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  • Bank of England – 2022 Statement on Interest Rates

    Bank of England – 2022 Statement on Interest Rates

    The statement issued by the Bank of England on 15 December 2022.

    Monetary Policy Summary, December 2022

    The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 14 December 2022, the MPC voted by a majority of 6-3 to increase Bank Rate by 0.5 percentage points, to 3.5%. Two members preferred to maintain Bank Rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

    In the MPC’s November Monetary Policy Report projections, conditioned on the elevated path of market interest rates at that time, the UK economy was expected to be in recession for a prolonged period and CPI inflation was expected to remain very high in the near term. Inflation was expected to fall sharply from mid-2023, to some way below the 2% target in years two and three of the projection. This reflected a negative contribution from energy prices, as well as the emergence of an increasing degree of economic slack and a steadily rising unemployment rate. The risks around that declining path for inflation were judged to be to the upside.

    Domestic wage and price pressures are elevated. There has been limited news in other domestic and global economic data relative to the November Report projections.

    Most indicators of global supply chain bottlenecks have eased, but global inflationary pressures remain elevated. Advanced-economy government bond yields have fallen, particularly at longer maturities. The sterling effective exchange rate has appreciated by around 2¾%. There has been some reduction in UK fixed-term mortgage rates since the Committee’s previous meeting, but rates remain materially higher than in the summer.

    Bank staff now expect UK GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than expected in the November Report. Household consumption remains weak and most housing market indicators have continued to soften. Surveys of investment intentions have also weakened further.

    Although labour demand has begun to ease, the labour market remains tight. The unemployment rate rose slightly to 3.7% in the three months to October. Vacancies have fallen back, but the vacancies-to-unemployment ratio remains at a very elevated level. Annual growth of private sector regular pay picked up further in the three months to October, to 6.9%, 0.5 percentage points stronger than the expectation at the time of the November Report.

    Twelve-month CPI inflation fell from 11.1% in October to 10.7% in November. The November figure was slightly below expectations at the time of the November Report. The exchange of open letters between the Governor and the Chancellor of the Exchequer is being published alongside this monetary policy announcement. Although the introduction of the Energy Price Guarantee (EPG) in October has limited the rise in CPI inflation, the contribution of household energy bills to inflation has risen further. Since the MPC’s previous meeting, core goods price inflation has fallen back, while annual food and services price inflation have strengthened. CPI inflation is expected to continue to fall gradually over the first quarter of 2023, as earlier increases in energy and other goods prices drop out of the annual comparison.

    The announcement in the Autumn Statement that the extension of the EPG will cap household unit energy prices at a level consistent with a typical household dual fuel bill of £3,000 per year from April 2023 to March 2024 implies a slightly lower near-term path for energy bills than the working assumption made in the November Report. All else equal, this will reduce the MPC’s forecast for CPI inflation in 2023 Q2 by around ¾ of a percentage point.

    Other additional near-term fiscal support was also announced in the Autumn Statement, but fiscal policy is expected to tighten by progressively larger amounts from fiscal year 2024-25 onwards. Overall, Bank staff estimate that these measures, combined with the impact of the EPG, will increase the level of GDP by 0.4% at a one-year horizon, leave it broadly unchanged at a two-year horizon, but reduce the level of GDP by 0.5% in three years’ time, relative to what was assumed in the November Report. The overall impact on the CPI inflation projection at all of these horizons is estimated to be small.

    The MPC’s remit is clear that the inflation target applies at all times, reflecting the primacy of price stability in the UK monetary policy framework. The framework recognises that there will be occasions when inflation will depart from the target as a result of shocks and disturbances. The economy has been subject to a succession of very large shocks. Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2% target sustainably in the medium term. Monetary policy is also acting to ensure that longer-term inflation expectations are anchored at the 2% target.

    The Committee has voted to increase Bank Rate by 0.5 percentage points, to 3.5%, at this meeting. The labour market remains tight and there has been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justifies a further forceful monetary policy response.

    The majority of the Committee judges that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target.

    There are considerable uncertainties around the outlook. The Committee continues to judge that, if the outlook suggests more persistent inflationary pressures, it will respond forcefully, as necessary.

    The MPC will take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. The Committee will, as always, consider and decide the appropriate level of Bank Rate at each meeting.

    Minutes of the Monetary Policy Committee meeting ending on 14 December 2022

    1: Before turning to its immediate policy decision, the Committee discussed: the international economy; monetary and financial conditions; demand and output; and supply, costs and prices.

    The international economy

    2: UK-weighted world GDP had increased by 0.5% in 2022 Q3, stronger than had been expected in the November Monetary Policy Report, and was expected to increase by 0.1% in Q4, in line with the projection in the November Report. Most measures of global supply chain bottlenecks had eased, but global inflationary pressures had remained elevated.

    3: In the euro area, GDP had increased by 0.3% in 2022 Q3, stronger than incorporated into the November Report but weaker than the 0.8% growth in Q2. Bank staff expected GDP to fall by 0.2% in the fourth quarter, a little weaker than had been anticipated in the November Report. The composite output PMI had increased slightly in November but had remained in contractionary territory for the fifth month in a row. The weakness had been broad based across euro-area economies and across sectors.

    4: In the United States, GDP had increased by 0.7% in 2022 Q3, stronger than had been expected in the November Report. The share of services in consumption had risen throughout the third quarter, tentatively pointing to the expected rotation in US demand, although this had partly reversed in October. In the fourth quarter, US GDP was expected to rise by 0.1%, broadly in line with the expectation in the November Report. Non-farm payrolls had increased by 263,000 in November and the unemployment rate had remained unchanged at 3.7%.

    5: In China, a sharp increase in Covid cases had contributed to a slowing in activity. China’s quarterly GDP growth in 2022 Q4 was likely to be some way below the 1.4% rate that had been anticipated at the time of the November Report. Covid outbreaks and related restrictions had weighed on consumption, and import growth had contracted sharply as a result. Chinese export growth had also contracted in November, reflecting slowing global growth and some Covid-related disruption to production. The Chinese government had issued new guidelines recently that had eased some zero-Covid policies. The weakening property sector had continued to have a negative impact on activity.

    6: Most measures of global supply chain constraints had eased in recent months, broadly in line with the assumption in the November Report. This was evident in the movements in October and November of an indicator of supply constraints based on global PMI surveys, although that indicator had remained elevated compared with historical averages. In China, that measure had increased in October and November, but had remained below recent peaks and around its historical average. Shipping costs had fallen across a number of regions. Further Covid outbreaks and any associated disruption to output in China could pose a risk to global supply chains in future, although the precise effect would depend on the Chinese economy’s response to changes in Covid policies and the extent to which global supply chains had become more resilient.

    7: Energy price movements had been mixed since the MPC’s previous meeting. At the time of the December MPC meeting, the Brent crude oil spot price was around $80 a barrel, having fallen by around 15%, although only to around the same level as at the start of the year. The Dutch Title Transfer Facility spot price, a measure of European wholesale gas prices, was €137 per MWh, up 18% since the previous MPC meeting. Gas futures prices had remained elevated, reflecting concerns around the impact of Russian restrictions to gas supplies and an expectation that supply constraints would continue into next winter. Global agricultural goods prices were broadly unchanged over this period and compared to a year ago, though remained at elevated levels

    8: According to the flash estimate, euro-area annual HICP inflation had fallen from 10.6% in October to 10.0% in November, with core HICP inflation remaining at 5.0%. US CPI inflation had fallen from 7.7% in October to 7.1% in November, suggesting PCE inflation would also ease further.

    9: The MPC discussed the outlook for global inflation. In the November Report, world export price inflation had been expected to peak at 14% in 2022 Q2, and UK-weighted world consumer price inflation to peak at just over 8% in 2022 Q4. Developments since then had been consistent with that view. World export prices had been projected to fall over 2023 as a whole and global consumer price inflation was expected to decline to 1.9% by the end of next year. Absent further shocks, the assumed future path of energy prices and the easing of global supply constraints were consistent with this fall in global traded goods prices. Services price inflation in advanced economies could fall back more quickly than expected if its recent strength had in part reflected indirect effects of energy prices. The tightening in monetary policy across many economies would bear down on global demand and inflation, as the effects of increases in policy rates fed through with a lag. Further shocks to energy and other commodity prices continued to present some upside risks to the central outlook, as would more persistent tightness in advanced economy labour markets. In addition, there could be upside risks to services price inflation if persistently high input costs became embedded, including through higher wage growth.

    Monetary and financial conditions

    10: Since the MPC’s November meeting, government bond yields had moved lower across major advanced economies, particularly at longer maturities. Ten-year yields had fallen by around 20, 60 and 20 basis points in the United Kingdom, United States and Germany respectively. Those movements had only partially offset the significantly larger increases in global yields that had occurred since the end of July. Supported by the recent reduction in yields, risky asset prices had risen globally since the MPC’s previous meeting.

    11: Market expectations for the near-term path of policy rates were little changed across major advanced economies since the MPC’s previous meeting. Both the Federal Open Market Committee and the ECB Governing Council were expected to raise policy rates by 50 basis points at their forthcoming meetings concluding on 14 and 15 December respectively. The market-implied policy paths in the United States and euro area were expected to peak around the middle of next year at a little under 5% and a little under 3% respectively, not materially changed from at the time of the MPC’s previous meeting.

    12: A large majority of respondents to the Bank’s latest Market Participants Survey (MaPS) expected Bank Rate to be increased by 50 basis points at this MPC meeting, consistent with market-implied pricing. The median MaPS respondent expected Bank Rate to peak at 4¼% in the first half of next year and remain at that level throughout the remainder of 2023. The market-implied path for Bank Rate, which would also reflect any upside skew in Bank Rate expectations, rose to around 4¾% by around the middle of next year and remained close to that level throughout the remainder of 2023. While the market-implied path was a little higher than the MaPS median, the gap between these measures had narrowed since the previous MaPS survey, conducted in mid-October.

    13: Further out, market-implied policy paths had fallen across major advanced economies since the MPC’s November meeting. Expectations for policy rates three years ahead, had declined by around 50, 75 and 40 basis points in the United Kingdom, United States and euro area respectively. In the United Kingdom, this was in addition to the material reduction that had occurred in the immediate run-up to the MPC’s November meeting, after the November Monetary Policy Report projections had been finalised. Nevertheless, expected rates at the three-year horizon had remained higher in the United Kingdom than in other major advanced economies.

    14: Medium-term inflation compensation measures were little changed in the United States and euro area since the MPC’s previous meeting. Interpreting the moves in UK medium-term inflation compensation measures remained challenging. Nevertheless, these measures had fallen since the MPC’s previous meeting, following significant volatility in September and October, when there had been large distortions from the repricing in long-dated and index-linked UK government debt, and associated pressure on liability-driven investment (LDI) funds. Looking further back, there had been a material reduction in UK medium-term inflation compensation measures since their peak in March, although they had remained above their average levels of the past decade. In the latest MaPS, the median respondent’s expectation for CPI inflation at both the three and five-year horizons had been 2%, having fallen since the previous survey. Responses, however, had remained skewed to the upside.

