have implications on the people of Scotland and our economy.

    We are not privy to discussions surrounding the UK Government’s ever changing Autumn budget plans, despite the clear and obvious impact this has on our ability to plan our 2023-24 Budget. The Scottish Budget will be informed by voices across Scotland to ensure we continue to deliver to build a fairer, greener and more prosperous country.

    I look forward to working with stakeholders and the Committee to ensure a Budget is delivered which puts the priorities of the Scottish people at the forefront and continues to strengthen our economy.

  • Kwasi Kwarteng – 2022 Statement on Appointment of James Bowler as Permanent Secretary

    Kwasi Kwarteng – 2022 Statement on Appointment of James Bowler as Permanent Secretary

    The statement made by Kwasi Kwarteng, the Chancellor of the Exchequer, on 10 October 2022.

    I’m delighted to welcome James [Bowler] back to the Treasury and Beth [Russell] and Cat [Little] into their new roles as Second Permanent Secretaries. James joined the Civil Service over 20 years ago and has enormous experience delivering across a range of Government departments. Beth and Cat bring experience and continuity and it’s fantastic to have them as part of the Treasury’s top team.

    James has a proven track record of delivery and strong leadership, both of which will be vital as we drive towards our mission of igniting growth and raising living standards for everyone across the UK.

  • David Shaw – 1988 Speech on the Budget

    David Shaw – 1988 Speech on the Budget

    The speech made by David Shaw, the then Conservative MP for Dover, in the House of Commons on 17 March 1988.

    I welcome the Budget because throughout the 1970s—the start of my working career—I witnessed an economy which went from stop-start to start-stop. The 1970s began with economic growth, but ended in decline. Towards the end of the 1970s, world opinion of us was at an all-time low. Far worse than that, however, was the attitude of the Labour Government towards the Health Service in 1976. The National Health Service suffered badly under Labour, but last November my right hon. Friend the Chancellor announced that £1.1 billion more would be put into it next year.

    Many things are wrong with the National Health Service. There are no satisfactory performance indicators by which to monitor its efficiency. Numbers of administration staff are still rising; on figures that I have seen, it appears that there are more administrators in the National Health Service than in the health service of the United States. I welcome the Government’s review, therefore. The Government’s approach has to do with value for money, not blank cheques.

    My right hon. Friend the Chancellor gave us all good news about the economy in his Budget speech. He said, among other things, that manufacturing exports were up by 8.5 per cent. and that unit labour costs hardly rose last year, which shows that there is more efficiency and success in the economy.

    Mr. Battle rose—

    Mr. Shaw I shall not give way. There are others wishing to speak.

    The figures that were announced today should no longer be known as the unemployment figures but as the employment and job vacancy figures. In February alone, 86,000 more jobs were created. There are now 260,000 registered vacancies, which—it is well known—are only a third of total vacancies.

    I was delighted with my right hon. Friend’s other announcements of success. He said that we had had six years of sustained economic growth, achieved through tax cuts. We have had six years of sustained increases in public expenditure and of real increases in National Health Service funding. That could only come about through managing the economy successfully. However, I suggest to the Minister that the Government have had one economic failure—they have not yet convinced the Opposition that there is no such thing as a free lunch.

    Mr. Corbyn The hon. Gentleman has them all the time.

    Mr. Shaw The Budget was about increasing personal responsibility and putting people’s incomes under their own control. It was also about home and share ownership. I am delighted that there are now 9 million shareholders in the country, a number which the Government proposals should increase. The benefits of privatisation are not only to widen ownership but to increase the profits being earned by the privatised companies to levels higher than they earned in the public sector. As a result of those profits, more taxes are paid to the Exchequer than when the companies were in the public sector. The privatised companies are also better at providing consumer services than they ever were in the public sector.

    Budgets are about income and how much the Government take away in taxation. I welcome the proposals on the taxation treatment of wives. For more than 200 years that treatment has been unfair. For much of that time the tax on marriage has been excessive. When I got married, I was charged more by the Inland Revenue on my marriage than my wife’s wedding ring cost.

    There are lower taxes for everyone in the Budget. Some will ask, “Why not more lower taxes?” About 750,000 people have been removed from tax altogether and some us might ask, “Why not a million?” The staff nurse who has had a 2.5 per cent. net pay increase as a result of tax deductions is a case in point. Some will ask why she should not be given a 3 per cent. reduction. I want more tax reductions.

