Chancellor's Statement in the House of Commons/Labour response
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Speech to the House of Commons as delivered by Chancellor Jeremy
Hunt. Mr Speaker, The central responsibility of any government is
to do what is necessary for economic stability. Behind the
decisions we take and the issues on which we vote are jobs families
depend on, mortgages that have to be paid, savings for pensioners,
and businesses investing for the future. We are a country that
funds our promises and pays our debts. And when that is questioned,
as it has...Request free trial
Speech to the House of Commons as delivered by Chancellor Jeremy Hunt. Mr Speaker, The central responsibility of any government is to do what is necessary for economic stability. Behind the decisions we take and the issues on which we vote are jobs families depend on, mortgages that have to be paid, savings for pensioners, and businesses investing for the future. We are a country that funds our promises and pays our debts. And when that is questioned, as it has been, this government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances. That means decisions of eye-watering difficulty. But I give the House and the public this assurance: every single one of those decisions… …whether reductions in spending or increases in tax, will prioritise the needs of the most vulnerable. That is why I pay tribute to my predecessors for the Energy Price Guarantee, for the furlough scheme… …and indeed for even earlier decisions to protect the NHS budget in a period when other budgets were being cut. Mr Speaker, I want to be completely frank about the scale of the economic challenges we face. We have had short term difficulties caused by the lack of an OBR forecast alongside the mini-budget… …but there are also inflationary and interest pressures around the world. Russia’s unforgivable invasion of Ukraine has caused energy and food prices to spike. We cannot control what is happening in the rest of the world, but when the interests of economic stability mean the government needs to change course, we will do so - and that is what I have come to the House to announce today. In my first few days in this job, I’ve held extensive discussions with the Prime Minister, Cabinet colleagues, the Governor of the Bank of England, the OBR, the head of the Debt Management Office, Treasury officials, and many others. The conclusion I have drawn from those conversations is that we need to do more, more quickly, to give certainty to the markets about our fiscal plans. And show through action, not just words, that the United Kingdom can and always will pay our way in the world. We have therefore decided to make further changes to the mini budget immediately, rather than waiting until the Medium-Term Fiscal Plan in two weeks’ time, in order to reduce unhelpful speculation about those plans. Mr Speaker I am very grateful for your agreement on the need to give the markets an early, brief summary this morning, but I welcome the opportunity to give the House details of the decisions now. We have decided on the following changes to support confidence and stability. Firstly, the Prime Minister and I agreed yesterday to reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not been legislated for in Parliament. So we will continue with the abolition of the Health and Social Care Levy, changes to Stamp Duty, the increase in the Annual Investment Allowance to £1 million, and the wider reforms to investment taxes. But we will no longer be proceeding with: The cut to dividend tax rates, saving around £1 billion a year. The reversal of the off-payroll working reforms introduced in 2017 and 2021, saving around £2 billion a year. The new VAT-free shopping scheme for non-UK visitors, saving a further £2 billion a year. Or the freeze to alcohol duty rates, saving around £600 million a year. I will provide further details on how those rates will be uprated, shortly. Second, the Government is currently committed to cutting the basic rate of income tax to 19% in April of 2023. This government believes that people should keep more of the money they earn, which is why we have continued with the abolition of the Health and Social Care Levy. But at a time when markets are asking serious questions about our commitment to sound public finances, we cannot afford a permanent, discretionary increase in borrowing worth £6 billion a year. So I have decided that the basic rate of income tax will remain at 20% - and it will do so indefinitely, until economic circumstances allow for it to be cut. Taken together with the decision not to cut Corporation Tax, and restoring the top rate of income tax, the measures I’ve announced today will raise around £32 billion every year. The third step I’m taking today, Mr Speaker, is to review the Energy Price Guarantee. This was the biggest single expense in the Growth Plan and one of the most generous schemes in the world. It is a landmark policy for which I pay tribute to my predecessor. It will support millions of people through a difficult winter and will reduce inflation by up to 5%. So I confirm today that the support we are providing between now