    15: The sterling effective exchange rate had appreciated by around 2¾% since the previous MPC meeting. In part, that had reflected a broad-based depreciation of the US dollar, consistent with the somewhat larger declines in US interest rate expectations relative to other advanced economies over the period and some improvement in global risk sentiment.

    16: There had been some reduction in UK owner-occupied fixed-term mortgage rates since the Committee’s previous meeting, but rates had remained materially higher than in the summer. Lending rates for new fixed-rate mortgages had fallen by around 40 to 80 basis points since the November MPC meeting, reflecting the reduction in risk-free market rates following their sharp rise in late September around the time of the announcement of the Government’s Growth Plan. The number of mortgage products available had continued to recover from October lows, but had remained below the levels seen in the summer.

    17: Over the past year, overall bank credit availability had reduced. According to supervisory intelligence that had, in large part, been related to an expected deterioration in borrowers’ balance sheets.

    18: There were some early signs that tighter lending conditions and a decline in credit demand were feeding through to lower lending volumes. In the mortgage market, approvals for house purchase had fallen below 60,000 in October, which, excluding the Covid lockdown period in the first half of 2020, had been the lowest level since 2013. In the corporate sector, net finance raised by businesses in October had declined to its lowest level since 2009.

    19: There had been a net reduction in sterling broad money in October, although that had only partially offset the very large increase in September. Sterling net lending had also fallen in October following a sizeable increase in September. These flows were accounted for primarily by some firms in the financial sector and one contributory factor was likely to have been the significant market volatility towards the end of September, associated with developments at LDI funds.

    20: The MPC had been informed that, on 29 November, the Bank had begun to unwind, in a timely but orderly way, the specific gilt purchases resulting from the financial stability operations conducted between 28 September and 14 October. As of 13 December, around 40% of the gilts purchased during those operations had been sold.

    Demand and output

    21: According to the ONS’s first quarterly estimate, GDP had fallen by 0.2% in 2022 Q3, a smaller decline than the expectation in the November Monetary Policy Report of a 0.5% fall. Within the expenditure components, household consumption and business investment had both fallen by 0.5%, while government spending was estimated to have risen by 2.1%. Underlying output, defined as market sector output adjusted for the estimated effects of recent additional bank holidays, was estimated by Bank staff to have fallen by a similar amount as headline GDP.

    22: Monthly GDP had risen by 0.5% in October, following a 0.6% fall in September, and marginally stronger than had been expected by Bank staff immediately prior to the release. The rebound in the level of output had in large part reflected the unwind of the economic impact of the additional bank holiday for the Queen’s state funeral. At a sectoral level, private sector services had risen in line with expectations, with upside news concentrated in manufacturing output and, to a lesser degree, the government and construction sectors.

    23: Bank staff now expected GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than had been expected in the November Report. This was consistent with a weakening in quarterly underlying growth to between -¼% and -½%, partially offset by the boost to headline output growth from the effect of the additional bank holiday unwinding in October and an assumption that government output would contribute positively to GDP during the quarter. The S&P Global/CIPS UK composite output PMI had remained below the 50 no-change mark for the fourth consecutive month in November. Intelligence from the Bank’s Agents was consistent with only a modest further weakening in activity in the fourth quarter, centred in consumer-facing sectors.

    24: For growth prospects further ahead, the composite future output PMI had recovered to close to its September levels, albeit remaining below its long-run average. In contrast, the CBI composite expectations balance had fallen sharply in November. An aggregate estimate of real growth from the latest Decision Maker Panel suggested that respondents expected sales volumes to stagnate over the next year. Taken together, the forward-looking survey evidence was broadly consistent with the projection in the November Report of a slight fall in GDP in 2023 Q1.

    25: Indicators of household consumption had remained weak. Retail sales volumes had risen by 0.6% in October, in part reflecting the boost to growth from the effect of the additional bank holiday unwinding, but had remained 1.2% below their 2019 Q4 level. GfK consumer confidence had edged higher in November, but had remained very weak by historical standards. Household real incomes were expected to be broadly flat in the near term.

    26: Most housing market indicators had continued to weaken in recent months, after several years of strength. Although the official UK House Price Index had increased strongly in October, house prices had fallen quite sharply in the Nationwide and Halifax indices in October and November. The November RICS survey had shown further declines in price balances and continuing weakness in indicators of housing market activity. According to higher-frequency Zoopla data, the volume of offers made on properties by potential buyers had declined to below their normal seasonal levels.

    27: Surveys of investment intentions had weakened further, and were consistent with small declines in business investment, following a period of greater strength in capital spending after the worst of the pandemic. Agency intelligence indicated that business confidence had remained weak, although mentions of uncertainty in the Agents’ reports had fallen back somewhat in recent weeks.

    28: The Autumn Statement had taken place on 17 November, accompanied by both an Economic and fiscal outlook from the Office for Budget Responsibility (OBR) and new fiscal rules as set out in an updated Charter for Budget Responsibility. Some additional fiscal support had been announced in the near term, including targeted cost-of-living support in addition to the extended Energy Price Guarantee scheme, cuts in business rates, and increased spending on health, social care and education. From fiscal year 2024-25, planned fiscal policy would tighten by progressively larger amounts, with net tax rises accounting for around half of this tightening and reductions in both departmental current and capital spending accounting for the other half. Overall, Bank staff estimated that the additional policy measures announced in the Autumn Statement could, relative to what had been assumed in the November Monetary Policy Report, increase the level of GDP by 0.4% in one year’s time, leave it broadly unchanged at a two-year horizon, but reduce the level of GDP by 0.5% in three years’ time.

    29: The Committee discussed how the OBR’s latest macroeconomic projections compared to those in the November Monetary Policy Report. The OBR’s GDP projection was broadly similar to the MPC’s over the first year of the forecast period. Thereafter, the forecast profiles diverged very significantly, with the OBR expecting GDP to be around 5% higher than in the November Report by 2025 Q4. This gap reflected the OBR’s judgement that both demand and supply would be stronger than the MPC was expecting in the medium term. Productivity was expected to be around 1½% higher in the OBR’s projection, with that difference in part reflecting a much stronger projected path for business investment and hence the capital stock.

    Supply, costs and prices

    30: The Labour Force Survey (LFS) unemployment rate had risen to 3.7% in the three months to October, slightly higher than the expectation of 3.5% at the time of the November Monetary Policy Report. LFS employment had grown by 0.1% in the three months to October, slightly weaker than the 0.3% expected at the time of the November Report. HMRC employee payrolls had increased by 107,000 in November. LFS inactivity had fallen slightly, but had remained high by historical standards.

    31: Regarding more forward-looking indicators, the KPMG/REC Report on Jobs for November had shown that hiring had remained below historical averages. The ONS vacancy survey had continued to decline in recent months, while remaining at a very high level. The vacancies–to-unemployment ratio had remained close to record highs, based on comparable series since 2001. Online indicators of vacancies had flattened off in recent months, but they had remained significantly above pre-Covid levels. Planned redundancies had remained low, although there had been a decrease in the S&P Global UK Household Financial Index and YouGov survey measures of perceptions of job security. Intelligence from contacts of the Bank’s Agents was consistent with some early signs of the labour market loosening, albeit from a very tight starting point, as employment intentions were flat and recruitment difficulties had eased slightly.

    32: The Committee discussed recent labour market developments. Overall, recent data suggested that the labour market was historically very tight but appeared to be past its peak tightness. Labour demand appeared to have weakened somewhat and the November Report was consistent with a further weakening, given the usual lags between GDP and the labour market. While the earlier strength in the labour market had partly reflected the recovery in demand following the pandemic, recent weakness in labour participation appeared to have somewhat exacerbated the tightness of the labour market. This weakness in participation in part reflected an ageing population, early retirement decisions for some workers and ill health. Given that these trends could continue for some time, a key uncertainty was the speed of the downward adjustment to labour demand as labour supply fell, and thus the extent to which any supply-demand imbalance exerted upward pressure on inflation. The MPC would have an opportunity to review these judgements as part of its annual supply stocktake, which would conclude alongside the February 2023 Monetary Policy Report.

    33: Annual whole-economy total pay growth had picked up slightly to 6.2% in the three months to October. Private sector regular pay growth had also picked up further to 6.9%, 0.5 percentage points stronger than the expectation at the time of the November Report. On a three month on three month annualised basis, private sector regular pay growth had fallen back to 6.7%, a level more in line with the annual rate of increase than earlier in the year. Annual public sector pay growth had remained weaker, at 2.7% in the three months to October.

    34: Annual private sector wage growth was expected to flatten off at around 7% in coming months, before declining later in 2023. There were risks on either side. Pay indicators in the November KPMG/REC survey, which tended to lead the official data, had weakened a little further. However, a number of contacts of the Bank’s Agents expected further upward pressure on pay growth next year, in part as strength in CPI inflation could encourage workers to continue to demand high pay settlements. Some contacts had nevertheless reported that weaker demand, affordability constraints for firms and an easing in recruitment difficulties could limit the extent of pay increases.

    35: Twelve-month consumer price inflation had fallen to 10.7% in November, from 11.1% in October. The November figure had been slightly lower than expected in the November Report, with the downside news concentrated in food and core goods prices. This release had triggered the exchange of open letters between the Governor and the Chancellor of the Exchequer that was being published alongside these minutes. Core CPI inflation, excluding energy, food, beverages and tobacco, had eased slightly from 6.5% in October to 6.3% in November.

    36: Considering non-energy inflationary pressures, core goods inflation had fallen back from recent peaks, in part due to weaker vehicle price inflation and was expected to ease further in the near term. This was consistent with an easing of supply chain bottlenecks and some cost pressures softening. However, food and non-alcoholic beverage price inflation had been 16.4% in November, its highest level in 45 years, and was expected to rise further. This had in large part reflected global factors including adverse climate conditions, supply constraints caused by the war in Ukraine and rising energy and fertiliser costs in food production. Core services inflation had risen to 6.3% in October and to 6.4% in November. Contacts of the Bank’s Agents reported that consumer services prices continue to be pushed up by higher input prices, particularly pay, food and energy.

    37: The largest component of the overshoot of the 2% inflation target had continued to be the contribution from energy prices. CPI inflation was expected to stay elevated in the near term, but to continue to fall gradually over the first quarter of 2023, in large part as earlier increases in energy and other goods prices dropped out of the annual comparison. These effects were expected to outweigh continuing strength from food and services price inflation.

    38: Since the November Report, the Government had announced that the cap on household unit energy prices under the Energy Price Guarantee would rise, from April 2023 to March 2024, to a level consistent with a typical annual dual-fuel bill of £3,000, from £2,500. Over the early part of the MPC’s forecast period, this implied a lower path for household energy bills than the working assumption made in the November Report of an indicative path for household utility bills that sat halfway between the previously announced £2,500 cap on the typical household bill and the level implied by futures prices under the Ofgem price cap framework. This downside news would lower the forecast for CPI inflation in 2023 Q2 by 0.8 percentage points, all else equal, and would boost household real incomes to a similar degree.

