I remind Members that, in Committee, Members should not address the Chair as “Deputy Speaker”. Please use our names when addressing the Chair. “Madam Chair” or “Chair” are also acceptable.
With this is will be convenient to take the following:
Amendment 2, page 1, line 25, at end insert—
“(2A) In any case where the Office has acted in accordance with subsection (2), it may notify the Independent Adviser on Ministers’ Interests of the circumstances in any case where it considers those circumstances may be relevant to—
(a) the Ministerial Code, or
(b) the functions of the Independent Adviser on Ministers’ Interests.”
This amendment enables the OBR to notify the Independent Adviser on Ministers’ Interests where the OBR considers that any instance where the Treasury had not requested a report under section 4A(1) in advance may give rise to consideration of compliance with the Ministerial Code.
Amendment 5, page 1, line 25, at end insert—
“(2A) Where the OBR prepares a report in accordance with subsection (1) or (2), it must take account of the impact of the measure or measures on—
(a) the UK’s compliance with, and
(b) the fiscal cost of meeting,
the UK’s net zero target as set in section 1(2) of the Climate Change Act 2008.”
This amendment requires the OBR to report on the impact of fiscally significant measures announced by Government on the UK’s statutory net zero target.
Amendment 1, page 2, line 4, at end insert “or
(b) the measure, or combination of measures, is likely to have an impact on—
(i) the cost of government borrowing,
(ii) interest rates, or
(iii) the rate of growth of gross domestic product.”
Thank you very much, Madam Chair. May I first take the opportunity to congratulate you on your election? I promise to try not to try your patience over the coming weeks, years and so on, but we will see how things go.
I wish primarily to speak today to amendment 9 and, of course, consequential amendment 10, which effectively seek to ensure that the fiscal lock proposed in the Bill should also include any changes to the fiscal rules and would require the Office for Budget Responsibility to produce a report on their effect on public finances. The Office for Budget Responsibility was of course constructed by a Conservative Chancellor following the poor forecasting record of the previous Labour Government. Between 2000 and 2010, the then Labour Government’s forecasts for economic growth were out by an average of £13 billion, and their forecasts for the budget deficit three years ahead were out by an average of £40 billion. Their forecasts therefore lacked credibility, and to re-establish confidence and credibility the OBR was created by the Conservative Government.
Labour lacked economic credibility in the past, and I am afraid it still lacks it now. The facts simply do not stand up the false claim that the Government have inherited the worst economic circumstances since the second world war; they transparently have not. Contrary to the rewriting of history that the current Labour Government are attempting, when we took over from Labour back in 2010, inflation was 3.4%. When they took over from us, it was 2.2%. The annual deficit is half what we inherited in 2010, unemployment is about half what it was in 2010, and we handed Labour the fastest economic growth in the G7. The dominant political and economic narrative since the second world war is in fact, as has been widely commented on, that every single Labour Government end up with unemployment higher at the end of their time in power than when they took over from the Conservatives preceding them.
My hon. Friend is making a fantastic speech on the importance of being responsible with our public finances. Much of the Bill is concerned with responsibility and transparency. Does he know whether the Government published an impact assessment when they took away the winter fuel allowance?
I thank my hon. Friend for that point. My understanding is that the Government have not published an impact assessment, as would normally be the case for something with such a significant impact. I think that speaks to the whole narrative that we are hearing from the Government: claiming one thing when the facts speak differently. As I said, far from inheriting a £22 billion black hole, they have actually spent, or committed to spending, an additional £25 billion. That is a choice that they made, so the claim that the Labour Government are having to take the winter fuel allowance away from millions of pensioners as a response to unexpected financial constraints simply does not stack up against the facts, or indeed the words of the Chancellor herself, who on 25 March 2014—yes, a decade ago—said:
“We are the party who have said that we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money”.—[Official Report, 25 March 2014; Vol. 578, c. 174.]
That is a direct quote in Hansard from the current Chancellor, so no, the Government’s restriction of winter fuel payments is not a response to financial circumstance; it is a long-established, clearly stated Labour policy intent—a deliberate policy choice, but a policy that they conveniently forgot to tell the public about in the run-up to the last election.
I hope, however, that the Government can be straight with the public on this point about the fiscal rules, accept the amendment that we are proposing, and provide assurance to all Members and the outside world that there is no sleight of hand here. We want the Bill to work as they say it is intended to, and to include financially significant decisions, such as on the levels of Government borrowing and the fiscal rules. I would therefore appreciate it if the Chief Secretary to the Treasury confirmed in his wind-up that the Government do not intend to change the definition of debt in their fiscal rules or practise some accounting trick to hide the level of Government borrowing, and that they do indeed wish to be clear and transparent about the public finances. If Labour Members vote against our amendment, it will merely prove that they are planning to change their fiscal rules in the Budget to borrow more money, increase debt, and run away from independent OBR scrutiny—the very opposite of the stated intent of the Bill.