    As for the famous business man that almost every Labour spokesman has mentioned, one must ask why the Opposition hate success. Why do Opposition Members hate the people who create jobs and who earn money overseas and bring it back to this country? Why do they hate successful business men who manage companies here and abroad and who bring profits and dividends to this country? The Opposition hate, and will always speak against, success. We should not lose sight of the massive contribution that the higher rate taxpayers have made to the country under the Government. When in government, the Labour party tried to squeeze them until the pips squeaked, but they raised only £800 million from the higher rate taxpayers. Under this Government, higher rate taxpayers pay £3,800 million a year which, even after the reduction of £1 billion, will still be about three times as much as Labour managed to get from them by the end of their years in office. I believe that next year the higher rate taxpayers will still be paying as much as this year because, with the tax cuts, they will be earning more, going in for fewer tax avoidance schemes, putting less money into pension plans and more into creating jobs and new businesses.

    We are going to remove many of the technical requirements that have been holding some share option schemes back, but they have not exactly held back share ownership in this country: 1,500,000 people are now in such schemes. We now have a true capital-owning democracy. I am pleased to say that some of those 1.5 million people are in my constituency. Many secretaries, typists and shop floor workers there are part of share option schemes and have done well out of them.

    I was also delighted by the abolition of yet another tax—capital duty. I have been involved for some time in my business career with helping to raise equity finance for companies and businesses, and capital duty was a considerable expense that hit those companies’ receipts right at the start of their new expansion phases. It came in just as the equity finance was being raised, and has proved extremely disadvantageous over the years.

    I wish to draw attention to the business expansion scheme, in which I worked for some time raising money for very small businesses. It has been a success, not as a means of helping the rich to avoid taxes as Opposition Members say—according to one report, more than 20 per cent. of the people who invest in the business expansion scheme pay tax at the standard rate—but in helping 2,200 small businesses, many of them having raised less than £100,000.

    However, there has been one thing wrong with the business expansion scheme. Indeed, four years ago I brought this to the attention of my right hon. Friend, who was then a Treasury Minister and is now the Secretary of State for Social Services. In a paper which is no doubt gathering dust in the Treasury, but which perhaps might have been brought out recently, I pointed out that we should cap the business expansion scheme. I am delighted that the Government are now to do so at £500,000 for any one company.

    However, I draw the attention of my hon. Friend the Economic Secretary to the Treasury to articles in today’s newspapers and to representations that have been made to me that that policy, as announced, could be unfair. There are several prospectuses out at the moment for the purpose of raising money under the business expansion scheme. The case of one small company has been brought to my attention. Although only about £600,000 is being raised to help expand the business and to create more jobs, that company may lose the whole of the money subscribed for shares because it may not he able to close the issue. That company has had to spend between £70,000 and £100,000 in legal and advisory fees, which will be lost if the issue cannot be closed. The problem of costs is caused by the Financial Services Act 1986, which is correct and proper in protecting shareholders but which has made more expensive the legal and professional advice that is required for the issue of prospectuses. I hope that my hon. Friend will be able to consider that, if the date of the issue of a prospectus is after Budget day, then that date could be the closing date for investment under the business expansion scheme being limited to £500,000 or so. I would advise him that some relief is needed on this point.

    I realise that time is getting on and conclude by saying that I welcome the Budget and the tax changes that have been made. This Budget is about increasing the number of jobs in our economy and the prosperity of individuals and businesses. I believe that the nation will be a lot better off with the many years of sustained economic growth that lie ahead of us because of this Budget.

  • Kwasi Kwarteng – 2022 Speech to the Conservative Party Conference

    Kwasi Kwarteng – 2022 Speech to the Conservative Party Conference

    The speech made by Kwasi Kwarteng, the Chancellor of the Exchequer, in Birmingham on 3 October 2022.

    Thank you, conference.

    What a day!

    It has been tough, but we need to focus on the job in hand.

    We need to move forward.

    No more distractions. We have a plan, and we need to get on and deliver it.

    That’s what the public expect from their government.

    But first conference, welcome back to Birmingham.

    This is a remarkable city.

    It has a history of great brilliance

    Joseph Chamberlain in the nineteenth century was an extraordinary civic leader who led Birmingham and the world through the industrial revolution.

    And today Andy Street is following in that great tradition.