    39: Most measures of households’ and businesses’ inflation expectations had fallen back in the latest data, but had remained at elevated levels. The one-year ahead Citi and Bank/Ipsos household measures had both fallen in November. At longer horizons, the five- to ten-year ahead Citi measure had fallen, while the Bank/Ipsos measure had risen a little. Respondents to the Decision Maker Panel in November had indicated lower own-price and inflation expectations over the next year, and lower inflation expectations three years ahead, although all of these series had remained above 2%.

    The immediate policy decision

    40: The MPC sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment.

    41: In the MPC’s November Monetary Policy Report projections, conditioned on the elevated path of market interest rates at that time, the UK economy had been expected to be in recession for a prolonged period and CPI inflation had been expected to remain very high in the near term. Inflation had been expected to fall sharply from mid-2023, to some way below the 2% target in years two and three of the projection. This had reflected a negative contribution from energy prices, as well as the emergence of an increasing degree of economic slack and a steadily rising unemployment rate. The risks around that declining path for inflation had been judged to be to the upside.

    42: Domestic wage and price pressures were elevated. There had been limited news in other domestic and global economic data relative to the November Report projections. Bank staff now expected UK GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than had been expected in the November Report. Most housing market indicators had continued to weaken. Vacancies had fallen back, but the vacancies-to-unemployment ratio had remained at a very elevated level. Annual growth of private sector regular pay had picked up further and had been 0.5 percentage points stronger than had been expected at the time of the November Report. A number of contacts of the Bank’s Agents expected further upward pressure on pay growth next year, although pay indicators in the KPMG/REC survey, which tended to lead the official data, had weakened a little further. Twelve-month CPI inflation had fallen to 10.7% in November, slightly below expectations at the time of the November Report. Since the MPC’s previous meeting, core goods price inflation had fallen back, while annual food and services price inflation had strengthened. Most measures of households’ and businesses’ inflation expectations had fallen back, but had remained at elevated levels.

    43: The Autumn Statement had taken place on 17 November, accompanied by an Economic and fiscal outlook from the Office for Budget Responsibility and new fiscal rules as set out in an updated Charter for Budget Responsibility. The Chancellor of the Exchequer had also written to the Governor setting out the remit for the MPC, including some updates to the government’s economic strategy. In this letter, the Chancellor had stated that, although the Bank of England Act required him to reaffirm the MPC’s remit annually, to provide certainty he could confirm that this government would not change the definition of price stability.

    44: The announcement in the Autumn Statement that the extension of the Energy Price Guarantee (EPG) would cap household unit energy prices at a level consistent with a typical household dual fuel bill of £3,000 per year from April 2023 to March 2024 implied a slightly lower near-term path for energy bills than the working assumption made in the November Report. All else equal, this would reduce the MPC’s forecast for CPI inflation in 2023 Q2 by around ¾ of a percentage point.

    45: Other additional near-term fiscal support had also been announced in the Autumn Statement, but fiscal policy was expected to tighten by progressively larger amounts from fiscal year 2024-25 onwards. Overall, Bank staff estimated that these measures, combined with the impact of the EPG, would increase the level of GDP by 0.4% at a one-year horizon, leave it broadly unchanged at a two-year horizon, but reduce the level of GDP by 0.5% in three years’ time, relative to what had been assumed in the November Report. The overall impact on the CPI inflation projection at all of these horizons was estimated to be small.

    46: The Committee would make a fuller assessment of this news, taken together with other developments since the November Report, as part of its forthcoming forecast discussions ahead of the February MPC meeting. The MPC would also have an opportunity to review its judgements on the supply side of the economy as part of its annual supply stocktake, which would conclude alongside the February Monetary Policy Report.

    47: The MPC’s remit was clear that the inflation target applied at all times, reflecting the primacy of price stability in the UK monetary policy framework. The framework recognised that there would be occasions when inflation would depart from the target as a result of shocks and disturbances. The economy had been subject to a succession of very large shocks. Monetary policy would ensure that, as the adjustment to these shocks continued, CPI inflation returned to the 2% target sustainably in the medium term. Monetary policy was also acting to ensure that longer-term inflation expectations were anchored at the 2% target.

    48: Six members of the Committee judged that a 0.5 percentage point increase in Bank Rate, to 3.5%, was warranted at this meeting. The labour market remained tight and there had been evidence of inflationary pressures in domestic prices and wages that could indicate greater persistence and thus justified a further forceful monetary policy response. Both services price inflation and private sector regular wage growth had increased significantly over the second half of the year, with the latter continuing to surprise on the upside since the November Report. There remained a risk that, following a protracted period of high inflation, inflation expectations could be slow to adjust downwards to target-consistent levels once external cost pressures had passed. Although activity in the economy was clearly weakening, there were some signs that it was more resilient than had been expected and it was therefore uncertain how quickly the labour market would loosen. Other economic forecasters had also continued to predict a stronger outlook for demand than in the MPC’s November Report projections. A 0.5 percentage point increase in Bank Rate at this meeting would help to bring inflation back to the 2% target sustainably in the medium term, and to reduce the risks of a more extended and costly tightening later.

    49: Two members preferred to leave Bank Rate unchanged at 3% at this meeting. The real economy remained weak, as a result of falling real incomes and tighter financial conditions. There were increasing signs that the downturn was starting to affect the labour market. But the lags in the effects of monetary policy meant that sizeable impacts from past rate increases were still to come through. That implied the current setting of Bank Rate was more than sufficient to bring inflation back to target, before falling below target in the medium term. As the policy setting had become increasingly restrictive, there was no longer a strong case for further tightening on risk management grounds.

    50: One member preferred a 0.75 percentage point increase in Bank Rate, to 3.75%, at this meeting. Although there was some evidence of an inflection point in CPI inflation, there was greater evidence that price and wage pressures would stay strong for longer than had been projected in the November Report. Another more forceful monetary tightening now would reinforce the tightening cycle, importantly leaning against an inflation psychology that was embedding in wage settlements and inflation expectations, and was pushing up core services and other underlying inflation measures. Pulling forward monetary action now would reduce the risk that Bank Rate would need to rise well into next year even as the economy slowed further.

    51: The majority of the Committee judged that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate might be required for a sustainable return of inflation to target.

    52: There were considerable uncertainties around the outlook. The Committee continued to judge that, if the outlook suggested more persistent inflationary pressures, it would respond forcefully, as necessary.

    53: The MPC would take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. The Committee would, as always, consider and decide the appropriate level of Bank Rate at each meeting.

    54: The Chair invited the Committee to vote on the proposition that:

    • Bank Rate should be increased by 0.5 percentage points, to 3.5%.

    55: Six members (Andrew Bailey, Ben Broadbent, Jon Cunliffe, Jonathan Haskel, Huw Pill and Dave Ramsden) voted in favour of the proposition. Three members voted against the proposition. Two members (Swati Dhingra and Silvana Tenreyro) preferred to maintain Bank Rate at 3%. Catherine L Mann preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

    Operational considerations

    56: On 14 December 2022, the total stock of assets held for monetary policy purposes was £844 billion, comprising £831 billion of UK government bond purchases and £13.6 billion of sterling non‐financial investment‐grade corporate bond purchases.

    57: At its September 2022 meeting, the MPC had voted to begin sales of UK government bonds held for monetary policy purposes. In 2022 Q4, the Bank had completed a total of £6 billion of sales of these bonds via eight auctions. Taken together with maturing bonds, this had led to a reduction in the outstanding stock of £7 billion in 2022 Q4 and £44 billion over 2022 as a whole. The MPC had been briefed on progress on these gilt sales and on the operational arrangements for 2023 Q1, which would be published in a Market Notice on 16 December at 6pm.

    58: In February 2022, the MPC had voted to unwind fully the stock of sterling non-financial investment-grade corporate bond purchases no earlier than towards the end of 2023. The stock of corporate bonds had since been reduced by a total of £6.4 billion, including £4.2 billion via sales through the Bank’s auctions since September. The Committee was content with the current rate of reduction in the stock, which, if sustained, would permit an earlier unwind of the portfolio than initially anticipated. The Committee would keep the pace of sales, and the implications for the completion date, under review.

    59: The following members of the Committee were present:

    • Andrew Bailey, Chair
    • Ben Broadbent
    • Jon Cunliffe
    • Swati Dhingra
    • Jonathan Haskel
    • Catherine L Mann
    • Huw Pill
    • Dave Ramsden
    • Silvana Tenreyro

    Clare Lombardelli was present as the Treasury representative.

    60: As permitted under the Bank of England Act 1998, as amended by the Bank of England and Financial Services Act 2016, David Roberts was also present on 7 and 9 December, as an observer for the purpose of exercising oversight functions in his role as a member of the Bank’s Court of Directors.

  • Gordon Brown – 2022 Comments on People Struggling Financially

    Gordon Brown – 2022 Comments on People Struggling Financially

    The comments made by Gordon Brown, the Labour Prime Minister between 2007 and 2010, on Twitter on 15 December 2022.

    At a time when so many are struggling to survive, unable to pay for heating or feed their kids, the government is deducting huge amounts from their Universal Credit.

    This isn’t just austerity, it’s cruelty.

    A couple with three children should get a UC payment of £46.11 a day.

    When the payment lands though some families are receiving just £35.

    25% is being deducted to repay the loan some families had to take out for their first 5 weeks on UC when they received no benefits.

    Another deduction is 5% to pay their utility company.

    After fuel bills, they find they have little left for food and nothing for all essential like soap, toothpaste, clothes, laundry, telecoms, travel, and essential repairs.

    In Kirkcaldy, 56% of claimants suffer deductions for loans they should never have had to pay back in the first place. It’s worse elsewhere.
    1m UK households are having more than 20% of their Universal Credit deducted.

    2m children are in families suffering deductions.

    Take away fuel, council tax and water, and a 25% UC deduction for a couple with 3 kids leaves them just £5.10 each a day for food and everything else.

    The maximum help with heating a family can get is £24 a week to cover £50. From April it’ll be just £16 for nearly £60.

    For families in need, Universal Credit only now covers 50% of what is needed for a decent home income.

    Welfare is being privatised, with the government passing the buck to charities who can’t cope.

    Such cruelty has to stop.

    This ruthless debt-collector government must suspend Universal Credit deductions immediately for the duration of the energy crisis. They did it during Covid, they can do it now.

    It would be a lifesaver for the millions now suffering under such vindictive policies.

  • Mark Spencer – 2022 Speech on Marine Management Organisation

    Mark Spencer – 2022 Speech on Marine Management Organisation

    The speech made by Mark Spencer, the Minister for Food, Farming and Fisheries, in Westminster Hall, the House of Commons, on 13 December 2022.