and April next year will not change. But beyond next April, the Prime Minister and I have agreed it would not be responsible to continue exposing the public finances to unlimited volatility in international gas prices. So I am announcing today a Treasury-led review into how we support energy bills beyond April next year. The review’s objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need. Any support for businesses will be targeted to those most affected. And the new approach will better incentivise energy efficiency. There remain many difficult decisions to be announced in the Medium-Term Fiscal Plan on October 31st… …when I confirm that we will publish a credible, transparent, fully costed plan to get debt falling as a share of the economy over the medium term… …based on the judgement and economic forecasts of the independent Office for Budget Responsibility. I would like to thank the OBR, whose director Richard Hughes I met this morning, and the Bank of England whose Governor Andrew Bailey I have now met twice. I fully support the vital, independent roles both institutions play, which give markets, the public, and the world confidence that our economic plans are credible, and rightly hold us to account for delivering them. But I want some more independent, expert advice as I start my journey as Chancellor. So I am announcing today the formation of a new Economic Advisory Council to do just that. The Council will advise the government on economic policy with the first four names announced today:
Mr Speaker, We remain completely committed to our mission to go for growth, but growth requires confidence and stability – which is why we are taking many difficult decisions, starting today. But while we do need realism about the challenges ahead, we must never fall into the trap of pessimism. Despite all the adversity and challenge we face, there is enormous potential in this country. We have some of the most talented people in the world. Three of the world’s top ten best universities. The most tech unicorns in Europe. One of the world’s great financial centres. Incredible strengths in the creative industries… …in science, research, engineering, manufacturing, and innovation. All that gives me genuine optimism about our long-term prospects for growth. But to achieve that, it’s vital that we act now to create the stability on which future generations can build. The reason the United Kingdom has always succeeded is because at big and difficult moments we have taken tough and difficult decisions in the long-term interests of the country. That is what will we now do. And I commend this statement to the House. Rachel Reeves MP, Labour’s Shadow Chancellor, responding to the Chancellor’s Statement in the House of Commons, said: As I say regularly now, I welcome the new Chancellor to his place. The fourth in four months of chaos and fiasco as this Conservative government spirals down the political plughole. The damage has been done. This is a Tory crisis made in Downing Street, and ordinary working people are paying the price. All that is left after these humiliating u-turns are higher mortgages for working people, and higher bonuses for bankers. And their climb-down on energy support begs the question yet again – why won’t they extend a windfall tax on energy producers to help foot the bill? Now, it is good to finally see the Prime Minister in her place. And not as the Leader of the House told us, under a desk. But what is she left with? No authority. No credibility. No plan for growth. It is clear for all to see: the people who caused the chaos cannot be the people to fix the chaos. They are out of ideas, out of touch and out of time. It should be the Prime Minister speaking here today. Yet we know she could not do so with a shred of credibility, given that the survival of this government depends on smashing to smithereens everything she stands for. And now she attempting to reverse everything she campaigned for. It’s not just impossible – it is absurd. The Prime Minister is barely in office, and she is certainly not in power. Only five days ago she said at Prime Minister’s Questions there would be ‘absolutely’ no public spending reductions. But after what we heard from the Chancellor today, every single public service is again at risk from the Tories – from our NHS nurses to our schools and to our servicemen and women, with the country paying the price. The Prime Minister said she had an energy package for two years, now that’s being withdrawn on the very day it is supposed to be legislated on. She insisted her Conservative mini-Budget would lead the country to the Promised Land. Instead it has led to the highest mortgages in 15 years and emergency interventions by the Bank of England to protect pensions. And then on Friday – the unedifying spectacle of the last Chancellor being dragged back from the IMF before he could do any more damage to our economy. So she has turned to a new Chancellor, who finished 8th out of 8 in the Tory leadership contest, winning just 18 votes from Conservative MPs. The Tories have run out of credibility and now they are running out of Chancellors. The latest office holder has been in Cabinet for 