Category: Economy

  • Owen Paterson – 2010 Statement on Funding for Northern Ireland

    Owen Paterson – 2010 Statement on Funding for Northern Ireland

    The statement made by Owen Paterson, the then Secretary of State for Northern Ireland, on 21 October 2010.

    It has been alleged that the government has broken its word on committing to Northern Ireland ‘s £18 billion investment strategy as set out by the then Chancellor of the Exchequer in May 2007. This is completely untrue.

    In fact I can confirm again today that we believe sufficient funding has been made available for Northern Ireland to meet the £18 billion investment commitment in the time frame set out by the previous administration and on exactly the same basis.

    Critics of the government have exclusively focused on the reduction of 37% over four years in capital spending announced by George Osborne yesterday. I acknowledge this will not be easy but it is worth remembering that the previous government was actually committed to cuts of 50 per cent.

    Yet the key point is that current capital spending was only ever one part of the Investment Strategy agreed by Gordon Brown. As the Northern Ireland Executive’s own Investment Strategy makes clear, it always consisted of a number of elements, including loans under the Reform and Reinvestment Initiative.

    In confirming that we are on course to meet the £18 billion commitment, the Treasury has included the same elements as it did in 2007.

    The reality is that under this government, Northern Ireland will still be able to invest considerable sums in capital projects, if the Executive chooses to do so, over the next number of years.

    The Executive has flexibility over how it manages its budget, including the ability to use current spending (DEL) for capital projects.

    We also remain committed to the package for the devolution of policing and justice. We will ensure its terms are observed.

    In any event under the spending review we have given more favourable treatment to the Executive over carrying forward unspent money at the end of this financial year than any Whitehall department will have.

    Northern Ireland has a much better settlement than most Whitehall Departments. It is of course going to be tough. We have inherited the largest deficit in the G20 and the whole of the United Kingdom has to play its part in tackling it.

  • David Cameron – 2006 Speech on the New Global Economy

    David Cameron – 2006 Speech on the New Global Economy

    The speech made by David Cameron, the then Leader of the Opposition, to the Euromoney Conference on 22 June 2006.

    I’m grateful for the opportunity to be with you today.

    This is an exceptionally well-informed audience.

    It sounds like you’ve enjoyed two days of very detailed discussion and debate.

    As people who are involved at the sharp end of the financial markets and the global economy, I’m sure you won’t hesitate to challenge me and I’m looking forward to that.

    Today I want to talk about the new global economy…

    .. and the great challenges and opportunities presented by the changes that we’re seeing.

    Above all I want to set out how I believe politicians can prepare their countries to compete in tomorrow’s world…

    Why do we have a new global economy?

    Globalisation isn’t new – we had free trade pre-1914.

    Writing about that period, Keynes said:

    “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could adventure his wealth in the natural resources and new enterprises of any quarter of the world”

    What is new, and unique to our time, is the extent and speed and sheer size of the new global economy.

    Over the past decade, a combination of events has led to a rapid rise in world trade, and rapid growth in prosperity in some of the poorest areas of the world.

    The end of cold war. The victory of capitalism, privatisation and liberalisation within countries. The opening up of trade between countries. And of course, the ICT revolution.

    These events have driven change.

    World economic growth is at its highest level in thirty years – and on some measures the highest ever.

    This is largely driven by a rapid growth in world trade – up by 10% in 2005.

    And the level of world trade is at its highest ever.

    The result is that two billion more people – a third of the world’s population – have left subsistence poverty and are now engaged in the world economy.

    Not only has this changed the volume of trade but it’s also impacted on the way we trade.

    You can see the change clearly in the rapid increase in the global capacity for manufacturing.

    Because the world can now more easily turn raw materials into goods, the price of manufactured goods has fallen compared to the price of raw materials.

    There are many winners in this process.

    In the West, consumers enjoy lower prices for things we import like TVs and shoes.

    In poorer countries there are rapid increases in incomes.

    In nations with natural resources – especially oil – GDP is growing.

    And in this global economy, the new winners – across Asia and among oil exporters – are lending much of their gains back to the developed world, driving a further round of growth.

    But there are losers too.

    Manufacturing firms in the west struggle in the face of this competition.

    Many nations are suffering environmental damage and social instability.

    Nevertheless, I believe that the overall impact is hugely positive.

    In the UK, the price of our imports has fallen relative to the price of our exports, making everyone better off, even if your income is fixed.

    You don’t need me to tell you that.

    Take a walk up any high street.

    The price of a pair of jeans is the same – or lower – than twenty years ago.

    There are real benefits here.

    Recently I visited a large supermarket and talked to its retail director.

    “People ask what our anti-poverty strategy is” he said. “And I show them this.” It was a smart school uniform, on sale for just £13.

    The new global economy is a great challenge

    The great changes taking place pose many challenges.

    We are losing not just low-paid, low value added jobs, but some high value added jobs too.

    The pace of change will accelerate.

    There are more people in China studying English than there are people in England.

    India, China and other countries are investing enormously in education.

    India alone has 1300 engineering colleges.

    Unless we can compete in the knowledge-based new global economy we will lose out in the economy of the future.

    Demand for resources is intensifying.

    China is now the world’s second largest user of oil, after the United States, absorbing 6.6 million barrels per day.

    A quarter of this comes from Africa, where China is investing heavily.

    All of this impacts on us in the developed world.

    At a micro level it has an impact on businesses and patterns of employment.

    And at a macro level rapid change brings uncertainty: we simply can’t guarantee that the beneficial effects of globalisation will continue automatically.

    We can’t guarantee that the price of imports will continue to fall.

    We can’t be sure that the ICT revolution will be sustained at the same pace.

    As Donald Rumsfeld would put it, there are simply too many ‘unknown unknowns’.

    Mervyn King talked last week about the ‘bumpy ride’ ahead as the world manages a transition to higher global interest rates, after a period of low rates around the world.

