Chancellor Jeremy Hunt: ‘Conservatives are taking the long-term decisions for a brighter future’

• Immediate Civil Service recruitment cap and Equality and Diversity Audit to save up to £1billion next year, cutting the cost of government and boosting efficiency

• Benefits reform promised to make work pay, as 2 million UK workers set to benefit from National Living Wage boost in April 2024

• Tough action to protect freedom of speech with a law change to ensure banks do not discriminate against lawfully held views

Speaking at Conservative Party conference in Manchester earlier today (2 October), Chancellor Jeremy Hunt set out plans for a more efficient and productive British state, steps to make work pay with benefits reform a wage boost for millions of workers, and action to protect freedom of speech in the banking sector.

Despite enormous global challenges, the British economy is proving the doubters wrong. The economy is growing and we are on track to halve inflation this year. Compared to France, Germany and Italy, the UK has been the joint fastest growing since Brexit, and the fastest growing since 2010.

However, with an ageing population and a war in Europe leading to greater calls on the public purse, the Chancellor warned the way government delivers public services must change to avoid higher taxes, lower growth and more debt into the future. That will require some necessary long-term decisions over the coming months to build a brighter future for everyone.

In contrast, he slammed the Labour Party’s dangerous plan to borrow £28 billion which would exacerbate problems further, leading to higher debt, higher inflation and higher taxes. Branding Labour’s approach an “economic illusion”, the Chancellor accused Sir Keir Starmer and Rachel Reeves of not being honest with the British people about the impact of their borrowing plans.

A more efficient government

As a first step to build a more productive state, the Chancellor announced an immediate Civil Service recruitment cap to ensure the workforce grows no further, increases efficiencies and boosts productivity. The cap is expected to save up to £1billion next year.

The Civil Service workforce is 63,000 bigger than pre-pandemic and it is right that we review this growth to reduce inefficiencies. We want to ensure we are delivering the best public services possible and investing in the right skills and people for the Civil Service, while providing value for money for the British taxpayer.

The Civil Service recruitment cap will stay in place for the rest of the Spending Review period. While we are setting an initial cap, all Departments will have to provide comprehensive productivity plans that demonstrate a long-term plan to get back to pre-2019 staff numbers. As part of the recruitment cap, the Chancellor also announced that we are auditing spending in the Civil Service on diversity spending to drive efficiency, improve equality of opportunity and tackle disparities.

Improving opportunity and stopping discrimination should be every manager’s job and not a box you tick by hiring a person, so driving out inefficiency and waste on diversity spending is critical. It is expected there will be a reduction in the estimated 10,000 people working full time on equality and diversity initiatives in the Civil Service. Action by the government will be announced at the Autumn Statement.

Making work pay

In a major boost for 2 million of the UK’s lowest paid workers, the Chancellor also announced we will commit to uprating the National Living Wage in order to meet a Conservative manifesto commitment for it to reach two thirds of median earnings by 2024.

The Low Pay Commission is expected to recommend uprating the National Living Wage with the current published forecast rate at £11.16 an hour. This could represent an increase of over £1,300 to the annual earnings of a full-time worker on the National Living Wage from April 2024.

The Chancellor also confirmed he and Work and Pensions Secretary Mel Stride intend to rework the benefits sanctions regime to make it harder for people to claim benefits while refusing to take active steps to move into work. Proposals will be set out in the upcoming Autumn Statement.

Protecting freedom of speech

Free speech is the cornerstone of our democracy and a Conservative Government will always protect it. It is unacceptable for banks or other payment service providers to close accounts on the

basis of someone’s political views. That’s why we will take action to change the law to ensure that banks do not discriminate on the basis of lawfully held views.

That is why the Chancellor confirmed we will legislate to change banks’ Threshold Conditions to ensure that banks do not discriminate against consumers based on their political opinions. We are also publishing a statement on how financial institutions should implement new payment services framework contract termination rules so that customers have more protection from having their payment accounts closed.

The hard but necessary long-term decisions this Conservative government has taken means we are now growing the economy and on track to halve inflation this year. The Labour Party have no plans

to reduce the cost of government with their reckless borrowing and unfunded spending commitments meaning higher inflation and higher taxes. They are silent on protecting freedom of speech, and have pledged to end benefit sanctions which removes the incentive to look for a job.

Only Prime Minister Rishi Sunak and the Conservatives are willing to take the long-term decisions for a brighter future for everyone in the United Kingdom.