    It is a pleasure to serve under your chairmanship, Mr Pritchard. I welcome the debate and am grateful to my hon. Friend the Member for Clacton (Giles Watling) for securing it. I sense his frustrations and I am sympathetic to them; I will try to assist and alleviate some of them. My hon. Friend said that he has not heard from the MMO and that it has not engaged in the debate; it has sent a rather brilliant Minister to respond on its behalf. [Interruption.] Yes, unfortunately he could not be here so I have taken his place.

    This is a timely debate: the MMO is due to publish its annual report next week. It comes ahead of the Second Reading of my hon. Friend’s ten-minute rule Bill, which is due in February. Alongside its marine licensing duties, the MMO covers a broad range of activities, including fisheries management and the management and regulation of marine protected sites. Many of these also interact with the MMO’s responsibilities as the marine planning authority for English waters, which my hon. Friend referenced. It has teams based in 15 locations around the English coast. It is responsible for engaging with the full range of local stakeholders, signposting to relevant MMO guidance and, where relevant, making introductions to other parts of the MMO in relation to specific activities.

    When it comes to marine licensing and the process, the MMO is the appropriate marine licensing authority for English waters. The scope of responsibility and function held by the MMO ensures not only that marine licensing applications are assessed on an individual basis, but that marine planning activities are placed in a wider context so that conservation work on protected sites and species and compliance, monitoring and inspections are taken into consideration.

    The MMO aims to determine 90% of marine licence applications within 13 weeks. Some cases are more complex and take longer because of the detailed technical and complex environmental assessments that may be required. My hon. Friend the Member for Clacton referred to an individual case that he was working on and the fact that when he engaged with Ministers, he got a response very quickly. It is my understanding that that was purely coincidence—that a lot of work was going on in the background to gain access to that information, and the intervention of the Minister at the time coincided with the MMO pulling the information together and it being ready within a matter of hours.

    I am aware of the circumstances around the licence application made for the sea defences at Naze. My understanding is that this licence has not been straightforward to determine. Supplementary information and assessments had to be sought from the applicant after the initial application was received in July 2021. This included a required water framework assessment and further information from the applicant to update the methodology of the works. The MMO also had some difficulty ascertaining whether Tendring District Council’s planning department was dealing with the planning application for the works as an environmental impact assessment application, and whether there was scope for working through the coastal concordat on the case. The potential for coastal concordat working was raised with the council on 2 August 2021, but it took seven weeks for the council’s planning department to reply, confirming its position. There was also a 28-day consultation period for interested parties and stakeholders to express their views on the licence application. I hope that my hon. Friend has some sympathy with the fact that there is a process to go through. Whether it was with the MMO or the local authority, there would be hoops and challenges to get through to ensure that we get to the right decisions.

    Following the consultation period, the MMO identified that a habitats regulations assessment would also be required. Agreement was reached with the applicant on the fees only on 22 March, ahead of the MMO progressing the final determination and issuing that on 14 April. I am aware that an application for a licence variation was then received in July this year and I understand that it has been held up while the MMO has awaited the submission of an environmental impact assessment screening request from the applicant. That was received by the MMO on 3 November, and the MMO will move to consider the licence variation as soon as possible.

    I understand that the time taken to determine some marine licence applications is sometimes frustrating. This case is an example of the complexity of some marine licences and of how careful consideration is paramount.

    Giles Watling

    We are talking here about potential flooding—flood risk. The area around Jaywick in my constituency flooded in 1953, with the loss of some 90 lives, so when we see floods no one hangs around; people have to be fleet of foot. That is what I am asking for: fleetness of foot. The case that I identified earlier was one where, with every succeeding tide, the damage worsened, threatening to flood a sewage farm and poison the backwaters

    Mark Spencer

    I wholly acknowledge the necessity of speed to save his constituents and to ensure that no environmental damage is caused around Clacton. What we must not do, though, is introduce a scheme that might cause damage in another community six or seven miles down the coast. It is important to determine whether an action is required—it clearly was required—to protect an area or piece of infrastructure and that it does not impact on another piece of infrastructure that could cause even more damage. To do so, there needs to be an overarching authority that looks at all the facts in the light of day and, after all due consideration, says whether something is the right or wrong thing to do—whether the impacts of the decision made will be felt further down the coastline. My hon. Friend would be distressed if an application in—to pick a constituency at random—Southend were to have a huge impact on Clacton. He would be distressed if Southend-on-Sea City Council made that decision unilaterally without considering the impact on the community of Clacton.

    As the debate has highlighted, the MMO has responsibilities in the marine space, all of which are crucial. We must not forget the adaptability of the MMO in its delivery of the important objectives that support the growth of our local communities, the trade in fish, and the marine environment. The MMO is the primary responder to marine emergency situations and is key to supporting evidence-based decisions that touch a range of Government Departments. I think that is the right outcome and an outcome that we can all agree on. We may disagree on whether the MMO performs to a level that we appreciate, but there has to be a regulator. We need to continue to support the MMO’s performance.

    Mr Jonathan Lord (Woking) (Con)

    Who regulates the regulator? Who is marking the homework of this organisation?

    Mark Spencer

    Ultimately, I think that falls under the umbrella of the Department for Environment, Food and Rural Affairs. I have regular meetings with the MMO—in fact, I met its chief executive this week. I asked him to meet my hon. Friend the Member for Clacton, and he confirmed to me that he would be willing to meet; I will make sure that meeting happens. Let me say again that if other colleagues want to engage directly with the MMO, I am more than happy to facilitate meetings and to ensure that MMO is delivering for their constituents. We have had an interesting debate. I sense the frustration of some colleagues around the Chamber, but, as the Minister, I am more than happy to try to facilitate those discussions and to work with the MMO to deliver outcomes that hon. Members and their constituents want.

  • Giles Watling – 2022 Speech on Marine Management Organisation

    Giles Watling – 2022 Speech on Marine Management Organisation

    The speech made by Giles Watling, the Conservative MP for Clacton, in Westminster Hall, the House of Commons, on 13 December 2022.

    I beg to move,

    That this House has considered the effectiveness of the Marine Management Organisation.

    It is an honour to serve under your chairmanship, Mr Pritchard. I am thrilled to have this opportunity to stand up for coastal communities, particularly my own in Clacton—a place that I have been a part of and lived in for over 55 years and have represented both locally and nationally since 2007. I have seen at first hand what works in our environment and what does not. Our extraordinary coastline has existed for hundreds of thousands of years. It is home to a Ramsar site and is a site of special scientific interest; it is a salt marsh, with superb beaches, cliffs and backwaters.

    Recently, I tabled a private Member’s Bill that seeks to put in place a pilot to devolve many functions of the Marine Management Organisation to local authorities. The MMO is a group that I have increasingly come to see as not fit for purpose. It lacks experience and is flippant in respect of the needs of local communities. Indeed, I have been told that we once had turn up to look at a marine development in the backwaters two officials from the MMO who seemed to be surprised about tidal range and direction.

    More recently, the Naze Protection Society waited 13 weeks for a licence from the MMO to undertake vital coastal works that involved protecting a sewage farm from incursion by the sea. Every tide that came and went and every storm that happened made those works more difficult and more expensive. The Naze Protection Society contacted me in desperation, as it had the money, the materials and the contractors standing by but was held up for want of a simple licence from the MMO. I made a couple of calls to the Minister and the Secretary of State, and the licence was issued almost immediately. It should not take a call to an MP to get this simple stuff done.

    In my opinion, the MMO is failing. For that reason, I have worked with my excellent local authority, Tendring District Council, which has offered to put in place a pilot that it will run, absorbing and discharging the licensing and management duties. I want to see that happen for three core reasons, which also illustrate why I felt this debate was needed. First, it seems rather odd to me that we allow the MMO so much centralised power. We have seen planning and licensing become core parts of local authorities’ action plans. Councils are accountable and, by their very nature, have a deep understanding of local issues and the local scene. We need to look to a slimmer MMO, more devolution and a non-executive directors board of experts with real-life experience, holding the MMO to account.

    Secondly, we should really be moving past all these organisations with people who just seem to collect non-executive directorships. We have spoken a lot in this place about how expensive distant and unaccountable quangos can be.

    Sir James Duddridge (Rochford and Southend East) (Con)

    I share the same Marine Management Organisation group as my hon. Friend and have not found them as problematic as he has, but his assertion that we should move closer to local government is quite compelling. I was surprised that some relatively small works on a café on Southend pier had to go via the MMO, which is very centralised. It would be much more appropriate for Southend-on-Sea City Council to look at those issues, and I would appreciate it if my hon. Friend’s local authority could look into Southend also being involved in the pilot to bring those functions closer to the public and democratic accountability.

    Giles Watling

    I thank my hon. Friend for his intervention; he is wise to mention that we should devolve those powers. In the end, that is exactly what this is all about. I am suggesting certain pilots, and my own local authority is happy to pilot them. I gently suggest to my hon. Friend that he should go to see his local authority and get it to agree to do a similar project. I think he might get some success.

    The MMO is an example of the fact that His Majesty’s Government are sometimes happier going after lower-hanging fruit. For example, we scrapped the dreaded development corporations in 2010, because everybody saw them as bodies that did not care about local feelings towards development while still not achieving the revolution in house building the nation needed. It was a bloated public body that was ripe for the plucking, but just because the Marine Management Organisation’s offences are against fewer people and therefore less easily seen, they do not seem any less egregious. If local government can take on such duties, why should such an accountable body as Tendring District Council not do it? That is the correct argument that the Government executed in respect of development corporations.

    Finally, and most pertinently, the MMO has displayed a flippant and unaccountable culture. When Members do things in this House, it should matter. If we criticise a public body for how it treats our constituents, that body should reach out and seek to offer reassurance on what it is doing in our communities. After all, nobody has a God-given right to spend taxpayer cash or to public power and authority. Sadly, since I tabled and spoke to my private Member’s Bill, I have not heard from the chief executive officer or chairman of the MMO—not a dicky bird.

    The Minister for Food, Farming and Fisheries (Mark Spencer)

    I want to make two points before my hon. Friend concludes. First, I hope he recognises that although local authorities are good at making local decisions, some decisions on the management of seas and oceans can have an impact on other local authorities down the coastline, particularly in respect of coastal erosion. Does he agree that there needs to be an authority to oversee the multitude of decisions that are made?

    On his second point, I will organise a meeting with the chief executive officer directly with my hon. Friend and myself, so that he can speak to him directly.

    Giles Watling

    My right hon. Friend is absolutely right. There should of course be a central overseeing body to oversee all this. I am seeking to devolve some of the powers to the local authorities because it makes sense: they understand exactly what is happening on the local scene.