Thank you, Madam Chair, for allowing me to give my maiden speech in this House. Like every Member across this House, it is the greatest honour, privilege and responsibility of my life to represent my community of Loughborough, Shepshed and the villages. I rise at the most difficult moment for our communities and our country since the second world war, when many feel despondency, despair and anger. I know that every Member across this House wants our communities to succeed and to contribute to our national success. That is what my community has done before and will do again, with hope and determination.
My story does not begin in Loughborough. I was not born there—unlike my neighbours, who are now my friends, and who have made it my home. My story instead begins in rural Punjab, 4,000 miles away, where my father was born almost 70 years ago. His chances of dying before his fifth birthday were one in four. Today, a child born in the same place is around nine times less likely to die. That is what economic growth means. It means less suffering, it means less misery and it means less death. That is why I became an economist: to build prosperity and to lessen misery.
I learned my trade in the Treasury and then went to work in Somaliland, one of the poorest nations on Earth, where I helped to write its economic policy, its budgets and its national development plan. That was where I saw the horrors of climate change lead to drought, hunger and death, but it was also where I learned that even in the darkest of hours and the most difficult of moments we can build prosperity.
Now I stand here as the elected Member of Parliament for my community. It says something remarkable about our nation that the fact that I, the son of immigrants, am standing in this Chamber is in and of itself unremarkable. It speaks to our common culture—a culture forged of different backgrounds, a culture that not only rejects the violence we saw over the summer, but completely rejects its reasoning too.
2:15 pm
In my community there is world-leading hydrogen research and industry. We need green hydrogen for fertiliser and to keep our trucks moving. It is not a coincidence that I have chosen to speak in this debate, with Treasury Ministers on the Front Bench; I say to them, “Get out the cheque book”—they are very excited by that—“because I will be asking for money from both the National Wealth Fund and GB Energy.”
However, this is about more than cash. It is about rebuilding hope and prosperity. As a previous generation rose to their moment, in the midst of the most destructive war in the history of humankind, an economist wrote a report that still defines our nation. He wrote:
“Freedom from want cannot be forced on a democracy or given to a democracy. It must be won by them.”
It was won by them. They built prosperity for all, with good jobs across our country, education for all, housing for all and healthcare for all.
As that generation rose to their moment, so will we, by building prosperity, protecting our planet and ending despair and despondency. As previous generations rose to their moment, we will too, with the hope and determination that defines our communities and that defines our country.
A very strong maiden speech, without a script in hand—your parents will be proud.
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This amendment broadens the definition of fiscally significant measures to those which fall below the costing threshold, but have wider fiscal effects, by affecting either the cost of government borrowing, interest rates or rates of economic growth.
Amendment 6, page 2, line 4, at end insert
“or if the condition in subsection (3A) is met.”
See the statement for Amendment 7.
Amendment 7, page 2, line 6, at end insert—
“(3A) The condition in this subsection is that the measure, or combination of measures, forms part of category of measures with a cumulative impact on—
(a) public sector net debt,
(b) public sector contingent liabilities, or
(c) both,
that exceeds a specified percentage of the gross domestic product for a specified period.
“Specified” means specified in, or determined in accordance with, the Charter for Budget Responsibility”
The purpose of this amendment is to extend the definition of fiscally significant measures to include measures with a cumulative impact on public sector net debt or contingent liabilities when taken together with other measures in the same category, such as public projects with private sector partners.
Amendment 3, page 2, line 16, leave out “28” and insert “56”.
See the statement for Amendment 4.
Amendment 4, page 2, line 17, at end insert—
“(6A) After the publication of a draft under subsection (6), the Treasury must consult—
(a) the Office for Budget Responsibility,
(b) the Treasury Committee of the House of Commons, and
(c) such other persons as the Treasury considers appropriate.
(6B) When a modified Charter so as to include provision by virtue of this section is laid before Parliament, the Treasury must also lay before Parliament a report on the outcome of consultation under subsection (6A).”
The purpose of this amendment is to impose a requirement on the Treasury to undertake a full consultation and publish the outcome of that consultation prior to revision of the Charter for the purposes of the Bill.
Clause 1 stand part.
Clause 2 stand part.
Amendment 10, Title, after “measures” insert
“and of any changes to the government’s fiscal targets”.
This amendment is consequential to Amendment 9. It would amend the long title of the Bill.
The British public should not be taken for fools. Just because Labour keeps claiming something, that does not mean that it suddenly becomes true, which is why clarity over plans and rules is so important. The fiscal rules are of course restrictions on fiscal policy set by the Government to constrain their own decisions on spending and taxes. The fiscal rules set by the previous Government said that the debt to GDP ratio should be falling within a five-year horizon, and that the ratio of the annual budget deficit to GDP should be below 3% by the end of the same period. Labour’s manifesto for the election proposed the following fiscal rules: balancing the current budget, so that day-to-day costs are met by revenues, and that debt must be falling as a share of the economy by the fifth year of the forecast. On the surface, therefore, the debt rules appear to be broadly the same under the new Government. The Government have even said that they have an “ironclad” commitment to reduce Government debt. It is therefore critical what definition of debt is used for the fiscal rules. Clearly, any changes to the fiscal rules are financially significant decisions because they affect how much the Government can borrow and spend.