ENDS

Notes to Editors:

Civil Service recruitment cap

• The Civil Service workforce is bigger by c.105,000 full-time-equivalent staff than in 2016 and c.63,000 bigger since the pandemic – we need to curb this growth and cut the cost of government. There has been a need for growth in areas to support our key public services and ensure we have the right skills needed particularly in digital, science, and technology. It was right that the workforce grew to respond effectively to the challenges of the Covid-19 pandemic. But now we need to prepare the civil service for a new era.
• The Civil Service workforce is a significant cost on the public purse – we have a responsibility to taxpayers to ensure they are getting value for money from this.Workforce is a significant cost, overall public sector pay and pensions costs represent a significant proportion of all government spending. It is right we consider how we can reduce those costs and ensure we are maximising the return for that investment.
• We are announcing an immediate cap on civil service numbers in order to curb the rise in civil service numbers and cut the cost of government. This will introduce a limit to the size of the Civil Service to ensure it does not grow further and any recruitment is offset by cracking down on unnecessary bureaucracy in Whitehall.
• Departments will be able to protect critical services but the Civil Service as a whole cannot continue to grow.This will not prejudice key public service delivery or the development of essential technology and science skills in the Civil Service. But it will mean Departments have to make difficult choices about how to get to the right size for the future.
• The cap will stay in place for the rest of the Spending Review period. It is important we take immediate action to cap numbers, to check the growth of the Civil Service and improve the efficiency of the system.
• The cap is expect to save up to £1billion. If we are able to keep the size of the Civil Service in England at the same level as the latest official statistics this could save up to £1 billion, compared to projections for 2024-25 based on the current trend.
• While we are setting an initial cap - all Departments will have to provide comprehensive productivity plans that demonstrate a long-term plan to get back to pre-2019 staff numbers. The Chancellor has asked all Departments to provide comprehensive productivity plans ahead of the next Spending Review. These plans will need to demonstrate how they will utilise modern technology to drive efficiencies and deliver better services for the public at lower costs. It is our ambition to get back to pre-pandemic numbers in the Civil Service, and departments will have to submit plans to this effect as part of the Productivity Review. and set out ambitious plans to be an even leaner, more effective and productive workforce.
• Labour wasted £26 billion on botched IT projects when they were in Government. Labour wasted £26 billion on botched IT projects. These were: £12.7 billion NHS National Programme for IT, £7.1 billion Defence Information Infrastructure, £5 billion National Identity Scheme, £400 million Libra system for magistrates’ courts, £350 million Rural Payments Agency Single Payment Scheme system, £300 million GCHQ ‘box move’ of technology, £155 million National Offender Management Information System (C-Nomis), £106 million Department for Work & Pension Benefit Processing Replacement Programme, £88.5 million Foreign & Commonwealth Office Prism IT project, £81 million Department for Transport, Shared Services Centre.

Equality and Diversity Audit

• The Chancellor has commissioned a thorough internal audit of current spending on Equality Diversity and Inclusion in the Civil Service – in order to ensure it is a cost-efficient and effective use of taxpayer money. The review will report to the Minister for the Cabinet Office, the Chief Secretary to the Treasury and the Minister for Women and Equalities.
• The audit will dovetail with the public sector productivity review, aiming at delivering a leaner, more efficient government. The audit forms part of our drive to improve productivity across the public sector by driving down waste and improving performance.
• The audit is a cross-government effort reporting jointly to the Cabinet Office, Minister for Women & Equalities and the Treasury. This will ensure greater cooperation across government, to drive better outcomes from the audit.
• The audit will build a comprehensive evidence base on spending across the civil service to assess whether it is delivering value for money for the taxpayer. We need to build an evidence base of how much we are spending in this area, what we are spending it on, and whether it is working. Once we have sufficient information on these points, we can assess where the spending is achieving value for money and actually improving equality of opportunity. It is important to maintain the Civil Service Code’s provision on political impartiality.
• A comprehensive survey is being issued to around 100 public bodies to ascertain the details of spending on diversity. The survey will go to approximately 100 bodies, including central government departments and bodies staffed by Civil Servants but excluding the NHS, Police and Local Government.
• Action by the government will be announced at Autumn Statement. The Chancellor will unveil any actions we take in response to the audit at the Autumn Statement in November.