    Brandon Lewis (Great Yarmouth) (Con)

    Does my hon. Friend agree that one of the benefits of the whole of East Anglia, working right down the coast from Great Yarmouth to his constituency, is that our local authorities —the county councils and the district authorities—work together closely on the issue of the East Anglian coastline? They face challenges in dealing with the MMO. For example, Great Yarmouth Borough Council has been frustrated in developing the operations and maintenance hub, a new area for renewable energy. It has seen delays of six months and eight and a half months to its progress because of the MMO’s slow decision making. Speeding that up—or, indeed, allowing the local authority to have more authority to get on with the works, given their knowledge from working with enabling authorities—would give us a faster and better way to deliver more jobs and a better coastal community.

    Giles Watling

    My right hon. Friend is absolutely right. We need to ensure that we get decisions much more quickly, before more damage happens to our coastline. I have heard nothing from the MMO and have not had any comment from it about how it proposes to devolve its functions to local government. This debate is publicly on the Order Paper, yet the MMO has not reached out to discuss it. That suggests that it either thinks that a House debate on its performance is irrelevant or does not even check to see what is happening in this place and whether it needs to keep abreast of debate. Either way, it shows an arrogance that is not becoming in a public body.

    What I find so sinister is that there is a private Member’s Bill to possibly radically alter how the MMO functions, and it feels that warrants no action. It is so seemingly content that it has the unrestricted right to gobble up taxpayer cash and play judge and jury in our communities that it has not bothered to articulate publicly why it should not be broken up. It clearly thinks that it is above reproach; well, no public body, including the MMO, is above this House. We often speak of the bonfire of quangos, and I think I have found another log for that fire.

  • Anthony Eden – 1942 Speech on the Holocaust (First Mention in House of Commons)

    Anthony Eden – 1942 Speech on the Holocaust (First Mention in House of Commons)

    The speech made by Anthony Eden, the then Foreign Secretary, in the House of Commons on 17 December 1942.

    Mr. Silverman (by Private Notice) asked the Secretary of State for Foreign Affairs whether he has any statement to make regarding the plan of the German Government to deport all Jews from the occupied countries to Eastern Europe and there put them to death before the end of the year?

    The Secretary of State for Foreign Affairs (Mr. Eden) Yes, Sir, I regret to have to inform the House that reliable reports have recently reached His Majesty’s Government regarding the barbarous and inhuman treatment to which Jews are being subjected in. German-occupied Europe. They Have in particular received a note from the Polish Government, which was also communicated to other United Nations and which has received wide publicity in the Press. His Majesty’s Government in the United Kingdom have as a result been in consultation with the United States and Soviet Governments and with the other Allied Governments directly concerned, and I should like to take this opportunity to communicate to the House the text of the following declaration which is being made public to-day at this hour in London, Moscow and Washington:

    “The attention of the Governments of Belgium, Czechoslovakia, Greece, Luxemberg, the Netherlands, Norway, Poland, the United States of America, the United Kingdom of Great Britain and Northern Ireland, the Union of Soviet Socialist Republics and Yugoslavia, and of the French National Committee has been drawn to numerous reports from Europe that the German authorities, not content with denying to persons of Jewish race in all the territories over which their barbarous rule has been extended the most elementary human rights, are now carrying into effect Hitler’s oft repeated intention to exterminate the Jewish people in Europe. From all the occupied countries Jews are being transported, in conditions of appalling horror and brutality, to Eastern Europe. In Poland, which has been made the principal Nazi slaughterhouse, the ghettoes established by the German invaders are being systematically emptied of all Jews except a few highly skilled workers required for war industries. None of those taken away are ever heard of again. The able-bodied are slowly worked to death in labour camps. The infirm are left to die of exposure and starvation or are deliberately massacred in mass executions. The number of victims of these bloody cruelties is reckoned in many hundreds of thousands of entirely innocent men, women and children.

    The above mentioned Governments and the French National Committee condemn in the strongest possible terms this bestial policy of cold-blooded extermination. They declare that such events can only strengthen the resolve of all freedom loving peoples to overthrow the barbarous Hitlerite tyranny. They re-affirm their solemn resolution to ensure that those responsible for these crimes shall not escape retribution, and to press on with the necessary practical measures to this end.”

    Mr. Silverman While thanking the right hon. Gentleman for that statement, in which he has given eloquent expression to the conscience of humanity in this matter, might I ask him to clear up two points: First, whether the phrase, “those responsible” is to be understood to mean only those who gave the orders, or is it to include also anybody actively associated with the carrying-out of those orders? [An HON. MEMBER: “The whole German nation.”] Secondly, whether he is consulting with the United Nations Governments and with his own colleagues as to what constructive measures of relief are immediately practicable?

    Mr. Eden The hon. Gentleman and the House will understand that the declaration I have just read is an international declaration agreed to by all the Governments I mentioned at the outset. So far as the responsibility is concerned, I would certainly say it is the intention that all persons who can properly be held responsible for these crimes, whether they are the ringleaders or the actual perpetrators of the outrages, should be treated alike, and brought to book. As regards the second question, my hon. Friend knows the immense difficulties in the way of what he suggests, but he may be sure that we shall do all we can to alleviate these horrors, though I fear that what we can do at this stage must inevitably be slight.

    Mr. Sorensen Having regard to the widespread abhorrence of all people regarding these crimes, could attempts not be made to explore the possibility of co-operation with non-belligerent and neutral Governments to secure the emigration of Jews, say, to Sweden or to some other neutral country?

    Mr. Eden My hon. Friend will see that it is only too clear, from what I have said, what is going on in these territories occupied by Germany. Naturally I should be only too glad to see anything of the kind, but the hon. Member will understand the circumstances.

    Mr. Sorensen Am I to understand that the right hon. Gentleman is exploring that possibility?

    Mr. de Rothschild May I express to the right hon. Gentleman and this House the feelings of great emotion—the really grateful feeling that I am certain will permeate the Jewish subjects of His Majesty’s Government in this country and throughout the Empire at the eloquent and just denunciation which has just been made by the right hon. Gentleman? Among the Jewish subjects of His Majesty there are many to-day who have been in this country only for a generation or so. They will feel that, but for the grace of God, they themselves might be among the victims of the Nazi tyranny at the present time. They might be in those ghettoes, in those concentration camps, in those slaughter-houses. They will have many relations whom they mourn, and I feel sure they will be grateful to the right hon. Gentleman and to the United Nations for this declaration. I trust that this proclamation will, through the medium of the B.B.C., percolate throughout the German-infested countries and that it may give some faint hope and courage to the unfortunate victims of torment and insult and degradation. They have shown in their misery and their unhappiness great fortitude and great courage. I hope that when this news goes to them they will feel that they are supported and strengthened by the British Government and by the other United Nations and that they will be enabled to continue to signify that they still uphold the dignity of man.

    Sir Percy Hurd Can my right hon. Friend say whether Canada and the other Dominions were asked to share in this declaration?

    Mr. Eden In the first instance, this, as my hon. Friend will realise, is a declaration organised by the European countries who are suffering, and it was necessary that the three great Powers should get together quickly about the matter. We thought it right, and I am sure the House will think it right, that the principal victims should sign this paper as rapidly as possible. I think the whole House fully understands that, and I know that the Dominions Governments very fully understand it. Perhaps I should state that arrangements are being made for this statement to be broadcast throughout Europe from here, and, of course, it is being done from Moscow and Washington also. I may also say that all the information we have from the occupied countries is that the peoples there, despite their many sufferings, trials and tribulations, are doing everything in their power to give assistance and charity to their Jewish fellow subjects.

    Mr. Lipson May I associate myself with everything that has been said by my hon. Friends the Members for the Isle of Ely (Mr. de Rothschild) and Nelson and Colne (Mr. Silverman), and ask my right hon. Friend whether if this protest is broadcast to the German people, it will be made clear to them that this is not war but murder and that they must be held in some measure responsible, if they allow the German Government to carry out their horrible intentions?

    Mr. Eden Yes, Sir, that is precisely what was in the minds of His Majesty’s Government when we took steps to set this declaration in motion.

    Mr. Silverman Would the right hon. Gentleman consider in the broadcasts which are made not limiting the question of responsibility to the negative side of punishment but expressing the appreciation which we all feel for the numerous acts of courage done all over Europe by individuals who take enormous risks in order to render what help they can to those who are suffering; and would it not be right, in the broadcasts, to promise those individuals that what they are doing now will not be forgotten but will redound to their credit and benefit when the time comes?

    Mr. Eden Yes, Sir.

    Mr. McGovern May we take it from the right hon. Gentleman’s statement that any persons who can escape from any of these occupied territories will be welcomed and given every assistance in the territories of the United Nations?

    Mr. Eden Certainly we should like to do all we possibly can. There are, obviously, certain security formalities which have to be considered. It would clearly be the desire of the United Nations to do everything they could to provide wherever possible an asylum for these people, but the House will understand that there are immense geographical and other difficulties in the matter.

    Miss Rathbone Will this declaration be addressed also to the Governments and the peoples of Hitler’s unwilling allies, the other Axis countries, who might be able to do much to secure the rescue of these victims?

    Mr. Eden That has already been arranged.

    Mr. Cluse Is it possible, in your judgment, Mr. Speaker, for Members of the House to rise in their places and stand in silence in support of this protest against disgusting barbarism?

    Mr. Speaker That should be a spontaneous act by the House as a whole.

    Members of the House then stood in silence.

  • Victor Cazalet – 1940 Speech on Internees

    Victor Cazalet – 1940 Speech on Internees

    The speech made by Victor Cazalet, the then Conservative MP for Chippenham, in the House of Commons on 22 August 1940.

    I hope that neither false sentiment nor false emotion will govern anything I say. Rather I am animated, if I may say so, by a sense of decency and of due regard to the fair name of both my country and the Government that I support to-day. A few weeks ago there was a debate here on this subject. I do not say as a consequence of that debate, but following it, the Home Secretary made a statement which appeared to me, I admit, to be pretty satisfactory. A few days later a White Paper was issued, and I regret to say that the more I and some of my friends studied that White Paper the less satisfactory it appeared to be. It does not matter whether there are 18 or 80 categories in a White Paper if those categories do not apply to the people who are interned. The real point is, how many people are being released, and are going to be released, under the particular categories. We have had some information about that to-day, in answer to a Question; and I hope the Home Secretary will give us further information. I should be the first to admit that since that last debate some progress has been made; but the question remains whether enough progress has been made, and whether the speed at which the existing machinery can work, even given the maximum of good will, is satisfactory.

    One cannot help asking oneself who is responsible. It may be said that that has nothing to do with the matter; but what is Parliament for if it is not to ask these questions? No ordinary excuse, such as that there is a war on and that officials are overworked, is sufficient to explain what has happened. I do not know whether the Home Secretary will agree, but I think that Members of Parliament have been extremely reticent in exposing cases of hardship which have come to all of us, and which, I regret to say, are coming to me every day, even now. One of the most serious aspects of this affair is not so much what is happening at home, because we can, and will, put that right, but the effect that this has had on our reputation abroad. It has been interpreted as an anti-Jewish campaign. Although I know that nothing is further from the mind of the Government than that, there are facts which lead to that interpretation. The Jews are, for political reasons, not being allowed to organise themselves to fight in Palestine. That may be right or wrong; I am not arguing about it. Jews who are refugees in this country have been interned. Perhaps some of those same Jews whom I myself saw in Dachau camp some years ago, who have been fighting our battle for years, are interned here, and have not been allowed to fight for their adopted country. I know that the propaganda which has been put out is untrue: I repeat that there is nothing further from the mind of the Government than to do anything which would lend colour to this misguided or mischievous propaganda.