    Opportunities

    But as well as these challenges, the new global economy also offers great opportunities.

    Those two billion new workers are rapidly becoming two billion new customers too – and you know what, western brands are in high demand.

    But the UK is failing to make the most of those opportunities.

    Our level of new investment in China is sixth in Europe – after Germany, Italy, the Netherlands, France and Sweden.

    Our trade with China is third in Europe

    When President Chirac went to China last year, he took 1000 businessmen with him, and opened doors for them.

    Politicians seeking to understand China shouldn’t think ‘sweatshop’ – they should think ‘silicon’.

    And they should remember how significant Japanese inward investment was to our economies in the 1980s because – as the head of Kingfisher pointed out to me recently – Chinese inward investment in Europe could be much bigger in the future.

    What are the UK’s greatest advantages in the new global economy?

    I am convinced that the UK has many great advantages in the new global economy.

    There are few places anywhere that are as profoundly stable as Britain.

    Our system of government is tried and tested.

    The rule of law is entrenched in a tradition reaching back centuries.

    We have a highly educated workforce with a diverse talent base and, of course, a natural command of the English language.

    We are, by and large, welcoming to foreigners – especially in that most cosmopolitan and tolerant of cities, London.

    But, having said all that, we are eroding our advantages.

    In recent years we have seen more regulation and higher tax.

    Our transport infrastructure and skills base have both been criticised by the OECD.

    Crime – especially violent crime and anti-social behaviour – is a blight on too many communities.

    Any responsible government must fully acknowledge these shortcomings and come up with a credible plan to tackle them.

    The City is a great example of using our advantages

    The City of London is a great UK success story.

    It’s the biggest international financial centre on earth.

    The London foreign exchange market is the largest in the world, with an average daily turnover of $504 billion. That’s more than New York and Tokyo combined.

    There are more than 550 international banks and 170 global securities houses in London.

    By contrast Frankfurt has around 280, Paris, 270 and New York 250.

    The growth of the modern City as we know it was shaped by three critical Conservative decisions.

    First, because of our attractive tax regime, in the 1970s, US bonds were traded in London – the so-called ‘euro-bond’ market.

    Then the big bang of the 1980s removed a huge swathe of regulation that allowed the City to expand and removed restrictive practices.

    And by being open to competition from banks from anywhere in the world, we injected an enterprising spirit into the City.

    The success of the City helps to drive the UK economy and provides huge benefits for our wider society.

    Over a million people are employed in financial services, who last year generated net exports for the country of £19 billion.

    Far from being based on the old school tie, it is supremely meritocratic.

    It is also highly innovative.

    You cannot simply set in stone a tax or regulatory regime for the City as it is today because it’s always changing, adapting and mutating.

    But, again, we must not be complacent.

    London has no God-given right to be the financial Capital of the world.

    If we want to remain ahead, not just of Frankfurt or Paris but of Shanghai and New Delhi in the next 20 years we need to continue to make Britain the best place in the world to do businesses – whether it’s in the financial sector or any other part of the UK economy.

    The lessons from the City are clear. Low tax. Low regulation. Meritocracy. Openness. Innovation. These are the keys to success.

    What do political and economic leaders need to do to compete in the future?

    So what will our political and economic leaders need to do in order to compete in the future?

    There are, I suppose, two responses to the challenges of the new global economy.

    One option is to shut out the threats, close down borders and retreat into protectionism.

    But isolation means closing the door on the opportunities too.

    I reject that path.

    The alternative is to build a flexible economy with low tax , light regulation and open markets.

    To embrace the new global economy and prepare for the inevitable changes that are taking place.

    I welcome the fact that there is now a broad consensus between both major parties in the UK on many fundamentals.

    But we should recognise our differences.

    As Chancellor, Gordon Brown has given us the highest tax burden in Britain’s history…

    Whereas I believe that a low tax regime is a vital part of economic prosperity.

    The government is wedded to the impulse to over-regulate…

    While I see a much greater role for exhortation and leadership.

    Many on the left-of-centre still seek to solve problems through more taxes, more laws and more regulations…

    But we, on the centre-right, prefer to step out of the way of business.

    One of the greatest services that government can give to the economy is to know when to stand clear.

    Clint Eastwood, in his guise as Dirty Harry, says “A good man knows his limitations.”

    I believe that a good government knows its limitations too.

    But that should never mean we are limited in our aspirations of what we can all do together.

    Successful economies also need good infrastructure – not just physically in terms of transport and energy but stable legal systems too…

    And, increasingly, a highly-skilled workforce.

    There’s another factor that is emerging.

    I believe it will grow in importance in the years ahead.

    The companies and key workers of the future will ask of a country: is it an attractive place to do business? Is it a nice place to live?

    There’s a developing quality of life agenda that only the short sighted can ignore.

    Instead of just measuring GDP, we need to think about GWB – general well being.

    People who dismiss this as woolly nonsense are economically short sighted.

    Increasingly, the most creative, productive and innovative people are insisting on working in an environment where they’re not just paid well but where they can stroll down a street in safety and educate their children in a good school.

    Conclusion – the choice

    Understanding the profound forces shaping change.

    Identifying the right response to globalisation.

    Recognising the broader aspirations that people have for a better quality of life in the 21st century.

    These are the keys to our future success.

    This Government doesn’t seem to understand the world of today and tomorrow.

    So it can’t work out the best way forward.

    Just compare the approach of our government to these challenges to the approach taken by our best businesses.

    Look at taxes. While businesses are cutting prices, government is getting more expensive.

    Look at IT. While businesses are decentralising, government still seeks centralised solutions.

    Look at management and openness. While businesses are flatter and more transparent, government is clings to hierarchies and secrecy.

    While businesses are moving towards flexible labour practices, government imposes more employment regulations.