    Grafts and grit turned this small town first into a thriving industrial market.

    Then into one of the centres of the industrial revolution…

    Which powered and grew not just the British economy,

    But provided the new technologies that changed the world forever.

    The Industrial Revolution was one of the most monumental transformations in human history.

    And it began here.

    With determination and application

    Those Britons built a thriving economy.

    They inspire me today.

    They remind us that in Britain, with the British people, absolutely anything is possible.

    Our Plan today focuses on the same, bold sentiment.

    The same inspiration

    To deal with the challenges of today by giving people the tools they need to thrive tomorrow.

    To get Britain moving.

    We have great ideas

    We have the same inspirational people

    And I know we have the same determination.

    Our Growth Plan set out ten days ago will ensure we focus relentlessly on economic growth.

    Because we must face up to the fact that for too long our economy has not grown enough.

    The path ahead of us was one of slow, managed decline.

    But I refuse to accept that it is somehow Britain’s destiny to fall back into middle league status…

    …or that the tax burden reaching a 70-year-high is somehow inevitable.

    It isn’t, and it shouldn’t be.

    Conference we needed a new approach, focused on raising economic growth.

    Because that is the only real way to deliver opportunities, to deliver higher wages, to deliver more jobs, and crucially, to deliver that revenue to fund our precious public services…

    …and it is the best and only way of achieving long-term fiscal sustainability.

    Because it is only by raising economic growth that we will spread opportunity and prosperity to every corner of our country.

    With economic growth, everybody benefits.

    And I mean everybody.

    Whilst we all believe in growth

    We as Conservatives also believe, it is an important principle that people should keep more of the money they earn.

    I don’t need to tell you that. That isn’t radical. That isn’t irresponsible.

    It is a deeply held belief that we all share as Conservatives.

    We were faced with a 70-year high tax burden,

    … we were confronted with low growth

    … and the path we were on was clearly unsustainable.

    So that’s why we are cutting taxes for working people.

    That’s why we will reverse the National Insurance hike on the 6th November.

    And that’s why we will bring forward the 1p cut to the basic rate of Income Tax by one year.

    And that’s why we will take 200,000 people out of paying Stamp Duty altogether.

    Taken together … this is what our support will do for all our people.

    Thanks to our energy intervention, a typical person in a semi-detached property will save £1,150 on their energy bills this winter.

    On top of the £400 discount.

    And if they are earning an average salary, they will benefit from an additional tax cut of around £400.

    That is almost a TWO-THOUSAND-POUNDS saving this year alone.

    But I can be frank, I know the plan put forward only ten days ago has caused a little turbulence.

    I get it. We are listening and have listened.

    And now want to focus on delivering the major parts of our growth package because with…

    Energy bills skyrocketing

    A painful Covid aftermath

    War on our continent

    A 70-year high tax burden

    Slowing global growth rates

    And glacially slow infrastructure delivery:

    We couldn’t simply do nothing.

    We can’t sit idly by.

    What Britain needs more than ever is economic growth…

    And a government wholly committed to economic growth.

    That is why we will forge a new economic deal for Britain…

    …backed by an ironclad commitment to fiscal discipline.

    More businesses. More jobs. Higher pay. More money for public services.

    Because we cannot have a strong NHS without a strong economy.

    We can’t have good schools without a strong economy.

    We cannot fund our Armed Forces without a strong economy.

    So growing our economy should be our central and guiding mission.

    With this plan, we are aiming for two and a half percent annual trend growth.

    We have done it before, and we can do it again.

    And even in the face of extreme volatility in global markets…

    …with major currencies wrestling an incredibly strong US dollar…

    …and longer-term trends from demographic change to climate change…

    …we will show that our plan is sound, that it is credible and that it will increase growth.

    That is our pledge to the people of this country.

    However, there is an immediate challenge facing not just our country, not just our people, but the whole of Europe…

    The high cost of energy driven by Putin’s barbaric invasion of Ukraine.

    Cast your mind back just four weeks ago.

    We had dire warnings of extreme energy prices to come.

    Corner shops to heavy industry predicted unprecedented disruption.

    Business groups feared mass unemployment.

    Entire livelihoods were on the line.

    Make no mistake, this was a very real prospect for our country.

    So, within 48 hours of taking office, we announced one of the most significant interventions ever conceived by the British state…

    Annual energy bills of up to £6,500 from next year were staring us in the face.

