We are investing in Britain’s future and putting in place the plans needed to get Britain building again after 14 years of Tory failure. Since the election, we have had five interest rate cuts, wages have risen more in the first 10 months of this Labour Government than they did in the first 10 years of the previous Conservative Government, and we are the fastest growing economy in the G7 in the first half of this year.
I thank the Chancellor for that response. This year, interest on debt is expected to total £111 billion, which is 8.3% of total public spending. What are the Chancellor’s plans to rebuild confidence in the gilt market, and how confident is she that we will not be reliving the worst bits of the 1970s?
The best way to make sure that we continue to have confidence in the gilt markets is to keep the Tories and Liz Truss as far away from running the economy as possible. We have brought stability back to the economy, and there have been five cuts in interest rates. This is in sharp contrast to the disaster of Liz Truss and the clown show that we witnessed at the Reform conference at the weekend. Those two parties would lose control of spending, and push up mortgage costs and inflation. They have done it before, and they would do it all over again.
The spread on our gilts over the central bank rate is lower in the UK than it is in Greece, so maybe the right hon. Gentleman should look again at his evidence. The truth is that we have had five cuts in interest rates since this Government came to office. We are paying high levels of interest on the debt, but the debt was accrued by the Conservative party, which destroyed our economy and public services all at once. We are fixing the mess that the Conservatives left.
The trust of financial markets depends not just on the policy of the Government today, but on whether we keep that trust tomorrow. The Opposition squandered that trust when they were in government by trying to push through tax cuts that they could not afford—that the UK could not afford. Does the Chancellor agree that Labour, too, has to resist the temptation to duck the tough choices on spending, which would not only risk economic stability but hold back growth?
I very much agree with my hon. Friend. That is why we published the spending review earlier this year. The review set out plans for day-to-day spending for the next three years and capital spending for the next five. Everything in the review is fully funded and fully costed through the difficult decisions that we had to make in the Budget last year to increase taxes. At the same time, the deficit is expected to fall by 1 percentage point of GDP this year.
Both the Conservatives and Reform want to repeat the medicine that Liz Truss inflicted on this country, pushing interest rates and mortgages through the roof. Is not the contrast that this Government have provided stability and confidence; that, as a result, we have record levels of private investment in this country; and that we are on the right track to rebuilding this country as a success story, which can be seen in the fact that we have the fastest growth in the G7 as well?
The Office for Budget Responsibility forecasts that debt is going to fall during the course of this Parliament—something that never happened under the Conservative Government—and that the deficit as a share of GDP will fall by 1 percentage point this year. This is a Government who have a grip on the public finances and on public spending, because of the choices that we made. All those choices were opposed by all the Opposition parties.
In the spring statement earlier this year, the Chancellor said that the responsible choice is to reduce our level of borrowing in the years ahead. That is a noble sentiment, which I applaud—if she was not trying to fix a watch with a hammer. This is the Chancellor that has seen UK debt interest now soar to a 27-year high, while annual debt interest is almost twice the cost of servicing the Ministry of Defence. Given her catastrophic first Budget, what reassurance has she got for Scottish businesses that things will not get even worse when she finally has her next Budget in the winter?
I will not take any lectures from the SNP, which has put up taxes on ordinary working people in Scotland. The SNP Scottish Government had the biggest settlement since devolution in real terms at the spending review this year. That was only possible because of the tax changes that we made in the Budget. It is now up to the SNP Government to use that money wisely and to see waiting lists fall in Scotland in the way that they have in England and Wales. Waiting lists are still rising in Scotland—what does that say about their Government?
Let me just check—oh yeah, it went through the roof! At the same time that our debt levels went up, we have seen our public services—whether that is our schools, our hospitals, our transport or our infrastructure—on their knees. The Conservative Government managed to destroy our public finances, our economy and our public services. What an achievement. That is why there are only 120 of them and they are sitting on the Opposition Benches—and they will be there for a long time to come.
UK long-term borrowing costs are now consistently above the range of G7 countries—something that did not occur at any time under previous coalition or Conservative Governments. It is because markets are pricing in the specific weakness of this Labour Government’s economic policies. The cost of that weakness means rising prices, lower investment and less money for public services in the long term. Having carpet-bombed the private sector with extra taxes, will the Chancellor rein back the splurge of unproductive public spending that she let rip last year?
The only person that carpet bombed our economy was Liz Truss and the Conservative party. The hon. Gentleman supported Liz Truss in leadership contest and throughout her time—