    As I said a fortnight ago, there are things that the private sector can learn from the public sector.

    The strength of vocation. Passion for the job. A belief in the value of service.

    The tragedy of this government is that it is mismanaging the public sector and undermining its ethos through relentless target driven centralisation, while failing to learn lessons from the private sector about the right way to respond to the modern world – all at the same time.

    The challenge – of responding to globalisation with an agenda that combines competitiveness with quality of life – is passing to a new generation.

    As I watch a government that is too top down, too centralised, that doesn’t trust people enough or share responsibility widely enough, I am determined to find a better way.

    It will take hard work, a profound understanding of the changes taking place around us and tough decisions to put our country in the best possible position for success.

    But it is a challenge that I am determined to meet.

  • John Glen – 2021 Statement on the Financial Conduct Authority Mortgage Review

    John Glen – 2021 Statement on the Financial Conduct Authority Mortgage Review

    The statement made by John Glen, the Economic Secretary to the Treasury, in the House of Commons on 29 November 2021.

    The issue of mortgage prisoners is one of my key priorities. I recognise the difficult position these borrowers are in and understand the stress that many experience as a result. I remain committed to examining what further can be done to assist borrowers and this is why I asked the Financial Conduct Authority (FCA) to conduct a review on mortgage prisoners to provide the further detail necessary to continue this important work. The Mortgage Prisoners Review [CP 576] has today been laid in Parliament.

    The review identifies that there are now around 47,000 mortgage prisoners—these are borrowers who are up to date with payments, who are unable to switch, and who could potentially benefit from switching if they were eligible for a new deal. Most mortgage prisoner loans originate from prior to the financial crisis, when lending standards were looser, and this means that many affected borrowers struggle to switch as a result of not meeting post-financial crisis risk appetite.

    The report is clear that the underlying reasons mortgage prisoners are unable to switch are complex, and it is therefore crucial to understand the facts and data around this issue in order to consider our approach. The FCA’s review provides important insight into the mortgage prisoner population which the Treasury will now examine to determine if any further practical and proportionate solutions can be found for affected borrowers who struggle to obtain a new mortgage deal.

    More widely the review shows that the number of borrowers with inactive firms has materially decreased since the FCA last collected data in this area in 2019. This partly reflects the ability of many borrowers in closed books to switch to an active lender if they so choose. I would encourage all mortgage borrowers to examine their switching options to ensure they are on as competitive a rate as possible for their circumstances.

    I am also encouraged to see that the interest rates paid by almost all borrowers in closed books are less than the rates they signed up to when they took out their mortgage, with a third paying at least 3.5 percentage points less.

    However, it is clear that challenges remain in addressing this issue. While there is evidence that some mortgage prisoners have switched as a result of significant regulatory interventions made to date, it is also clear that the number of borrowers who have benefited is small. This new report also makes clear that the reasons borrowers struggle to switch are complex and varied, and that there are no simple solutions to increase the number of borrowers who are able to switch to better rates with active lenders.

    Nevertheless, I remain committed to this issue, and am grateful for the work undertaken by the FCA on this review which provides the crucial insight necessary to consider any further action. I am also grateful to the industry partners who have committed to continue to work together on this issue and look forward to further engagement with them.

    With the data from this review, the Treasury will now target our work to determine if there are any further practical and proportionate solutions for affected borrowers, including consideration of means through which we can help borrowers better position themselves to meet lender risk appetite. While I am approaching this further piece of work with appropriate ambition and optimism, I am also keen to manage borrower expectations by emphasising that any solutions tabled must avoid the potential for significant risk of moral hazard to consumers in the wider mortgage market or those who aspire to obtain a mortgage and must be value for money for the taxpayer. Any announcements on this will be made when the Treasury has had sufficient time to examine the review’s findings and consider any options available to address this complex issue.

    Copies are available in the Vote Office and at: https://www.gov.uk/government/publications/mortgage-prisoner-review.

  • Bridget Phillipson – 2021 Comments on New GDP Figures

    Bridget Phillipson – 2021 Comments on New GDP Figures

    The comments made by Bridget Phillipson, the Shadow Chief Secretary to the Treasury, on 11 November 2021.

    This morning’s GDP figures confirm that the economic recovery is slowing and risks grinding to a halt.

    We need urgent action to keep the economy moving and support households as we head into the winter, as prices rise and as the cost of living crisis continues to escalate.

    The Budget showed that the Government is trapping us in a cycle of high taxes and is risking our recovery by not growing our economy.

    Labour will tax fairly, spend wisely and, after a decade of faltering growth, we’ll get Britain’s economy firing again with our plan to buy, make and sell more in Britain.

  • Rishi Sunak – 2021 Speech at COP26 Finance Day

    Rishi Sunak – 2021 Speech at COP26 Finance Day

    The speech made by Rishi Sunak, the Chancellor of the Exchequer, on 3 November 2021.

    Good morning – and welcome to Cop26 finance day.

    It’s easy to feel daunted by the scale of the challenge that we face.

    By sea levels rising; droughts and wildfires spreading; people forced out of their homes.

    But I look around this hall and I feel optimism.

    Why?

    Because this is the first COP to bring together so many of the world’s finance ministers, businesses and investors with such a clear common purpose:

    To deliver the promise, made in Paris six years ago, to direct the world’s wealth to protect our planet.

    The good news is that the will is there:

    At least 80% of the global economy has committed to net zero or carbon neutrality targets.

    Our challenge now is to deploy the investment we need to deliver those targets around the world.

    To do so, we are accelerating three actions today.

    First, we need increased public investment.

    And I want to speak directly to the developing countries of the world:

    We know you’ve been devastated by the double tragedies of coronavirus and climate change.

    That’s why the G20 is stepping up to provide debt treatments more swiftly.

    It’s why the IMF are providing a new, $650bn allocation of special drawing rights – and Kristalina will say more on this later.