    Everybody was worried.

    Now, we are holding down the price at an average of £2,500.

    Not just this winter like the Labour Party promised… but next winter too.

    Two years of significant taxpayer support to protect our people.

    Because THIS government will always be on the side of those who need help the most.

    For our businesses too, Conference, help is on its way.

    A local pub could save £3,100 a month, cutting their bills by 40 per cent.

    And we have also frozen Alcohol Duty!

    Make no mistake, this is a monumental support package to protect millions of families and businesses from devastating price hikes unleashed by Vladimir Putin.

    There is no doubt that this is a substantial intervention, but we had no choice.

    Doing nothing was simply not an option.

    We couldn’t just cross our fingers and hope for the best.

    The price of inaction would have been far greater than the cost of the scheme.

    We will deal with the short-term shocks caused by Putin…

    But we must also go for growth to ensure we are much more self-sufficient.

    We will tackle the mistakes of the past to ensure the UK can NEVER again be blackmailed by people such as Putin and his like.

    When Covid hit our shores, we were right to intervene to protect lives and livelihoods.

    And I can say – in all sincerity – that we went into that crisis in a much better position because of the action we have taken over the last decade.

    Because of successive Conservative governments, the UK now has the second lowest debt to GDP ratio in the G7.

    And throughout this urgent endeavour of ours to protect Britain from high energy costs… and in response to…

    … the urgent need to grow our economy… we have taken the appropriate action.

    Our entire approach will be underpinned by a strong institutional framework, which enhances growth in our country…

    …including our independent Bank of England and Office for Budget Responsibility.

    We will have a strong fiscal anchor with debt falling as a proportion of GDP over the medium term.

    That is the Conservative way.

    But today, we face new challenges.

    And in addressing those challenges, we will act in a fiscally sustainable and responsible way.

    That is why, shortly, we will publish our Medium-Term Fiscal Plan setting out our approach more fully.

    It will set out how we plan to get debt falling as a percentage of GDP over the medium term.

    And I have asked the OBR to publish a full economic and fiscal forecast alongside our Medium Term Fiscal Plan.

    There is no path to higher sustainable economic growth without fiscal responsibility.

    Conservatives have always known this and we know it still.

    And it is because we are Conservatives, that we must remain absolutely committed to being serious custodians of the public purse.

    This is what defines us – and separates us from the Labour Party

    But conference, to grow the economy we really do need to do things differently.

    We know that it is our towns and cities which drive much of our economic growth today.

    Business investment, skills, science and technology, infrastructure, housing, energy supply, strong financial services…

    …these are the key ingredients for higher economic growth and well-funded public services.

    I had the great privilege of being Business Secretary for nearly 2 years.

    I visited every corner of this country.

    I saw the creativity, the drive, the entrepreneurial spirit.

    We have to celebrate our entrepreneurs, our business people, our job creators, people who are taking risks…

    But I also saw where government got in the way of progress.

    My job now is to free that potential.

    This starts with Investment Zones.

    We will empower local areas to do things differently, just as here in Birmingham.

    We will liberalise planning rules, releasing land and accelerating development.

    We will cut taxes for business in these zones.

    We will accelerate tax reliefs for new structures and buildings.

    We will provide relief on investments on plant and machinery.

    We will lower taxes which stop businesses hiring and skilling up their workforce.

    That is an unprecedented set of incentives for business to invest, to build, and to create jobs right across the country.

    And it will start right now.

    Conference, we will…get… Britain… moving.

    But too often regulation holds business and Britain back.

    Stifling red tape puts up too many barriers for entrepreneurs looking to scale up…

    …there are too many rules for the small business owner who wants to take on an apprentice

    … there are too many burdens on our finance sector stopping it from investing in key projects

    And when Britain’s innovators, job creators, entrepreneurs and risk takers are held back…

    …so is Britain.

    That is why we will review, replace or repeal retained EU law holding our country back.

    We will also speed up the delivery of infrastructure and promote house building to create a true home owning, shareholding democracy.

    Unapologetically, and emphatically we will get out the way to get Britain building and on its feet.

    Over the coming days and weeks, we will forge ahead and break down the barriers that have held our country back for too long.

    On childcare, agriculture, immigration, planning, energy, broadband, business, financial services…

    Sensible, economic reforms to produce more of the products and services we need to drive down costs.

