House of Commons · Urgent Question
09 January 2025 · 36 other contributors
Opened by Mel Stride Con Central Devon
Summarised by AI from the official record, so it can contain mistakes.
Mel Stride raised concerns about public finances borrowing costs 2025-01-09 in the House of Commons. A government minister responded. Other MPs also contributed.
Key points
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
Will the Chancellor confirm that the growing pressure of borrowing costs on the public finances is a cause for concern, given recent high levels and the impact on mortgage costs and lending across the economy? The urgent question highlights the serious issues facing the country with regards to rising borrowing costs and their potential implications.
Question
Does the Chief Secretary confirm that any emergency statement will be made first in this House? Also, given recent media reports about market movements, what estimates has the Treasury made of how these will impact mortgage costs and lending across the economy?
Minister reply
The fiscal rules are non-negotiable. The Government inherited a high debt burden from previous Conservative governments due to their failure to achieve sustainable growth. Public spending will be within the Budget-set numbers, ensuring economic stability and clear public finance stewardship.
Question
What process is being followed for the spending review? Will extra cuts to Departments be communicated in advance, and will the Chancellor make a fiscal statement when presenting the OBR forecast?
Minister reply
The second phase of the spending review has begun, setting public sector budgets from 2026-27. The House will receive updates between March's OBR forecast and June's completion of the spending review.
Question
Will protecting NHS and care services be non-negotiable during fiscal balancing efforts? Will the Government work to repair ties with Europe, especially in light of trade-related challenges?
Minister reply
The NHS remains a key commitment for this Government, with plans to address elective waiting lists and invest further. The focus is on adhering to fiscal rules while growing the economy sustainably.
Question
Will the Minister give an absolute assurance of no more tax increases or borrowing?
Minister reply
I can absolutely assure the Father of the House that we are working through this spending review on the basis of the envelope set at the Budget. Public services will have to operate within the means that we are providing to them.
Question
Does the Chief Secretary agree that one of the lessons from global developments in recent days is that we must pay for day-to-day public spending through tax rises?
Minister reply
I very much agree with my hon. Friend. We have to pay day-to-day bills with the income we generate day to day.
Question
Which of those choices is he inclined to make, and when will he tell the British people honestly what this Government have done?
Minister reply
I have been clear to the House, as has the Chancellor, that the fiscal rules are non-negotiable. Public services will have to live within their means.
Question
Will my right hon. Friend confirm that this Government are absolutely committed to fiscal responsibility and rising living standards?
Minister reply
I thank the Chair of the Science, Innovation and Technology Committee for her question. She will know that our first commitment in the Labour party manifesto at the last election was to fiscal responsibility.
Question
Is the reason the Government Front Bench is so empty today and the Chancellor has fled to China that she has realised that her Budget means she now is the arsonist?
Minister reply
I must say I am rather surprised by the inflammatory language of the former Chair of the Treasury Committee, which is clearly no reflection of reality. The Chancellor is going on her trip to China.
Question
Will the Minister confirm that the route out of that is growth, and that remains our No. 1 mission?
Minister reply
My hon. Friend is right. May I offer some probably unwelcome advice to Opposition Members? The sooner they stop groaning and stop laughing about their performance when they were last in government, and the sooner they apologise for it, the sooner the British people might start listening to them again.
Question
Does the Minister recognise that scaling back investment in vital public services risks even more devastating consequences for our local communities?
Minister reply
At the autumn Budget, the Chancellor invested in frontline public services, because we recognise that people rely on them, but also because functioning public services are an important route to growth in the economy.
Question
Does the Chief Secretary agree that in order to improve living standards for my constituents, we must stick to our fiscal rules?
Minister reply
I very much agree. That is why fiscal stability and economic responsibility are at the heart of this Labour Government and the Chancellor’s agenda.
Question
Will he level with people about when and where the next round of cuts will fall?
Minister reply
As I said, the fiscal rules are non-negotiable. The only reliable sources on future financing will be the OBR forecast on 26 March, the conclusion of the spending review in June, and the Budget, which the Chancellor will present in the autumn.
Question
Does the Chief Secretary agree that the Government’s plan for change is the right approach to ensure that the United Kingdom can weather the global uncertainty?
Minister reply
My hon. Friend is absolutely right. Let me set out the difference that the British people will experience.
Question
By underlining that there will not be any tax or borrowing increases, he is in effect saying that austerity is back.
Minister reply
As I said, the fiscal rules are non-negotiable. The only reliable sources on future financing will be the OBR forecast on 26 March, the conclusion of the spending review in June.
Question
Is the Chief Secretary aware that the last two months’ GDP figures, for September and October, are both down? Is he aware that sterling is falling—in fact, almost collapsing? Confidence is falling and investors are fleeing. The only things going up are inflation, wasteful public spending and the cost of debt. Be under no illusion: we are heading towards a financial crisis. Will he ask the Chancellor to return from her ridiculous trip to China, to reverse course, and to cut daft spending and wasteful regulations, so that we can create some growth?
Minister reply
I think the question was whether I was going to demand that the Chancellor come back from her trade trip to China. I will not, no.
Question
Does the Chief Secretary agree that there is an irony in the Conservatives raising concerns about the cost of borrowing, when they oversaw debt rising from 64.7% of GDP to more than 96% of GDP and left a £22 billion unfunded black hole in public finances—and now continue to oppose the tough decisions that we are making on tax and spend to fix their mess?
Minister reply
That is exactly why our fiscal rules are non-negotiable. While the Conservatives borrowed to pay the bills every month because they did not have enough money to pay for all their promises, this Government are investing in the future of our country, whether through reforming public services or investing in infrastructure and opportunities for growth.