    We all know that what has been done has not been done deliberately, with a desire to be cruel, in order to propitiate the sadistic instincts of officials. Exactly the opposite is the case. Officials have been more than sympathetic. Those at the War Office I have found always helpful; and the Home Office officials, like the Home Secretary and the Under-Secretary, are only too anxious to help when we represent our case to them. Why is it that something has not happened? I am afraid it is because of sheer incompetence and mismanagement. I have no desire to ask for punishment, but I desire to see that similar things may not happen in the future. Also, what may start as incompetence and mismanagement may, if not corrected, very soon become cruelty. I admit that there has been exaggeration. I myself have taken very few cases to the Home Office, because it is so difficult to check the facts. Of course, there has been exaggeration, but I would say, in extenuation of some of the exaggeration of which perhaps hon. Members of this House have been guilty: how can you expect that there will not be exaggeration when it has taken over three weeks to get a letter from one party to another—[An HON. MEMBER: “Longer than that.”]—a month in one case that I know of; when the “Oxford Book of English Verse” has been decreed an unsuitable book for a refugee; when names have been lost; when people have disappeared? It is obvious that when those things occur you are bound to get an atmosphere in which exaggeration of statements will take place. I know that the Minister is the first to admit that mistakes have been made, and I know that neither he nor his Department is responsible. But I do not think that that is quite enough. Horrible tragedies, unnecessary and undeserved, lie at the door of somebody; and I want the Minister, if he will, to say that he realises that these mistakes which he has admitted have in certain cases resulted in appalling and most regrettable tragedies. We have, unwittingly I know, added to the sum total of misery caused by this war, and by doing so we have not in any way added to the efficiency of our war effort.

    So much for the past; what of the future? Personally—and here I believe that I represent the views of the majority of Members—I have confidence in the two committees which are concerned with these people. But there are one or two points which I do not think come within the terms of reference of either of these committees. I asked a Question to-day about the financial condition of the wives of internees. I have had one or two very distressing cases brought to me. In one case the husband has paid for over three years into the Unemployment Insurance Fund. You would expect that when he is unable to earn any money his wife would be able to receive something by right, not by charity, of what her husband has contributed to that scheme in the past. But apparently the fact that he is not eligible for a job—and the only reason he is not eligible is because he is interned by the Government—means that his wife is not allowed, under the Regulations, to draw any unemployment benefit. I do not think that anybody, in any part of the House, will challenge those facts, or deny that this is a great injustice. I believe that there is a fund—the Prevention and Relief of Distress Fund—to which the wives and families of those internees can apply. I would ask the Minister please not to circulate to the Employment Exchanges, but to all the internment camps, this information, so that the refugees may inform their wives, many of whom are at their last gasp to-day, how to get relief quickly and legitimately.

    The second question I ask is, Has every individual, who is of suitable age and physique, and against whom there is nothing from the point of view of security, been offered the chance of going into the Pioneer Corps? I believe that is absolutely essential. In asking the question, I must admit that I was perhaps guilty, because I did not realise the fact that there was quite a number of young refugees in this country enjoying positions and jobs, which would be denied to our own people because they were being called up, which they were holding merely because they were refugees. It is impossible that such a situation should continue, and I would be the first to admit it. Therefore I suggest, as a solution, that these young men should be offered the alternative of joining the Pioneer Corps, or, of course, being continued in internment. That offer should be made to men under the age of 35 or 40, and I would like all over a certain age, of suitable physique, to be offered the chance of going into an industrial corps from which the Minister of Labour could, if they were suitable, allocate them to various factories. I believe that if we got these two things it would certainly go a long way towards solving a very large number of hardships to-clay.

    What about the position in Canada and Australia? It is clear that there are bound to be difficulties which require great tact, both on our side and on the side of the Dominions, to see that unnecessary hardship is not done. A number of refugees have gone out there in Category B. Those were the cases in the course of being examined by a new tribunal in this country, and many no doubt would have been placed in Category C. If they are in Category C, no doubt the Dominions will allow them that liberty and freedom that they would have enjoyed in this country, but how can the Dominions know whether they ought to be in Category B or C? If they are in Category B or A arrangements have to be made and accommodation provided for their internment, and it is in the interests of the Dominions, as it is in the interests of the refugees themselves, that this question should be decided as speedily as possible.

    I know that the Under-Secretary has visited various of these camps, and I believe that conditions in the great majority of them have improved enormously, and that in future Lord Lytton’s Committee, which is now responsible, will see that the conditions in these camps are now kept up to the maximum efficiency that is possible. But I have received disturbing letters about Prees Heath and Sutton Park Camps, saying that men of 65 and 67 are still living under canvas. I do not know whether that is true or not, but if the Under-Secretary has visited these camps and is satisfied, either that the conditions are good, or that they are to be speedily changed, I accept the position at once. But it is only right in a Debate of this kind, when we all receive these letters, that an answer should be given.

    There must be individual cases which are not to-day, and will never be, covered by any particular category in any White Paper. I want no refugee to be refused the right of being released simply because he does not come under any particular category. I want there to be an individual committee, or whatever body it may be, who will examine the request of an individual on its merits. We all know, in the individual cases which have been brought to our notice, how hard it is to put them in any particular category. There is always some exceptional case. Perhaps the parents had been rather careless at the birth of one or more of their children and had not registered them in the right country, and for this the individual is now suffering. There are certain categories of artists whose technical work, and, indeed, whose whole life work may be ruined unless they are given certain opportunities. You cannot put them into any particular category, but they must be examined on their own individual merits. I am content to abide by the statement made by a Noble Duke in another place when he said that the Government will be able, as time goes on, to secure the release of all those whose release would not involve any danger to the country. That satisfies me, (1), if that is the policy of the Government, and (2) if there is a correct interpretation of “as time goes on.” Personally, I believe that categories would be an entirely satisfactory way of dealing with this problem, and I accept it for the time being. Let us get the categories working, and get out as many people as possible, but, as time goes on, surely, there must be another criteria. Innocence, loyalty, honesty—these must be the deciding factors.

    If a man is guilty, if there is the slightest suspicion that he has been guilty or is likely to become guilty, of in any way endangering the security and safety of the State, of course, he must be interned, but if his honesty, patriotism and loyalty are beyond doubt, then, I say, let such a man out. Give him his liberty to join with us in fighting for that freedom for which he might have been fighting for many years already. I ask the Minister to recognise that speed is of the essence of the whole problem. I know that he has problems and difficulties and confusion arising in the thousands of cases that are involved, and that there are tens of thousands of letters addressed to his Department, but I also know, as we all do, of the tragedies, sufferings and hardships which this control causes. I know also that the Government as a whole desire to do the right thing in this matter, and that they are just as appalled as any of us are at certain individual Cases that come to our notice. Frankly, I shall not feel happy, either as an Englishman or as a supporter of this Government, until this bespattered page of our history has been cleaned up and rewritten.

  • Victor Cazalet – 1940 Speech on Palestine and Jewish Ghettos in Poland

    Victor Cazalet – 1940 Speech on Palestine and Jewish Ghettos in Poland

    The speech made by Victor Cazalet, the then Conservative MP for Chippenham, in the House of Commons on 6 March 1940.

    No one realises more than I do the extreme difficulty of speaking after my right hon. Friend the Secretary of State for the Colonies. Although I disagree profoundly with the Government’s policy in Palestine, I recognise that this afternoon my right hon. Friend has made a brilliant defence of that policy, and that the overwhelming majority of hon. Members in my party are behind him. I do not pretend to view this subject with a completely open mind; nor did I come here with a completely open mind to listen to the Debate. I know some of the facts. My right hon. Friend made the speech which I had thought he would make—calm, endeavouring not to raise any unnecessary opposition, dispassionate in all his remarks, but I knew that to almost every argument which he made there was another side.

    I will give the House two examples of that. My right hon. Friend said that the peace in Palestine to-day is due, not solely to the war, but very largely to the publication of the White Paper some months ago. Of course, one can always purchase peace by making concessions to one’s opponents. But what an invitation that is to the Jews to follow the example of the Arabs and to make trouble in order to wring concessions from the Government. I am certain they will not do that. I should, in my humble way, use every endeavour I could to prevent them from doing it. The idea appears to be that although there is peace now, the Arabs may at some future time make a fuss and revolt; and therefore, they must be given concessions. We were then told about the Arabs in Iraq, the Mohammedans in Africa, India and elsewhere. I would remind the House that there are 16,000,000 Jews distributed throughout the world. Surely, in these critical days, their views and opinions should also be considered. My right hon. Friend said that there is plenty of good land in the maritime area for the Jews to buy. He knows very well that it is in that area where the Jews have spent most money that they have attracted the greatest number of Arabs. If the Jews are to buy land there, and indeed they only buy it there, being excluded from 95 per cent. of the rest of the territory, it will put a monopoly price on a very limited amount of land and so make it practically impossible for the Jews to buy any land in that area.

    I am opposed to the Government on this issue. I am pro-Government as they were three years ago, when they adopted the Royal Commission’s Report on partition. I am afraid I have not been able to change my views on Palestine quite as quickly as the Government have changed theirs. Some months ago, I appealed to the Government in vain not to proceed with the proposals of the White Paper because I considered that they were dishonourable and broke the promises and pledges which the same Government had given to the Jews three years ago. In listening to my right hon. Friend, it struck me as rather odd how often he referred to these commissions, and in particular the deference which he paid to the Royal Commission’s views on land. I wish that he had paid a little more deference to their views on other matters in regard to Palestine.

    A few months ago we had a hope that the League of Nations might intervene and prevent the Government from committing what I and others consider to be this crime against Jewry. The Permanent Mandates Commission has met and produced a report, and I think it would not be an overstatement to say that the Mandates Commission’s report is not entirely satisfactory towards the Government. It is of no use decrying the Mandates Commission in this case simply because it happens to recommend something against the Government’s policy. My right hon. Friend has given reasons why the Council has not yet been consulted. I agree with him in one aspect of this matter. I think it is very unlikely that any member of the Council, if asked to-day to give its opinion, would raise its voice in opposition to a policy which is officially favoured by Great Britain and presumably supported by Germany. It would have been much more honest if, from the beginning, the Government had said to the House that, in their opinion, the Mandate had failed, and they proposed something quite different. I would have disagreed with that, but I would have understood it. What I have never been able to forgive is the attempt to make this policy square with the Mandate. When the full White Paper policy is in execution—a permanent minority for the Jews, no more immigration, land sales to be confined within a narrow area—what will be left of the Mandate? The ghost of Lord Balfour ought to haunt those on the Treasury Bench when they try to square their policy with the Mandate.