    To create jobs

    And generate higher pay and productivity.

    And when it comes to those who would hold us back, we will act.

    Pernicious strike action disrupts the lives of the British people and it slows down our economy.

    It stops children going to school.

    It stops parents from going to work.

    And it stops people from getting the vital care they need.

    Action which slows down our economy cannot be the policy of any serious party serious about growth.

    And a party which is not serious about growth, can never be considered fit for office.

    So, we will introduce important reforms to stop strike action from derailing our daily lives.

    Reform to get Britain moving.

    Conference, I am unashamedly a pro-business Conservative.

    I know that the interests of businesses and hardworking families are not in conflict. They are aligned.

    When businesses thrive, they create more jobs, they raise wages, and they contribute more for our public services.

    Rather than bashing business, we’re backing it.

    That is why we need to make our tax system simpler, more competitive and pro-growth.

    So, we will reverse the planned increase in Corporation Tax, ensuring we have the lowest rate in the G20.

    This will plough almost £19bn a year back into the economy.

    That’s £19bn for businesses to reinvest, to create jobs and raise wages.

    We will reverse the reforms to IR35 that have added unnecessary complexity and cost for so many businesses.

    We will maintain the £1 million Annual Investment Allowance, giving 100% tax relief on investments in plant and machinery.

    For over a decade, the Conservative Party has stood up for working people in this country.

    Since 2010, we have delivered:

    ● The lowest unemployment since the 1970s

    ● A million new businesses

    ● More than doubling the tax-free personal allowance

    ● We have taken 2 million of the lowest paid OUT of paying tax altogether.

    ● The National Living Wage, boosting the pay packets of the lowest paid

    ● Fuel duty, frozen for 12 years.

    ● The £1,000 uplift in Universal Credit, making sure work always pays.

    These are great achievements. Conservative achievements.

    And let us not forget…

    When this Party came into Government – we were met with the full force of Labour’s economic incompetence.

    ● ‘No money left’

    ● Taxes raised

    ● Record unemployment.

    We reversed that story of national decline.

    But even after three election defeats, they still haven’t learned their lesson.

    The Labour Party would have you believe that every penny you earn should go straight into the Government’s coffers.

    The Labour Party believe that they know how to spend your money better than you do.

    The Labour Party believe that you can tax your way to growth.

    We don’t believe that.

    We believe in low tax, high growth and fiscal discipline. We are Conservatives.

    And that’s what our growth plan delivers.

    Last week we saw a Labour Party with the same old ideas

    Renationalisation

    … empty slogans

    … and no plan for growth.

    But we as Conservatives believe in Britain.

    We love this country, our patriotism, isn’t something that we turn on and off and negotiate like the Labour Party

    It goes to the core of what it is to be a Conservative… it is an unyielding quality.

    Yes we have challenges to face.

    But our plan will take this country forward.

    We will get Britain moving.

    We will deliver lower taxes for you and your family.

    And we will grow our economy.

    I know we can achieve that goal.

    With grit, with drive and with determination

    We can meet the challenges of this new era.

    Thank you.

  • Sadiq Khan – 2022 Statement on the Government’s Fiscal Statement

    Sadiq Khan – 2022 Statement on the Government’s Fiscal Statement

    The statement made by Sadiq Khan, the Mayor of London, on 23 September 2022.

    The measures in this Budget are not only unfair, but will put public finances on an unsustainable footing, which risks harming our economy for years to come.

    As the country grapples with the worst cost of living crisis in decades, the Chancellor has today prioritised massive unfunded tax giveaways for the wealthy, rather than helping those households that are really struggling.

    There is not enough in today’s Fiscal Statement to help those families and businesses who need support the most.

    Today was a missed opportunity from the Chancellor who could have made a real difference to millions of Londoners by providing free school meals to all primary school children, uplifting Universal Credit and ensuring that the most vulnerable receive a basic amount of free energy. He should also have given me the power to freeze private rents in London, which would save people £3,000 over two years.

    Instead the Government has chosen to bring in an swathe of tax cuts that they admit will disproportionately benefit the most wealthy in society. Londoners who are struggling to make ends meet will be disappointed at the lack of immediate help today.

  • Bank of England – 2022 Statement on the Collapse of the Pound

    Bank of England – 2022 Statement on the Collapse of the Pound

    The statement made by the Bank of England on 26 September 2022.