National Living Wage

• We are announcing that we will meet our manifesto commitment to boost the wages of the lowest paid by agreeing that the National Living Wage will rise to two thirds of median earnings. We will accept the recommendations of the Low Pay Commission should they, as they are expected to, recommend this uprating.
• This means that the National Living Wage could rise next year to around £11.16 an hour – leading to a pay rise for over 2 million workers. The rise will take effect from April 2024, based on the Low Pay Commission’s remit which sets a target for the rate to reach two-thirds of median earnings by 2024 for workers aged 21 and over, taking economic conditions into account. The exact figure of the new hourly rate is subject to final Commission projections, but the current published forecast rate is £11.16 an hour.
• This will represent an increase of around £1,300 to the annual earnings of a full-time worker on the National Living Wage. Based on the final hourly rate being £11.16, that would mean the gross annual earnings of full-time eligible worker will have increased by £1,347.
• The annual earnings of a full-time worker on the National Living Wage will have increased by over £6,000 since its introduction in 2016, and by around £9,000 since 2010.Young people, women, individuals from some ethnic minority backgrounds, and those with a disability are among those more likely to benefit from this increase.
• No Labour Government has ever left office with unemployment lower than it was when they came into power – leaving more people without the security of a pay packet. Every Labour Government has left office with unemployment higher than before they came into power. Under the last Labour Government, unemployment rose from 2.1 million in 1997 to 2.5 million by the time they left office in 2010 – meaning more people were denied the security of a good job.
• Labour have doubled down on their £28 billion borrowing plan meaning more money for you and your children to pay off. Rachel Reeves has said Labour would borrow £28 billion a year until 2030, despite concerns it could crash markets – Reeves confirmed Labour would ‘ramp up’ to the spending.
• Paul Johnson, the Director of the Institute for Fiscal Studies, said Labour’s plans would result in a rise in personal taxes and an increase to interest rates. Johnson said: ‘It is hard to say how, without tax rises, they do anything more generous than is currently planned’. Johnson then said: further borrowing could ‘potentially increase inflation, and also drive up interest rates’.

Debanking

• We will change the law so that banks will be forced to show exactly how they are protecting customers’ freedom of speech. We will amend the Threshold Conditions that financial services firms are required to meet and consult on how to deliver that. The financial services regulators will be required to assess how banks are upholding their duties towards non-discrimination, including ensuring safeguards are in place to protect freedom of speech. The regulators have a range of tools to deploy if they have any concerns that a firm is not meeting the Threshold Conditions, to ensure that firms act to address that.
• We are publishing a statement on how banks should implement new contract termination rules so that customers have more protection from having their accounts closed. In July we announced our intention to legislate to strengthen rules whereby providers terminate users’ framework contracts. These changes will extend the notice period for termination of a framework contract from two months to 90 days and mandate that providers give a ‘clear and tailored’ explanation to affected customers for termination, unless to do so would be unlawful, inconsistent with wider legal or regulatory requirements. This new statement will set out next steps to support implementation and confirm the government’s intention to publish draft legislation by the end of the year.
• This follows our previous announcement on new protections to stop customers having their bank account closed with no notice or no reason. In response to the Call for Evidence, we published a policy statement on 21 July that set out our plans to strengthen requirements relating to payment contract terminations. These changes will require reasons for termination to be given and increase the minimum notice period in cases of contract termination to 90 days (subject to limited exceptions) – giving customers more time to challenge a decision through the Financial Ombudsman Service or find a replacement bank. Making these changes will require secondary legislation.
• We have asked the regulator to review the treatment of ‘Politically Exposed Persons’ (PEPs) to ensure they are not being denied services by banks. We have asked the 9 FCA to conduct a review into financial institutions’ adherence to their guidance on Politically Exposed Persons. This review will assess the compliance of FCA-regulated firms with their legal and regulatory obligations regarding the risk management and treatment of these individuals, as well as their relatives and known close associates, and action will be taken if serious failures are identified. The FCA has contacted domestic PEPs seeking their input regarding their own treatment by financial institutions.
• Rachel Reeves failed to stand up against account closures for political reasons – siding with the banks rather than free speech. Rachel Reeves accused the Treasury of attempting to ‘bully’ the Chief Executive of NatWest out of her job after the bank was found to have allegedly debanked an individual for their political views.
• Deputy Labour leader Angela Rayner defended the National Union of Students’ efforts to no platform speakers, failing to stand up for free speech and academic freedom. As Shadow Education Secretary, she supported the National Union of Students attempts to no-platform speakers, saying it was a ‘false choice to suggest universities are either places of free enquiry or places of safety’.