    And its why we are going to meet the target to provide $100bn of climate finance to developing countries.

    And while we know we are not yet meeting it soon enough, we will work closely with developing countries to do more and reach the target sooner.

    Over the next five years, we will deliver a total of $500bn investment to the countries that need it most.

    And we can do more today:

    I can announce that the United Kingdom will commit £100m to the Taskforce on Access to Climate Finance, making it quicker and easier for developing countries to finance they need.

    And we’re supporting a new Capital Markets Mechanism, which will issue billions of new green bonds here in the UK, to fund renewable energy in developing countries.

    Two tangible, practical examples of how we’re delivering our promise of $100bn.

    But public investment alone isn’t enough. Our second action is to mobilise private finance.

    Let me pay an enormous tribute to Mark Carney for his leadership – leadership that is delivering results.

    The Glasgow Financial Alliance for Net Zero has now brought together financial organisations with assets worth over $130 trillion of capital to be deployed.

    This is an historic wall of capital for the net zero transition around the world.

    What matters now is action: to invest that capital in our low carbon future.

    To do that, investors need to have as much clarity and confidence in the climate impact of their investments as they do in the traditional financial metrics of profit and loss.

    So our third action is to rewire the entire global financial system for Net Zero.

    Better and more consistent climate data.

    Sovereign green bonds.

    Mandatory sustainability disclosures.

    Proper climate risk surveillance.

    Stronger global reporting standards.

    All things we need to deliver and I’m proud that the UK is playing its part.

    We’ve already made it mandatory for businesses to disclose climate-related financial information.

    With 35 other countries signing up to do the same.

    Today I’m announcing that the UK will go further and become the first ever ‘Net Zero Aligned Financial Centre’.

    This means we are going to move towards making it mandatory for firms to publish a clear, deliverable plan…

    …setting out how they will decarbonise and transition to Net Zero – with an independent Taskforce to define what’s required.

    So: a renewed pledge to $100bn a year of public funding;

    Over $130 trillion of private capital waiting to be deployed;

    And a greener financial system, under way.

    Six years ago, Paris set the ambition.

    Today, in Glasgow, we’re providing the investment we need to deliver that ambition.

    Now I know that when people hear about global finance it can feel remote and abstract.

    But we’re not simply talking about numbers on a page.

    We’re talking about making a tangible difference to people’s lives.

    About cheap, reliable and clean electricity to power schools and hospitals in rural Africa.

    About better coastal defences in the Philippines and the pacific islands to protect people from storm surges.

    About everyone, everywhere having fresher water to drink…

    …cleaner air to breathe…

    …better insulated homes in which to live.

    That’s the vision we’re asking you to commit to.

    That’s the opportunity we’re asking you to invest in.

    And that’s the work we’re asking you to begin, today.

    Thank you.

  • Nigel Lawson – 1988 Autumn Statement

    Nigel Lawson – 1988 Autumn Statement

    The Autumn Statement read by Nigel Lawson, the then Chancellor of the Exchequer, in the House of Commons on 1 November 1988.

    With permission, Mr. Speaker, I should like to make a statement.

    Cabinet today agreed the Government’s public expenditure plans for the next three years. I am therefore taking the earliest opportunity of informing the House of the contents of the Autumn Statement: that is to say, the public expenditure plans for the next three years, and the expected outturn for this year; proposals for national insurance contributions for 1989–90; and the forecast of economic prospects for 1989 required by the Industry Act 1975.

    The main public expenditure figures, together with the full text of the economic forecast, will be available from the Vote Office as soon as I have sat down. They will also appear in the printed Autumn Statement, which will be published next Tuesday.

    I turn first to public expenditure. For the current financial year, 1988–89, the public expenditure planning total now looks likely to amount to some £153½ billion, or some £3¼ billion less than was allowed for in the last public expenditure White Paper. In other words, only around £¼ billion of the £3½ billion reserve I provided for is in fact likely to be needed.

    The main reasons for this shortfall are an extra £1 billion in privatisation proceeds, a reduction in social security spending of almost £1 billion as a direct result of the sharper than expected fall in unemployment and a saving of some £¾ billion largely due to extra housing receipts under the right-to-buy programme. Taken together with the strong growth in the economy this year, and the containment of debt interest now that the Budget is in surplus, this means that total public spending this year, even excluding privatisation proceeds, will be less than 40 per cent. of national income—the first time this has happened for over 20 years.

    Not so long ago, the share of national income spent by the state seemed to rise inexorably. Over the past six years, that trend has been decisively reversed. Since 1982–83, public expenditure, excluding privatisation proceeds, expressed as a share of national income has fallen by seven percentage points—the largest and longest sustained fall since the wartime economy was unwound. Over the whole decade since this Government first took office, from 1978–79 to 1988–89, public expenditure has grown by under 1½ per cent. a year in real terms. This is exactly half the rate at which it grew over the whole of the immediately preceding decade.

    Looking ahead, Cabinet agreed in July that public spending over the next three years should keep as close as possible to the existing planning totals, and should continue to fall as a share of national income. The plans I am about to announce meet both those objectives.

    For 1989–90, the planning total published in the last public expenditure White Paper was £167 billion. It will remain at £167 billion. This important outcome has been made possible, despite the many claims for increased public spending, by a rigorous reassessment of priorities, coupled with the continuation of two of the factors that have contributed to this year’s shortfall; that is to say, benefit savings from lower unemployment and increased receipts from council house sales.

    For 1990–91, however, though these two factors will persist, the planning total has been set at £179½ billion, some £3¼ billion more than the previously published figure. For 1991–92, the planning total has been set at £191½ billion. These totals all include the same level of reserves as in last year’s plans; that is to say, £3½ billion in the first year, £7 billion in the second year, and £10½ billion in the third. They also incorporate an unchanged estimate of privatisation proceeds of £5 billion a year.