On Second Reading, the Exchequer Secretary to the Treasury said:
“Our fiscal rules are non-negotiable.”—[Official Report, 30 July 2024; Vol. 752, c. 1263.]
Great, but why then has the Chancellor repeatedly failed to rule out that she will change the definition of debt in her fiscal rules to allow, presumably, for massive borrowing? The Government cannot run from the scrutiny that they should be subjected to if they are considering making such a change. We believe that our amendment requiring an OBR report on changes to the fiscal rules is entirely consistent with the Government’s stated policy intent, and should therefore be fairly uncontentious. After all, on Second Reading, the Chief Secretary to the Treasury said that
“the announcement of a fiscally significant measure should always be accompanied by an independent assessment of its economic and fiscal implications, in order to support transparency and accountability.”—[Official Report, 30 July 2024; Vol. 752, c. 1211.]
We agree, and not accepting our amendment would be contrary to those goals, because clearly changing the fiscal rules would be a fiscally significant measure in anybody’s book. Furthermore, the Chief Secretary said that
“fiscal discipline and sound money is the bedrock of our plans.”—[Official Report, 30 July 2024; Vol. 752, c. 1213.]
Well, changing the fiscal rules would be changing the foundations and that bedrock.
Transparency and clarity are important in relation to the public finances, because Ministers should never forget that it is not their money that they are spending; it is the public’s money. The public have a right to know how their money is being spent, and government is about making difficult choices with limited resources. With Government spending being above £1.2 trillion per year, the British public recognise that the Government clearly have choices. It is not an endless supply of money, but it is a very, very large amount. In the last few weeks, the new Labour Government chose to spend the public’s money on pay settlements for their union friends rather than on supporting pensioners. Those settlements are estimated to cost about £10 billion. They also chose to spend £8.3 billion on a public energy company and £7.3 billion on a national wealth fund, so far from inheriting a £22-billion black hole, they have actually just spent £25 billion creating one within their first few weeks of coming to power.
My election represents an historic first for my community. I am a member of an under-represented minority—I am, of course, the first Member of Parliament elected by the men and women of Loughborough to have a beard. To the organisers of the beard of the year competition I say, “Call me.” Luckily for me, my dad is not eligible for that particular competition. I know that the right hon. Member for Islington North (Jeremy Corbyn) has won the award several times; I hope he does not mind me winning the prize this time, as long as I let him win the argument.
My predecessor in this place, Jane Hunt, was not a contender for that award, but no one can doubt her commitment to team Loughborough, and every single Member across this House and across my community will wish her the very best, especially as she has recovered from cancer. Her predecessor, Baroness Morgan, has talents that are well known both in this and the other place. Before her was my good friend and mentor Andy Reed. Members who know Andy will know that he is still a leading figure in sports policy, and they will also know that Andy is the nicest man in British politics. It is his character that I hope to live up to in this place.
However, I rise to speak at the most difficult time for our communities and our nation since 1945. Our communities are in crisis. Wages in my constituency are £10,000 lower than they would be had we grown at new Labour rates. The divides caused by deindustrialisation have widened from cracks into chasms, with young men who used to leave school and get good jobs now 20% less likely to get any job; in our most deprived neighbourhoods, life expectancy falling before the pandemic; more than any fact or figure, the despair, the despondency and the anger; across and beyond our shores, war in Europe once more, with democracy in danger; and, most seriously of all, a planet that is burning.
For my community, this was the hottest summer we have ever known, followed by the worst flooding we have ever seen, destroying homes. The Prime Minister and I saw that destruction when we visited the homes of Ian and Alan. No one should wake up in the morning to find their home destroyed by flooding, but that will only become more common in the years ahead. What we do in the next decade will determine the fate of our communities, of democracy and of our planet. Either we will rise to this moment, build prosperity for all, protect democracy and stop emitting carbon, or everything we hold dear will crumble and fall.
Previous generations have shown us that we can rise to this moment that threatens us. Our country stood alone against fascism in Europe and won. I think today of my constituent William Williams, 104 years old, who flew Spitfires in the war. As his generation rose to their moment, so can we. My community have shown me that we can. When the waters came and the floods rose, my constituents Caz and Carl did not pause to think if they could help, only how they could help. They organised collections, they provided refuge, and they looked after perfect strangers. It is their spirit that I carry into this place—asking not if, but how. How can we build prosperity and protect our planet from burning? We can do so by investing in a green transition that creates good jobs and gets wages rising for the people and places left behind when the factories closed. That is what we can achieve, and we are seeing it work already in the United States.