    Something else has happened during the last few months. War has broken out. I think that for several months the war gave some hopes about what might happen in Palestine. The war has influenced all our lives and policies. Surely, it should have had some effect on the policy in Palestine. After all, the Government in certain very important ways have changed their character. The right hon. Gentleman the First Lord of the Admiralty is no insignificant member of the Government. He was strongly opposed to this policy. When he entered the Government, surely some concession ought to have been made to his views. The Opposition have been invited to co-operate with the Government, and they have loyally co-operated on most issues. Unity is our motto. It has been accepted loyally by the great bulk of the people of this country, and nowhere with greater surprise or with more welcome than in Palestine itself. Now this bomb has been thrown into our midst, spreading dissension and bitterness.

    The legal question has been dealt with. The question of the amount of land avail able has been dealt with. I want to state to the House one or two simple facts—facts, I admit, from the Jewish point of view—because I do not think that my right hon. Friend, although he paid a tribute to the Jews in Palestine, and expressed sympathy with them, understands how they feel about this policy. The question which the ordinary man-in-the-street is asking himself at the present time is why it should be necessary at this moment to introduce in Palestine this one item of the proposals of the White Paper. Does anyone really think it will help to win the war when it will raise bitter feelings on the part of Jews throughout the world? This must be the crucial test of everything that the Government do at this time—will it help us to win the war? That is the only thing which matters. My right hon. Friend has admitted that there is comparative peace in Palestine. In a few months, in a few weeks, war may develop in the Near East, and then we shall want the services of Jewish men—

    Mr. MacLaren (Burslem) And Arabs.

    Major Cazalet —Jewish men, scientists, factories. Already Iraq, Turkey, Egypt and Syria are utilising the brains, talents and resources of the Jews in Palestine. Are the Government really afraid of an Arab revolt? I believe that to-day the Arabs are just as united in their loyalty as are the Jews. I am far less afraid than is my right hon. Friend of Arab dissension. Whom does he fear? From where is the revolt to come? Is the army of the Hedjaz to march up, is Iraq to invade Palestine? I thought we had thousands of troops from the Antipodes in Palestine. There are tens of thousands of troops in Syria, should they be wanted. The Government have always insisted, rightly, that there never will be lasting peace in Palestine except through co-operation of the Jews with the Arabs. It is perfectly correct. I maintain that that co-operation can only be carried into effect successfully along economic lines. Economic prosperity depends on land purchases by the Jews. In areas where the Jews have bought land the Arabs work willingly, peacefully, and happily, with better wages and conditions than they have ever enjoyed. In some periods of the year at the height of the citrus season there are 10,000 Arabs working contentedly for the Jews. So it is a political question. I object to this decision because it will frustrate the only real hope of obtaining permanent co-operation between Jews and Arabs, and because it will deny the Jews the right to invest their money in purchases of land as they have done in the past. By this Measure you are handing back a vast number of Arab tenants and cultivators of the soil to the Arab moneylenders. Up to date they have been able to sell a portion of the land, and for that money they have been able to go in for intensive cultivation. You are condemning two-thirds of Palestine to bankruptcy. The right hon. Gentleman asked whether we had not heard of the £5,500,000 loan, but that is for the whole of the Empire, and what proportion will go to Palestine? We know the Jews have spent £5,000,000 a year in Palestine.

    This is the third partition of Palestine. We had the first in 1922, and the second was suggested by the Government on the report of the Royal Commission. Now we have this miserable third partition of Palestine. I know although lip service is paid to the Jews by almost everybody in this country that the Jews have not many friends. One knows so well people who start a conversation by saying, “Of course, I have a great many Jews, intimate friends who I admire and like very much, but—”No one knows better their thoughts and failings better than I, but, perhaps, if we had been persecuted for generations, we might have possessed, if we do not already possess, some of their less desirable characteristics. Perhaps we should not have survived the persecution. One of the most potential factors in giving to the Jews some of their less agreeable characteristics is that for centuries he has had to dwell in towns and ghettoes and has been denied the right of land ownership. Now, for the first time, in Palestine, he has land freedom and space, he can dig the soil and can create something constructive by the sweat of his brow. If you have not seen a Jewish farmer and compared him, as I have, with the type cringing in the ghettoes of Poland, you cannot understand what the possession of land and working on the soil, either in a communal farm or a farm in his own possession, means to him.

    What magnificent work they have done; and have the Arabs really suffered? Have the Jews farmed well? Well, I have never tasted better cheese or drunk better milk than off a Jewish farm. Are they not in Palestine contributing something of real worth to the national need? And now you deny them further expansion. Do not be deluded. The right hon. Gentleman explained how many thousands of acres there were, but what are the facts? The Jews have been told by the First Lord of the Admiralty that they were in Palestine by right, but the Jews under this scheme are there by right in less than 5 per cent. of the territory. They are tolerated only in 20 per cent., and are excluded altogether from another 65 per cent. What a mockery of the National Home. After all, who are these people? Are they likely to conspire with our enemies? No, Sir, these are the men who in the first days of the war were ready to offer a fighting division to go anywhere the British Government asked. So far that offer, no doubt for good reasons, has not been accepted. These are the men and women who have pledged themselves unreservedly—pledged their lives and possessions—in the service of the Government until victory is won. These men will still fight for England, but you have played on their loyalty and strained their patriotism almost to breaking point. You have played them off against the Arabs because you knew that in the last resort they would not let you down. They have no one else to turn to, better for them the ghettoes of Poland than the martyrdom of Lublin in Poland. After all, for what are we fighting if it is not for the preservation of individual liberty and of the right of small peoples to live their lives and cultivate and develop their own culture in their own land? The Jews have been at war for six years, and they have suffered up to date more casualties than the Allies. Their war is our war, and our war is theirs, and yet to-day, they have to suffer this supreme indignity in their hour of need.

    I apologise for perhaps expressing very strong views, but I feel, and believe, that these Regulations should be withdrawn, for a variety of reasons. I think they are almost certainly illegal, that they are unjust in themselves, and, in spite of what the right hon. Gentleman said, that they are unnecessary. I have every reason to suppose that there would not have been very much land purchase, and that the money is not, and will not, be forthcoming in the next few years. I believe these Regulations are dishonourable in peace and wicked and contemptible in war. They divide opinion at home and lend support to that body of opinion in the United States of America and elsewhere which wishes to think wrongfully I believe, that we are prepared to make terms with the enemy. They inflict a deep moral wrong on the Jewish race. Holding these views, is it any wonder that I am distressed and feel bitterly on the matter? Is there any wonder that I am prejudiced on behalf of those who are prepared to fight to the bitter end on our side in this war?

    Even if I were the only Member of my party who raised his voice against these proposals, and if necessary vote against them, I should do so. If I did not I should be ashamed of myself ever afterwards. I have been a most loyal back-bencher for 16 years, and perhaps I may be permitted this digression from the path of duty to-night. I realise, of course, that some of those on the Front Bench do not like these Regulations. There has been a good deal of mental shuffling to accommodate their consciences to these Regulations. I expect in their heart of hearts they desire, as we do, to see fair play to both Jews and Arabs, but, knowing as I do the extent of the bitterness of the blow which millions of Jews are feeling to-day, can I do anything else than raise my voice and beg the Government, futilely, I know, to withdraw even at this late hour these Regulations so that honourably once again Jews, Arabs and Christians in Palestine and elsewhere can unite whole-heartedly to destroy and defeat the King’s enemy?

  • Victor Cazalet – 1940 Comments on Welcoming Refugees

    Victor Cazalet – 1940 Comments on Welcoming Refugees

    The comments made by Victor Cazalet, the then Conservative MP for Chippenham, in the House of Commons on 10 July 1940.

    propose in a very few minutes to initiate a discussion on the subject of refugees and their treatment in this country during the past few months. For some years I have been interested in this question, but any humble or slight contribution which I may have made to this problem is only a tithe of the really great work which the hon. Lady the Member for the English Universities (Miss Rathbone) has done for refugees. All refugees in this country, and indeed many refugees in other countries as well, owe her a deep debt of gratitude, and I am glad to have an opportunity to pay tribute to her work to-day. I know enough about the subject to realise something of the hardships, miseries, and sufferings which a great many of these people have endured during the past four years. It has been the historical policy of this country for many centuries to give asylum to refugees, and I do not believe that England has lost by this policy.

  • Guy Opperman – 2022 Speech on Benefit Sanctions

    Guy Opperman – 2022 Speech on Benefit Sanctions

    The speech made by Guy Opperman, the Minister for Employment, in Westminster Hall, the House of Commons, on 13 December 2022.

    It is a pleasure to serve under your chairmanship, Mr Pritchard. In the limited time that I have, I will endeavour to answer the various points raised. I start by briefly addressing the point made by the hon. Member for Westminster North (Ms Buck)—that there is a reduction in the value of benefits. She will be acutely aware that UK Government welfare spending has increased from £151 billion in 2010 to £245 billion in 2022-23, and that there have been significant increases in Scotland, which I will come to. I wholeheartedly reject the suggestion that there has been a reduction in the value of benefits, not least given the fact that this Government increased welfare support for the most vulnerable by 10.1% at the autumn statement.

    Let me address the original points raised by my hon. Friend, the hon. Member for Glasgow South West (Chris Stephens). I hesitate to call him an hon. Friend, because I realise that he will receive an SNP pile-on as a result. I was not aware that he is standing down from the Work and Pensions Committee after many years of distinguished service, and I congratulate him on that. As always with promotions, one never knows whether to congratulate or commiserate. I also welcome back the hon. Member for Glasgow East (David Linden) to his Front-Bench position. I believe I have held my position for 47 days, after my personal sacking over the summer and the sabbatical that I enjoyed on the Back Benches courtesy of the previous Prime Minister.

    David Linden

    Plus one.

    Guy Opperman

    Plus one. The long and short of it is that, in that time, I have engaged at length with multiple employers, Jobcentre Plus and individual work coaches at the Department for Work and Pensions.

    I will endeavour particularly to address the points raised by the hon. Member for Glasgow South West, given that this is very much his debate. He has engaged with the Department on a number of individual cases, and I will endeavour to write to him on the specifics of the particular case that he raised most recently. I am advised that we have responded to the case that he raised today, but I undertake to write to him with more detail before Christmas. Given the circumstances that we face, the letter will obviously have to be communicated by email as well as post.

    I turn to the second point. With no disrespect to the hon. Member and other colleagues who have raised this issue, I do not recognise the comments against individual DWP members of staff. Where there are particular examples of named individuals who people genuinely feel have transgressed and behaved in an inappropriate way, clearly there is a process that must be entered into.

    It is certainly not the case, in any way whatsoever, that there has been a change of policy by individual Ministers—either by myself in the 47 days that I have held this post, or by previous Ministers. I cannot speak for colleagues who have held these positions.