    The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets.

    In recent weeks, the Government has made a number of important announcements. The Government’s Energy Price Guarantee will reduce the near-term peak in inflation. Last Friday the Government announced its Growth Plan, on which the Chancellor has provided further detail in his statement today. I welcome the Government’s commitment to sustainable economic growth, and to the role of the Office for Budget Responsibility in its assessment of prospects for the economy and public finances.

    The role of monetary policy is to ensure that demand does not get ahead of supply in a way that leads to more inflation over the medium term. As the MPC has made clear, it will make a full assessment at its next scheduled meeting of the impact on demand and inflation from the Government’s announcements, and the fall in sterling, and act accordingly. The MPC will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term, in line with its remit.

  • Rachel Reeves – 2022 Response to the Chancellor’s Fiscal Statement

    Rachel Reeves – 2022 Response to the Chancellor’s Fiscal Statement

    The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 23 September 2022.

    Thank you, Mr Speaker.

    I would like to welcome the Rt Hon Gentleman to his place and I thank him for his statement.

    He is the third Conservative Chancellor this year – and it’s still only September.

    The Chancellor has confirmed that the costs of the energy price cap will be funded by borrowing, leaving the eye-watering windfall profits of the energy giants untaxed.

    The oil and gas producers will be toasting the Chancellor in the boardrooms as we speak – while working people are left to pick up the bill.

    Borrowing higher than it needs to be, just as interest rates rise.

    And yet the Chancellor refuses to allow independent economic forecasts to be published which would show the impact of this borrowing on our public finances on growth and inflation.

    It is a budget without figures.

    A menu without prices.

    What, Mr Speaker, has he got to hide?

    This statement is an admission of 12 years of economic failure.

    And now here we are – one last throw of the dice, one last claim that these ministers will be different.

    For all the chopping and changing and chaos and confusion there has been one person here throughout.

    The Prime Minister.

    She’s been a minister for a decade, out defending every single economic decision.

    When the Prime Minister says she wants to break free from the past, what she really means is she wants to break free from her own record.

    Because where have the last 12 years left us?

    Lower growth, lower investment, lower productivity.

    And today, we learn we have the lowest consumer confidence since records began.

    The only things that are going up are inflation, interest rates and bankers’ bonuses.

    As the Tories become more and more detached from reality millions of people are lying awake at night worrying about how they’ll make ends meet.

    Labour won the argument that action on energy bills was necessary.

    But the question is: who pays?

    The energy producers who have profited so much from the rise in prices should make a contribution.

    But when the country asked who should foot the bill for their energy rescue
    package the Conservatives responded: “you”, the British people.

    Instead of standing up for working people, the Conservatives chose to shield the gigantic windfall profits of the energy giants leaving tens of billions of pounds on the table and pushing all the costs onto borrowing to be paid for by current and future taxpayers.

    This Prime Minister and Chancellor have no regard for taxpayers’ interests or the concerns of working people.

    It’s not just that this Conservative government is not working for ordinary families – it’s actively working against them.

    Mr Speaker, we have had six so-called growth plans from the Conservatives since 2010.

    A litany of failure.

    I do at least commend the Chancellor on having the ambition of achieving two and a half percent growth a year – the last Labour government’s rate of growth.

    But to achieve that sort of growth and for that growth to be sustainable, you need a credible plan.

    And the truth is that this government does not have one.

    The Prime Minister and Chancellor are like two desperate gamblers in a casino, chasing a losing run.

    The argument peddled by the Chancellor today isn’t a great new idea as much as he’d like us to think so.

    What this plan adds up to is to keep corporation tax where it is today and to take national insurance, which they voted to increase, back to where it was last March.

    Some new plan!

    And it’s based on an outdated ideology that says if we simply reward those who are already wealthy, the whole of society will benefit.

    They’ve decided to replace levelling up with trickle down.

    As President Biden said this week, he is “sick and tired of trickle-down economics.”

    And he is right to be.

    It is discredited, it is inadequate and it will not unleash the wave of investment that we need.

    Mr Speaker, it’s not just this side of the House with concerns.

    The Rt Hon Member for Surrey Heath, described the Prime Minister’s economic plans as ‘taking a holiday from reality’.