    Over the three survey years as a whole, the real growth in spending on programmes will be over 3 per cent. a year. This can be afforded only because of the fall in the burden of debt interest brought about by the dramatic improvement in the Government’s finances from Budget deficit to Budget surplus. As a result, overall public spending, excluding privatisation proceeds, will rise by less than 2 per cent. a year, well within the prospective growth of the economy as a whole. In other words, total public spending, excluding privatisation proceeds, will continue to decline as a proportion of national income. At the same time, substantial additional funds have been made available for the Government’s most important public expenditure priorities.

    The figures which I am about to give all represent increases over the plans in the last public expenditure White Paper.

    First, health. An extra £1¼ billion—£1¾ billion—is—[Interruption.] An extra £1¼ billion—[Interruption.]

    Mr. Speaker

    Order. This is a very important statement, and I am sure that the House wishes to hear it.

    Mr. Lawson

    An extra £l¼ billion is being provided for the National Health Service in England in 1989–90—[Interruption.] The Opposition may not be interested in the National Health Service, but we on this side of the House are interested in it and are providing a lot more money for it.

    An extra £1¼ billion is being provided for the National Health Service in England in 1989–90, and an extra £1½ billion the following year. There will be corresponding increases in Scotland, Wales, and Northern Ireland. On top of that, health authorities are expected to receive an extra £100 million a year from sales of surplus land. Continuing the rate of cost improvement savings achieved in recent years will produce an extra £150 million in 1989–90 and an extra £300 million the following year.

    In addition, the Government are accepting the recommendation of the Government Actuary, in a report published today, that NHS employers’ superannuation contributions in England and Wales should be reduced, which will save the Health Service a further £300 million a year.

    In total, the increases for the Health Service in the United Kingdom as a whole will be over £2 billion in 1989–90 and over £2½ billion in 1990–91. These are by far the largest increases the Health Service has ever received. Comparing next year with this year, the increase in real resources for the NHS should amount to some 4½ per cent.

    Second, roads. An extra £220 million is being provided next year for building and repairing motorways and trunk roads, and for strengthening bridges, with a further £250 million the following year.

    Third, housing. Gross provision for public sector housing investment is being increased by around £440 million in 1989–90 and £340 million the following year. But thanks to the success of the Government’s right-to-buy policy, this is more than financed by extra receipts.

    Fourth, law and order. An extra £290 million has been made available in 1989–90 and £430 million in 1990–91, principally for a further expansion in the prison building programme. This will provide a further 3,000 places by 1991–92. Provision for local authority spending on the police has been increased by £240 million.

    Defence spending is to be increased by £150 million in 1989–90 and by £600 million in 1990–91. These significant increases are designed to provide a firm framework for the next three years within which our defence programme can be planned with confidence.

    So far as the massive social security budget is concerned, lower unemployment has saved more than £1½ billion in both 1989–90 and 1990–91. But substantial increases in planned spending on other benefits, particularly for the disabled, mean that the social security programme will be only marginally reduced in 1989–90 compared with previous plans, and some £1·7 billion higher in 1990–91.

    On science and technology, we have altered the balance of public support within an increased total. In particular, provision for spending by the Department of Education and Science has been increased by £120 million a year, with the DES science budget up by 16 per cent. in 1989–90 compared with 1988–89. This reflects the importance the Government attach to basic and strategic research.

    The new plans imply an overall increase of £2¼ billion in public sector capital spending in 1989–90. This includes extra investment in hospitals, housing, prisons, and roads. There is provision, too, for higher investment by the nationalised industries, including further anti-pollution investment by the water authorities.

    That the Government have been able to strengthen their priority programmes within an unchanged planning total for 1989–90 is, in large measure, a reflection of the success of their policies. The improved performance of the economy has eased pressures on a number of programmes, giving the Government more scope than ever before to shift resources where their own priorities, rather than circumstances, dictate. The details of these and other changes are provided in the material in the Vote Office and more details will be published in the printed Autumn Statement next week.

    I turn next to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund, and taking account of the statement on benefits which my right hon. Friend the Secretary of State for Social Security made last week.

    The lower earnings limit will be increased next April to £43 a week, in line with the single person’s pension, and the upper earnings limit will be raised to £325 a week. The upper limits for the 5 per cent. and 7 per cent. reduced rate bands will also be increased, to £75 a week and £115 a week respectively. The upper limit for the 9 per cent. rate for employers will be raised to £165 a week.

    Over recent years, we have steadily reduced the Treasury supplement, the taxpayer’s contribution to the national insurance fund. From 18 per cent. in 1979, it now stands at 5 per cent. My right hon. Friend and I now propose to carry this policy to its logical conclusion and to abolish the supplement altogether. The necessary legislation will be introduced early in the new Session.

    However, because of the healthy state of the national insurance fund, this decision will not require any increase in contribution rates. Thus, the main class I contribution rates will remain unchanged at 9 per cent. for employees and 10·45 per cent. for employers.

    Finally, I turn to the Industry Act forecast. Growth this year looks to be turning out at 4½ per cent. compared with the 3 per cent. growth forecast at the time of the Budget. Investment is particularly strong, growing twice as fast as consumption, with manufacturing investment expected to show the biggest rise of all, at 18 per cent. Indeed, it is striking that total investment has grown almost twice as fast as total consumption over the whole of the past five years.

    The continuing vigour of the British economy is testimony to the transformation that has taken place in the supply side of the economy, a transformation which has enabled the seven years to 1988 to record a combination of strong and steady growth unmatched since the war.

    As a result, unemployment has been falling rapidly. Since the middle of 1986, it has fallen by very nearly 1 million—the largest fall on record.

    Over the past year, unemployment has fallen faster in the United Kingdom than in any other major country.