    Grahame Morris

    I am sure the Minister gives that assurance in good faith, but how does he explain the rapid increase in the level of sanctions in recent months? Can he rebut the allegation that there is a sanctions regime that incentivises DWP staff to apply sanctions?

    Guy Opperman

    On the second point, I am not aware of any such policy or any such incentivisation in any way whatsoever. If the hon. Gentleman has any evidence of such incentivisation, he should publish it and name it individually, because there is no such evidence as far as I am aware.

    The hon. Gentleman also asked about the rise in the numbers. It is right to have a legitimate discussion about what is a fair and effective welfare system that supports people into work and provides value for money for taxpayers. Our work coaches support claimants by setting out the activities to move them into work or to progress in work and work more. Activities are set out in the claimant commitment, which is surely the start or base of all the discussions. They are tailored to reflect individual circumstances and take into account health conditions, caring responsibilities, current work and opportunities for training.

    The hon. Gentleman asked specifically about the rise in the number of sanctions. Some 98.2% of sanctions are for missing a meeting with a work coach. Such sanctions can be quickly and simply resolved by attending another appointment. The evidence is that approximately 50% of such sanctions are resolved with mandatory reconsideration.

    I wish to address in particular the issue in relation to the most vulnerable. It is right that the most vulnerable in society receive extra support. The Government have clearly shown a commitment to that by adding a further £26 billion in the cost of living support in the autumn statement, on top of the £37 billion for 2022-23 that we announced earlier this year, in May.

    Where benefit claimants have vulnerabilities, safeguards exist to ensure that they are not sanctioned inappropriately. Those with severe health and mental health conditions, those with full-time caring responsibilities and those with children under the age of one are not required to look for work and cannot be sanctioned. Many of the most vulnerable receive other elements of universal credit in payment, such as housing, child or disability support. Those payments are not affected by a sanction.

    Finally, when people experience particular challenges, such as childcare difficulties, accommodation issues or bereavement, work coaches have the discretion to switch off work-related activities for a period of time. Such measures enable us to support vulnerable claimants and provide tailored support. To answer the follow-on question, we have a well-established system of hardship payments, which are available as a safeguard if a claimant demonstrates that they cannot meet their immediate and most essential needs—including for accommodation, heating, food and hygiene—as a result of sanctions. I am advised that the relevant percentage is 1.987%.

    Various colleagues made specific points. The hon. Member for East Lothian (Kenny MacAskill) and the hon. Member for Slough made the point that work is hard to find. I will address that point in two particular ways. First, the evidence from the labour market statistics shows that the employment rate is up 0.2 percentage points on the quarter; the number of payroll employees is up on pre-covid levels by 932,000 to a record high; and the inactivity rate has fallen. On the vacancies rate, which surely relates to the point that work is hard to find, there were 1.2 million vacancies. Although obviously it remains high, the rate has fallen for the fifth consecutive month, to 1.187 million. Inactivity, which is a long-term issue, has fallen by 0.2 percentage points on the quarter, to 21.5%.

    Scotland was raised specifically, so let me give the Scottish figures. The number of people employed is at 2.725 million, up 22,000 on the quarter and up 61,000 on the year. The employment rate is at 75.9%, up 0.7 percentage points on the quarter and 1.4 percentage points on the year. Unemployment is at 93,000, down 21,000 on the year and 12,000 against February to December 2020. The number of people in workless households has fallen by 113,000 since April to June 2010.

    John McDonnell

    I do not want to stop the Minister’s flow, other than to correct him: there is no Member here from Slough. I may have missed his answer to this question, but why has there been an increase in the number of sanctions on such a scale, even compared with pre-pandemic levels? Could he answer the question that we have all asked?

    Guy Opperman

    The answer has already been given to the hon. Member for Easington (Grahame Morris). The figure in respect of persons failing to attend an individual appointment is at approximately 98%. That 98% is for failing to attend a specific appointment.

    John McDonnell

    Will the Minister give way?

    Mark Pritchard (in the Chair)

    Order. Is the Minister giving way?

    Guy Opperman

    No. I have one minute left to address this debate. In November 2018 the Work and Pensions Committee specifically said that the Committee agreed with the Government that the principles of conditionality and sanctions were an important part of the welfare system.

    I congratulate the hon. Member for Glasgow South West on securing the debate. The Government have been utterly clear that we are fully supportive of all people who are on benefits.

    John McDonnell

    Just answer the question!

    Mark Pritchard (in the Chair)

    Order. The right hon. Gentleman is very experienced in this place and should know better. If the Minister is not giving way, he should not be speaking.

    John McDonnell

    I can tell the Minister—

    Mark Pritchard (in the Chair)

    Order. We are running out of time. Minister, I think the hon. Member for Glasgow South West would like to hear replies to his questions at least.

    Guy Opperman

    I welcome the opportunity to respond to the hon. Gentleman’s debate and set out how the Government are helping to get people into work. We have intensified our support for jobseekers. We have made great efforts on in-work progression. Employment figures are up. There is more to do, and I will write to the hon. Gentleman with specifics.

  • Karen Buck – 2022 Speech on Benefit Sanctions

    Karen Buck – 2022 Speech on Benefit Sanctions

    The speech made by Karen Buck, the Labour MP for Westminster North, in Westminster Hall, the House of Commons, on 13 December 2022.

    It is a pleasure to respond for the Opposition to this short and important debate under your chairmanship, Mr Pritchard. I, too, congratulate the hon. Member for Glasgow South West (Chris Stephens) on introducing the debate and making a powerful speech. We have heard powerful contributions, and many who spoke drew on their own experiences of cases as well as cases brought to them by advice agencies in their constituencies.

    Before the debate, I asked my local citizens advice bureau about the changes it had experienced in terms of clients with concerns about sanctions. It told me that there has been an increase in calls for help, including appeals from clients who were bedbound when the sanction was imposed because they had covid and were quarantining. I was told about someone who was sanctioned for attending a funeral and about a young woman who was forced to leave her home because she became pregnant outside marriage and feared for her safety. She was sanctioned for not wishing to return to a jobcentre near her family home in order to attend an appointment.

    What has come through all of the speeches is the strong theme—it is a theme that has come up time and again whenever we have debated social security issues over recent months and years—of the impact on mental health. So many of the clients who come to us asking for help with sanctions and other aspects of social security problems are highly vulnerable and sometimes chaotic in their vulnerability, as my right hon. Friend the Member for Hayes and Harlington (John McDonnell) stated. Sometimes they have significant mental health concerns that should have been a red flag.

    As we have heard, this debate is well timed because over the last few months it has become increasingly clear that the DWP’s approach to sanctions has changed in ways that Ministers have so far been unwilling to explain or justify. The evidence lies in the sheer volume of sanctions that the Department has been handing out. Let us not be distracted by the suspension of most forms of conditionality during the pandemic. That was, of course, the right thing to do, and obviously that meant there was bound to be some degree of a resurgence in sanctions once things opened up again. But that does not explain—and this point has been made several times this afternoon—why sanction levels and rates are so much higher now than they were before the pandemic.

    Several Members have referred to the work of Dr David Webster, whose regular briefings on sanctions for the Child Poverty Action Group have served to bring the issue to the fore. He finds that the number of sanctions handed out per month in May to July of this year was on average 45,000, equivalent to 2.5% of people on universal credit subject to conditionality, compared with 1.4% in the three months before the pandemic. That increase in the number of adverse sanction decisions is reflected in the cumulative number of people on universal credit serving a sanction at any point in time. Dr Webster writes:

    “The number of universal credit claimants who were serving a sanction in August was 115,274…more than three times the pre-pandemic peak of 36,771 in October 2019.”

    Of course, there were more people on universal credit in August 2022 than in October 2019, but as Dr Webster shows, the percentage of universal credit claimants subject to conditionality serving a sanction was 6.4% in August, more than double the pre-pandemic peak of 3.1% in October 2019. And for unemployed people—those in the searching for work group—Dr Webster estimates that nearly 8% were under sanction in August 2022. My first question to the Minister is: how have we arrived at a situation where one in 13 unemployed universal credit claimants are currently under sanction?

    We should be under no illusion that sanctions are just a slap on the wrist for claimants. Typically, sanctions involve the withdrawal of 100% of the universal credit standard allowance, and even the reduced rate for the lowest level of sanction is 40% of the standard allowance. And except for the lowest level sanctions, the penalties continue after the person sanctioned has complied with the rules—for seven days rising to 28 days for low level sanctions, while higher level sanctions apply for 28 days and 91 days rising to 182 days, depending on whether there have been previous failures to comply in the same year.

    An increase in the sanction rate is not just a technical matter. People on universal credit do not have a margin of income that they can fall back on to weather an interruption to benefit payments—all the less as the four-year benefit freeze has permanently eroded the real-term value of benefits.

    There is an urgent need to understand what lies behind the increase. Has there been a revolution in people’s behaviour or attitudes since 2019? If so, what is the evidence for that? Has the level of non-compliance with conditionality really doubled since the pandemic? Have there been operational changes leading to more sanctions being issued without any change in the level of compliance? Has there been a change in the Department’s policy on sanctions? Or is the increase an unintended consequence of other factors? in other words, is the sanctions regime out of control?

    The purpose of sanctions has been well described by Professor Paul Gregg as a backstop to the system of benefit conditionality. The point is that while sanctions set at a reasonable level serve an important function, they are not an end in themselves. A sudden increase in the number of sanctions such as we have seen should be seen by any responsible Government as a cause for concern rather than for self-congratulation. It raises the fear that the sanctions tail is wagging the conditionality dog, that the Government are more concerned with signalling toughness than with improving employment outcomes, and that the purpose of conditionality has been twisted towards catching people out rather than maintaining contact with the labour market. Or, no less worryingly, it raises the fear that the number of sanctions has shot up because the Government have lost control of the sanctions regime and no longer know what they are doing.

    The fact that the Government have suppressed their own research into the effectiveness of the universal credit sanctions regime is hardly reassuring. In 2018, in response to a Work and Pensions Committee report, the Department agreed to

    “evaluate the effectiveness of reforms to welfare conditionality and sanctions,”

    and said that this would focus

    “on whether the sanctions regime within Universal Credit (UC) is effective at supporting claimants to search for work.”

    It said that it would publish the results in spring 2019, but we know what happened. The research was undertaken, but earlier this year the last Secretary of State but one—the right hon. Member for Suffolk Coastal (Dr Coffey)— reneged on the commitment to publish the results. That is the behaviour of a Government who are uninterested in learning lessons, and evasive of public scrutiny.

    Chris Stephens

    I thank the shadow Minister for making that important point. The same applies to the drivers of food bank use, which include sanctions.

    Ms Buck

    Sanctions are indeed an important driver of the increase in food banks, which is another symptom of widespread structural failure in the system.

    It would be refreshing if the new Secretary of State took a different view of the matter. A doubling in the rate of sanctions in the context of a cost of living crisis and permanent reductions in the value of benefits is a serious matter. I hope that the Minister can give a suitably serious response.