9 of the last 12 years – at the centre of a government responsible for low growth and weakened public services – and him responsible for helping run the NHS into the ground. He was a big part of austerity season 1 and now he says the cure is austerity season 2. And what was his flagship policy in the leadership contest? To reduce corporation tax in a totally unfunded manner – not from 25% to 19% - the Right Hon Gentleman called for it to be lowered to 15%. With not a single explanation for how that will be paid for. The truth is had he won the contest and implemented these policies, we would incredibly be in an even worse place than we are now. There is no mandate and no authority for any of this. The Conservatives have put a lasting premium on people mortgages. Uncosted borrowing has sent interest rates spiralling, millions of people’s mortgage deals will be coming to an end soon, leaving many families forking out £500 more per month on average. People will be paying a Tory mortgage premium for years to come. How does the Chancellor think ordinary people can possibly afford this? We’ve heard no answers today. The Chancellor has said that growth requires ‘confidence and stability’. I agree. But where does he think the lack of confidence and the instability came from? It didn’t fall from the sky. It came from the minibudget 3 weeks ago. What does it say about our country that we are watching borrowing costs, hour by hour. That’s not the sign of a strong G7 economy. It is the exact opposite. Businesses are saying that things are so unstable that they have paused investment. The former Deputy Governor of the Bank of England, Charles Bean, has outlined the extraordinary damage the Conservative have done to our standing. In his words, “we’ve moved from looking not too dissimilar from the U.S. or Germany as a proposition, to looking more like Italy and Greece.” What a mess. And where is the OBR forecast? Has this government learnt nothing? Does the Chancellor really expect the country to take everything from him at face value? Last week the Business Secretary was busy undermining the Office for Budget Responsibility. Today we have received another massive fiscal statement with no forecast. What has the government got to hide? They should publish the numbers so we know the true state of the public finances after 40 days of this Prime Minister - and after 12 years of this Tory government. Today they’ve scaled back help with energy bills for families and pensioners. It begs the question yet again – why won’t they bring in a proper windfall tax on energy producers to help foot the bill to support consumers? And when will the current Chancellor publish in full the government’s estimates of windfall profits of the energy giants over the next two years? No-one was talking about spending cuts until the Tories crashed the economy with their mini Budget. So I ask the Chancellor, why should the British people pay the economic price for the Tories’ mistakes? What spending cuts does the government plan on making? We believe the government must honour its commitments to uprate benefits and pensions in line with inflation. Will the Chancellor make it clear today that is what he intends to do? And what a contrast that cuts to benefits are still on the table but the one thing the Chancellor couldn’t bring himself to reverse today was lifting the cap on bankers’ bonuses. Why is this the last policy standing in this disastrous mini-Budget? And let me come to credibility. Does he accept that once credibility and trust have been destroyed, it cannot simply be regained by a series of zig zagging, chaotic u-turns? Will he and the Prime Minister apologise for the costs and anxieties laid on families? Can he admit once and for all that the market turmoil we are in was directly caused by the disastrous decisions of his predecessor and of the Prime Minister? Can he guarantee the Bank of England won’t have to intervene to save the government again and what guarantee can he give to people about their pensions, mortgages and household bills? The Chancellor said everything is now on the table. But is that really the case? We know that abolishing non dom tax status will raise £3 billion pounds a year, yet there was no mention of that today. How can it be right that some of the richest individuals in society are allowed to buy their way out of paying the tax that should be paid here in Britain? There is lasting damage which these policy u-turns won’t change. They’ve set fire to everything. Now they insist it is all fine. The truth is an arsonist is still an arsonist, even if he runs back into the burning building with a bucket of water. Because they can’t be trusted. The Tories are clinging on for themselves regardless of the cost to the country. Trickle-down economics will always fail – what drives forward our economy are the talents and efforts of millions of working people and thousands of businesses. The government’s economic credibility has been destroyed. They have harmed our economic institutions. People are paying higher mortgages. The same set of people doing u turns isn’t going to fix it. The only way to change is a real change of government. |