    Inflation, as measured by the retail prices index, is likely to be a little over 6 per cent. in the fourth quarter of this year. Part of the rise in recorded inflation reflects the impact on mortgage payments of the higher interest rates needed to tighten monetary policy and thus get inflation firmly back on a downward trend. Excluding mortgage interest payments, the RPI in the fourth quarter is likely to be around 5 per cent., compared with the 4 per cent. rise in the RPI forecast at the time of the Budget.

    Exports have continued to perform well, with manufactured exports up 7½ per cent. over the past year. Over the past seven years, the United Kingdom’s share of world trade in manufactured goods has remained steady after decades of decline. However, with investment booming, and consumer spending increasing fast, total imports have grown even faster than exports, rising by 13 per cent. in the year to the third quarter. This has led to a substantially greater current account deficit than forecast at the time of the Budget. For 1988 as a whole, this now looks like turning out at some £13 billion, equivalent to 2¾ per cent. of GDP. The stronger than expected economic growth this year means that total tax revenues are likely to exceed the Budget forecast by £3½ billion. Both income tax and VAT have been particularly buoyant.

    In the Budget, I set a public sector debt repayment—or PSDR—for 1988–89 of £3 billion, equivalent to around ¾ per cent. of GDP. With higher than expected Government revenues and lower than expected public expenditure, this year’s PSDR now looks likely to turn out at some £10 billion, equivalent to over 2 per cent. of GDP.

    This will be the second successive year of debt repayment, something that has not hitherto been achieved since records began in the early 1950s. Moreover, this year, the Budget would still be in surplus, by some £4 billion, even if there had been no privatisation proceeds at all. No other major economy has such sound public finances.

    Looking ahead to 1989, the economy is forecast to grow by a further 3 per cent., with domestic demand also up by 3 per cent. Once again, investment is expected to grow considerably faster than consumption, and once again unemployment is expected to fall.

    The slower growth forecast for 1989 inevitably implies a marked deceleration during the course of the year, particularly so far as domestic demand is concerned. Thus, comparing the second half of next year with the second half of this year, overall growth is forecast at 2½ per cent., and growth in domestic demand at only 1½ per cent.

    The current account deficit is likely to fall only slightly, to some £11 billion, or 2¼ per cent. of GDP.

    Inflation, while it will inevitably continue to edge up for some months to come, is forecast to peak at some point in the middle of next year before falling back again to 5 per cent. by the fourth quarter.

    In short, after two years of unexpectedly rapid expansion, growth next year is forecast to return to a sustainable level, and one which compares well with the economic performance of the 1970s, while inflation will resume its downward path.

    The public finances are in substantial surplus and will remain so, with public spending on priority programmes continuing to increase, while overall public spending continues to fall as a share of GDP, to a level in 1991–92 not seen for a quarter of a century.

    The prospect that lies before us is yet further testimony to the success of the policies we have been pursuing these past nine and a half years and will continue to pursue, and to the economic transformation that those policies have wrought.

  • Rachel Reeves – 2021 Reply to Budget Statement

    Rachel Reeves – 2021 Reply to Budget Statement

    The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 27 October 2021.

    Thank you, Madam Deputy Speaker.

    Families struggling with the cost of living crisis, businesses hit by a supply chain crisis, those who rely on our schools and our hospitals and our police – they won’t recognise the world that the Chancellor is describing. They will think that he is living in a parallel universe.

    The Chancellor in this budget, has decided to cut taxes for banks. So, Madame Deputy Speaker, at least the bankers on short haul flights sipping champagne will be cheering this budget today.

    And the arrogance, after taking £6 billion out of the pockets of some of the poorest people in this country, expecting them to cheer today for £2 billion given to compensate.

    In the long story of this Parliament, never has a Chancellor asked the British people to pay so much for so little.

    Time and again today, the Chancellor compared the investments that he is making to the last decade. But who was in charge in this lost decade? They were.

    So, let’s just reflect on the choices the Chancellor has made today – the highest sustained tax burden in peacetime.

    And who is going to pay for it?

    It’s not international giants like Amazon – the Chancellor has found a tax deduction for them. It’s not property speculators – they’ve already pocketed a stamp duty cut. And it’s clearly not the banks – even though bankers’ bonuses are set to hit a record high this year.

    Instead, the Chancellor is loading the burden on working people. A National Insurance Tax rise – on working people. A Council Tax hike – on working people. And no support today for working people with VAT on their gas and electricity bills.

    And what are working people getting in return? A record NHS waiting list, with no plan to clear it, no way to see a GP and still having to sell their home to pay for social care.

    Community policing nowhere to be seen, a court backlog leaving victims without justice and almost every rape going unprosecuted.

    A growing gap in results and opportunities between children at private and state schools. Soaring number of pupils in supersize classes and no serious plan to catch up on learning stolen by the virus. £2 million announced today – a pale imitation of the £15 billion catch up fund that the Prime Minister’s own education tsar said was needed. No wonder, Madame Deputy Speaker, that he resigned.

    Now the Chancellor talks about world class public services. Tell that to a pensioner waiting for a hip operation. Tell that to a young woman waiting to go to court to get justice. Tell that to a mum and dad, waiting for their child the mental health support they need.

    And the Chancellor says today that he has realised what a difference early years spending makes. I would just say to the Chancellor, has he ever heard of the Sure Start programme that this Tory government has cut?

    And why are we in this position? Why are British businesses being stifled by debt while Amazon gets tax deductions?

    Why are working people being asked to pay more tax and put up with worse services?

    Why are billions of pounds in taxpayer money being funnelled to friends and donors of the Conservative party while millions of families are having £20 a week taken off them?

    Madam Deputy Speaker, why can’t Britain do better than this?

    The Government will always blame others. It’s business’ fault, it’s the EU’s fault, it’s the public’s fault.