    The Rt Hon Member for Richmond, two Chancellors ago, was perhaps too honest with his party when he told them:

    “We tried having a … low corporation tax … as a means of getting businesses to invest.”

    But that “It has not worked.”

    The new Chancellor and Prime Minister used to agree with that.

    They voted for the corporation tax rise, and Labour supported it too.

    Members opposite might have changed their minds, but we have not.

    Because the evidence shows that low rates of Corporation Tax are not the best way to boost investment and productivity and the Tories’ own record shows that.

    Britain has the lowest headline rate of corporation tax in the G7 but we also have the lowest rate of private investment.

    That’s why Labour would do what businesses are actually asking for:

    Using targeted investment allowances to boost productivity and growth.

    And scrapping outdated and unfair Business Rates, that harm our small businesses and high streets replacing them with a system that’s fit for the 21st Century.

    What about their other policies?

    Let’s take these so-called ‘investment zones’.

    Again, these are nothing new.

    Every time they were tried, all they have achieved was moving growth around
    the country, not creating growth.

    The best way out of this high tax, low growth spiral that the Tories have created is to get the economy firing on all cylinders in all parts of the country.

    It’s going to take much more than a stamp duty cut to get our economy back on track and home ownership back to the levels last seen under the Labour government.

    These stamp duty changes have been tried before.

    Last time they did it, a third of the people who benefited were buying a second or third home, or a buy to let property.

    Is that really the best use of taxpayers money when borrowing and debt are already so high?

    And can the Chancellor confirm today how much of his stamp duty cut will go to those purchasing multiple properties?

    Instead of a stamp duty rates going up and down like a yo-yo, we’ve got to get building.

    We need to target support at first time buyers and tackle the issue of homes being sold to overseas investors.

    The Chancellor has made clear today who his priorities are. Not a plan for growth, a plan to reward the already wealthy.

    A return to the trickle down of the past, back to the past, not a brave new future.

    This Chancellor and Prime Minister proclaimed in Britannia Unchained that ‘the British are amongst the worst idlers in the world’.

    And to prove they mean it, instead of supporting working people this government is cutting their rights at work.

    Working people are the backbone of Britain and should be respected not sneered at.

    Labour will always stand up for their rights.

    The Chancellor has in effect today admitted he has broken his fiscal rules.

    This is the 10th time the Tories have broken their own rules, something that I’m sure the Office for Budget Responsibility would have confirmed if they had been allowed to publish their forecasts today.

    Mr Speaker, it is unprecedented to have a fiscal statement of this scale with no independent forecasts from the Office for Budget Responsibility.

    Never has a government borrowed so much and explained so little.

    Economic institutions matter.

    Yet this government has undermined the Bank of England, sacked the respected Permanent Secretary at the Treasury and silenced the Office for Budget Responsibility.

    That is no way to build confidence.

    This is no way to build growth.

    Mr Speaker, Labour believes in wealth creation.

    We will always support enterprise, creativity and hard work.

    We want British businesses to grow, to be successful and contribute to our wider prosperity.

    We don’t believe – as the Chancellor and Prime Minister do – that British workers are idlers.

    We understand that it is the workers who turn up every day to make the great product at a factory or deliver a great service in the store who generate growth.

    It is the teachers giving the young people the skills they need.

    It is the doctors and nurses keeping people well.

    It is the entrepreneur taking a personal risk to start a new business.

    These are the people who generate growth – and they all deserve to share in it too.

    Mr Speaker this statement is more than a clash of policies.

    It is a clash of ideas – two different ideas of how our country prospers.

    If you’re a pensioner worried about the cost of living, a working family seeing your mortgage costs going up or a small business owner whose costs are spiralling, the government’s announcements today do little to reassure you.

    Bigger bonuses for the bankers and huge profits for energy giants, shamelessly shielded by Downing Street.

    And all the while, ministers pile the crushing weight of all these costs onto the backs of taxpayers.

    The Conservatives can’t solve the cost of living crisis.

    The Conservatives are the cost of living crisis.

    And our country cannot afford them anymore.

  • Andrew Bailey – 2022 Letter to the Chancellor of the Exchequer on Inflation

    Andrew Bailey – 2022 Letter to the Chancellor of the Exchequer on Inflation

    The letter sent by Andrew Bailey, the Governor of the Bank of England, to Kwasi Kwarteng, the Chancellor of the Exchequer, on 22 September 2022.

    [in .pdf format]