    The global problems, the same old excuses. But the blunt reality is this – working people are being asked to pay more for less for three simple reasons:

    Economic mismanagement,

    An unfair tax system,

    And wasteful spending.

    Each of these problems is down to 11 years of Conservative failure and they shake their heads but the cuts to our public services have cut them to the bone. And while the Chancellor and the Prime Minister like to pretend they are different, the Budget they’ve delivered today will only make things worse.

    The solution starts with growth. The Government is caught in a bind of its own making. Low growth inexorably leads to less money for public services, unless taxes rise.

    Under the Conservatives, Britain has become a low growth economy. Let’s look at the last decade – the Tories have grown the economy at just 1.8 percent a year.

    If we had grown at the same rate as other advanced economies, we could have spent over £30bn to invest in public services without needing to raise taxes.

    Let’s compare this to the last Labour Government. Even taking into account the global financial crisis, Labour grew the economy much faster – 2.3 percent a year.

    If the Tories matched our record, we would have spent £30bn more on public services without needing to raise taxes.

    It could not be clearer. The Conservatives are now the party of high taxation, because the Conservatives are the party of low growth.

    The Office for Budget Responsibility confirmed this today – that we will be back to anaemic growth. The OBR said that by the end of this Parliament, the UK economy will be growing by just 1.3%. Which is hardly the plan for growth that the Chancellor boasted about today, hardly a ringing endorsement of his announcements.

    Under the Tory decade we have had ow growth and there’s not much growth to look forward to.

    The economy has been weakened by the pandemic but also by the Government’s mishandling of it.

    Responding to the virus has been a huge challenge. Governments around the world have taken on debt, but our situation is worse than other countries.

    Worse, because our economy was already fragile going into the crisis. Too much inequality, too much insecure work, too little resilience in our public services.

    And worse, because the Prime Minister dithered and delayed, against scientific advice – egged on by the Chancellor – we ended up facing harsher and longer restrictions than other countries.

    So, as well as having the highest death toll in Europe, Britain suffered the worst economic hit of any major economy.

    The Chancellor now boasts that we are growing faster than others, but that’s because we fell the furthest.

    And whilst the US and others have already bounced back to pre-pandemic levels, the UK hasn’t. Our economy is set to be permanently weaker.

    On top of all of that, the Government is now lurching from crisis to crisis. People avoiding journeys because they can’t fill up their petrol tank is not good for the economy. People spending less because the cost of the weekly shop has exploded is not good for the economy. And British exporters facing more barriers than their European competitors because of the deal that this government did is not good for the economy.

    If this were a plan, it would be economic sabotage. When the Prime Minister isn’t blagging that this chaos is part of his cunning plan, he says he’s “not worried about inflation.”

    Tell that to families struggling with rising gas and electricity bills, with rising prices of petrol at the pump and with rising food prices. He’s out of touch, he’s out of ideas and he’s left working people out of pocket.

    Madam Deputy Speaker, Conservative mismanagement has made the fiscal situation tight. And when times are tight it’s even more important to ensure that taxes are fair, that taxpayers get value for money. But the Government fails on both fronts.

    We have a grossly unfair tax system with the burden heaped on working people.

    Successive budgets have raised council tax, income tax and now National Insurance. But taxes on those with the broadest shoulders, those who earn their income from stocks, shares, and property portfolios have been left largely untouched.

    Businesses based on the high street are the lifeblood of our communities and often the first venture for entrepreneurs.

    But despite what the Chancellor has said today, businesses will still be held back by punitive and unfair business rates. The Government has failed to tax online giants and watered-down global efforts to create a level playing field.

    And just when we need every penny of public money to make a difference, we have a government that is the by-word for waste, cronyism and vanity projects.

    We’ve had £37 billion for a test and trace system that the spending watchdog says, ‘treats taxpayers like an ATM cash machine’. A yacht for ministers, a fancy paint job for the Prime Minister’s plane and a TV studio for Conservative Party broadcasts, which seems to have morphed into the world’s most expensive home cinema.

    £3.5bn of Government contracts awarded to friends and donors of the Conservative Party, a £190 million loan to a company employing the PMs former Chief of Staff, £30 million to the former Health Secretary’s pub landlord. And every single one of those cheques signed by the Chancellor.

    And now he comes to ordinary working people and asks them to pay more. More than they have ever been asked to pay before and at the same time, to put up with worse public services. All because of his economic mismanagement, his unfair tax system and his wasteful spending.

    There are of course some welcome measures in this budget today, as there are in any budget.

    Labour welcomes the increase in the National Minimum Wage, though the Government needs to go further and faster. If they had backed Labour’s position of an immediate rise to at least £10 an hour then a full-time worker on the minimum wage would be in line for an extra £1,000 a year.

    Ending the punitive public sector pay freeze is welcome, but we know how much this Chancellor likes his smoke and mirrors. So, we’ll be checking the books to make sure the money is there for a real terms pay rise.

    Labour also welcomes the Government’s decision to reduce the Universal Credit taper rate, as we have consistently called for. But the system has got so far out of whack that even after this reduction, working people on universal credit still face a higher marginal tax rate than the Prime Minister. And those unable to work – through no fault of their own – still face losing over £1000 a year. And for families who go out to work everyday but don’t get government benefits, on an average wage, who have to fill up their car with petrol to get to work, who do that weekly shop and who see their gas and electricity prices go up – this budget today does absolutely nothing for them.

    We have a cost-of-living crisis.

    The Government has no coherent plan to help families to cope with rising energy prices. Whilst we welcome the action taken today on Universal Credit, millions will struggle to pay the bills this winter.

    The Government has done nothing to help people with their gas and electricity bills with that cut in VAT receipts as Labour has called for. A cut that is possible because we are outside the European Union and can be funded by the extra VAT receipts that have been experienced in the last few months.

    Working people are left out in the cold while the Government hammers them with tax rises.

    National Insurance is a regressive tax on working people, it is a tax on jobs.

    Under the Chancellor’s plans, a landlord renting out dozens of properties won’t pay a penny more. But their tenants, in work, will face tax rises of hundreds of pounds a year. And he is failing to tackle another huge issue of the day. Adapting to climate change.

    Adapting to climate change presents opportunities – more Jobs, lower bills and cleaner air. But only if we act now and at scale. According to the OBR, failure to act will mean public sector debt explodes later, to nearly 300% of GDP.

    The only way to be a prudent and responsible Chancellor is to be a Green Chancellor. To invest in the transition to a zero-carbon economy and give British businesses a head-start in the industries of the future.

    But with no mention of climate in his conference speech and the most passing of references today, we are burdened with a Chancellor unwilling to meet the challenges we face.

    Homeowners are left to face the costs of insulation on their own, industries like steel and hydrogen are in a global race without the support they need and the Chancellor is promoting domestic flights over high speed rail int he week before COP26.

    It is because of this Chancellor that in the very week we try and persuade other countries to reduce emissions, this Government can’t even confirm it will meet its 2035 climate reduction target.

    Madam Deputy Speaker, everywhere working people look at the moment they see prices going up and shortages on the shelves. But this Budget did nothing to address their fears.

    Household budgets are being stretched thinner than ever but this Budget did nothing to deal with the spiralling cost of living. It is a shocking missed opportunity by a government that is completely out of touch.

    There is an alternative. Labour would scrap the business rates and replace it with something much better by ensuring online giants pay their fair share. That’s what being pro-business looks like.

    We wouldn’t put up National Insurance for working people, we would ensure those with the broadest shoulders pay their share. That’s what being on the side of working people looks like.

    We’d end the £1.7 billion subsidy the Government gives private schools and put it straight into local state schools. That’s what being on the side of working families looks like.

    We’d deliver a climate investment pledge – £28bn every year for the rest of the decade. That’s Giga-factories to build batteries for electric vehicles, a thriving hydrogen industry and retrofitting, so we keep homes warm and get energy bills down. That’s what real action on climate change looks like.

    This country deserves better but they’ll never get it under this Chancellor who gives with one hand but takes so much more with the other.

    The truth is this – what you get with these two is a classic con game. It’s like one of those pickpocketing operations you see in crowded places. The Prime Minister is the front man – distracting people with his wild promises. All the while, his Chancellor dips his hand in their pocket. It all seems like fun and games until you walk away and realise your purse has been lifted.

    But people are getting wise to them. Every month they feel the pinch. They are tired of the smoke and mirrors, of the bluster, of the false dawns, of the promises of jam tomorrow.

    Labour would put working people first. We’d use the power of government and the skill of business to ensure that the next generation of quality jobs are created right here, in Britain.

    We’d tax fairly, spend wisely and after a decade of faltering growth, we’d get Britain’s economy firing on all cylinders.

    That is what a Labour budget would have done today.

  • Simon Hart – 2021 Comments on Budget Impact on Wales

    Simon Hart – 2021 Comments on Budget Impact on Wales

    The comments made by Simon Hart, the Secretary of State for Wales, on 29 October 2021.

    This is a fantastic budget for Wales, delivering significant investment directly to people, businesses and communities across the country.

    The devolved administration in Wales will receive its largest-ever settlement so it can deliver its vital services like health, education and flood protection, while Wales will benefit fully from many of our UK-wide measures including freezes to fuel and alcohol duty, the increase in the minimum wage for thousands of workers and investment in parks and sports facilities.

    Levelling up communities across the UK is top of our agenda. Investing more than £120m in 10 projects including the regeneration of Aberystwyth seafront and improving transport links in Rhondda shows how we will achieve this ambition across Wales.

    Alongside the funding of a Welsh Veterans’ Commissioner, these measures and others in the Spending Review add up to an excellent package for Wales and its economy.

  • Rishi Sunak – 2021 Comments on Budget Impact on Wales

    Rishi Sunak – 2021 Comments on Budget Impact on Wales

    The comments made by Rishi Sunak, the Chancellor of the Exchequer, on 29 October 2021.

    This is a budget for the whole of the UK. We’re focused on what matters most to the British people – the health of their loved ones, access to world-class public services, jobs for the future and tackling climate change.

    An additional £2.5 billion per year in Barnett funding means the Welsh Government is well-funded to deliver all their devolved responsibilities while the people in Wales will also benefit from this Government’s commitment to levelling up opportunity and delivering for all parts of the UK.

    We are continuing to boost industry and jobs and improve infrastructure and public services throughout Wales.

  • Rishi Sunak – 2021 Comments on BBC News about the Cost of Living

    Rishi Sunak – 2021 Comments on BBC News about the Cost of Living

    The comments made by Rishi Sunak, the Chancellor of the Exchequer, on 28 October 2021.

    BBC INTERVIEWER

    Let’s start with the cost of living because we’re here in a market, many people will see the price of food going up, petrol going up, gas prices going up. Why was there no specific support, why wasn’t there a specific measure to help people with a cost of living yesterday?

    RISHI SUNAK

    Well, first of all, I talked about it right at the beginning of the budget speech to provide people some context, explanation and reassurance about what’s going on. It’s largely the result of two global forces, one, the rapid reopening of economies putting pressure on supply chains, but also what’s happening with energy prices. Now, I mean, I wish I could wave a magic wand and make these global problems disappear overnight, but I can’t, so I wanted to be upfront with people about that. These practices are going to be with us for a little while, but people should have reassurance that because of the plans we put in place a year ago to ensure that our economy now is recovering strongly, more people in work and wages are rising. We can face the future with a bit more confidence. And yesterday we did take action, and noticeably we froze fuel duty, especially when fuel prices are at almost a 10 year high. But also we cut the tax on the lowest paid people which I think will make an enormous difference.