Question
Next has said that it will increase prices by 1%, directly because of the increases to national insurance contributions, and has warned of slowing growth. With business confidence plummeting, gilts at a 26-year high and growth stagnating, do the Government still maintain that they have an iron grip on public finances, or will they admit that their Budget has done exactly what the Conservatives warned: increase costs, increase prices and reduce growth?
Minister reply
The question was whether the Government have an iron grip on public finances; the answer is yes.
Question
Meur ras ha myttin da, Mr Speaker. Does the Chief Secretary agree that the only way that we can wrest the economy out of the clutches of the Conservatives’ doom loop is to go for growth? The Government’s new industrial strategy will be a core foundation underpinning that growth.
Minister reply
My hon. Friend is absolutely right. Our industrial strategy, through which we will invest alongside businesses and industries of the future, and our infrastructure strategy, which sets out how we will get Britain building again, are two examples of the Government playing their part by bringing economic and political stability.
Question
We are looking at higher interest rates, lower growth and a higher cost of borrowing to the Government; as my hon. and right hon. Friends have said, we are grateful to the Chief Secretary to the Treasury for being so honest with the House. It is clear that if he sticks to his word, there will not be any more borrowing, or any more tax rises. Given the numbers, that leaves only one option: cuts in public services. I wonder whether his colleagues behind him on the Government Benches realise that reality. What word other than “austerity” will he use to describe it?
Minister reply
As I have said, it seems that the Conservative party is proud of its record on austerity. We do not support austerity, which was blind ideological cuts to public services—3% cuts—irrespective of the outcome for the people who rely on public services.
Question
I think that I heard the Chief Secretary say that the Chancellor has not gone to China. Will he confirm first that she is still planning to go? Secondly, if she has not gone to China yet, why is she not here? Lots of people would like to hear from her. Thirdly, has the Chancellor talked to the Governor of the Bank of England about market turbulence at any point in the last seven days?
Minister reply
The Chancellor is going to China, as has been well documented. Again, I am sorry that it disappoints the hon. Member that I am here. I refer him and his colleagues to the urgent question, which is about a statement on borrowing costs and public finances.
Question
According to media reports today, the former Member of Parliament for South West Norfolk is issuing cease and desist letters to those who have accused her of crashing the economy. Is there anything you can add in relation to this urgent question?
Minister reply
You will correctly tell me, Mr Speaker, that it would not be right for me to comment on legal proceedings.
Question
During these exchanges, we have heard Opposition Members oppose tax increases and urge the Government to call off talks with economic partners including China. Is it any wonder that the GDP-to-debt ratio rose by a full 30 percentage points under the Conservative Government?
Minister reply
The fiscal rules are non-negotiable and public services have to live within their means because that is the bedrock of any approach in government.
Question
When will the Chief Secretary take responsibility for the actions of his own Government? We had a general election where people gave their verdict, and now we want accountability for this Government’s reckless decisions.
Minister reply
The fiscal rules are non-negotiable and public services have to live within their means because that is the bedrock of any approach in government.
Question
A key ingredient of economic growth has to be responsible government. People across the country are still paying the price for 14 years of irresponsible government. Can my right hon. Friend assure us that this Administration will be committed to responsible government for the rest of the parliamentary term?
Minister reply
Yes, I can. There is no denying that the economic inheritance that we were given by the Conservative party makes life very difficult for us: it means that we have to take difficult decisions.
Question
The issue here is spending. Will the Chief Secretary confirm that the Labour manifesto said a Labour Government would increase spending by £9.5 billion a year, and now the Treasury Red Book is increasing it to £76 billion?
Minister reply
One of the issues was that the Conservative party made a whole list of unfunded spending commitments.
Question
Conservative Members talk about economic stability, but they seem to have forgotten that they were swapping out Chancellors every five minutes. Does the Chief Secretary agree that this Government is restoring stability to our economy?
Minister reply
Restoring economic and political stability is important.
Question
Every Labour Government leave office with unemployment higher and the economy in a worse condition than they inherited, but this Labour Government are taking the record for doing that the fastest. Can we expect to see how the Chancellor spins this period of employment on her CV?
Minister reply
The fiscal rules are non-negotiable, and they will be met.
Question
Does the Minister agree that the reckless ideological austerity measures taken by the Conservative party in government have directly led to constituents being worse off? Can he outline the impact of the new Office for Value for Money?
Minister reply
The Office for Value for Money is an important part of our spending review process.
Question
At the back end of last year, borrowing figures were the second highest monthly figures on record. Given that we have more union pay negotiations this year, should constituents be braced for the Government giving into those union demands?
Minister reply
I think the hon. Member might want to ask his constituents whether they appreciated their doctors and nurses being on strike.
Question
On the economy, as with so much else, does my right hon. Friend agree that Conservative Members should sip from the elixir of personal responsibility and apologise?
Minister reply
My hon. Friend makes a really important point.
Question
The fact is that today, borrowing costs are up, business confidence is down and growth is going nowhere. Is it time to admit that this lefty economic experiment is not working?
Minister reply
We will never play fast and loose with the nation’s finances as the Conservatives did.
Question
The hon. Member wishes to know if the Minister can quickly turn around this situation for his constituents and the country, questioning why a plan addressing the scope of the problem and its solution was not presented.
Minister reply
The Government has a clear plan as set out in the Chancellor's Budget last autumn which deals with inherited financial challenges. The spending review process is ongoing and will be updated in June.
Question
Has the Chancellor spoken to the Governor of the Bank of England about the impact of soaring borrowing costs within the last week?
Minister reply
The Minister confirmed that the Chancellor meets with the Governor of the Bank of England on a regular basis.
Question
In light of reports suggesting departmental cuts, can he reassure the House that there will not be any such cuts?
Minister reply
The Minister mentioned embedding mission-led government which involves Departments working together to focus on delivering priorities. The spending review is being conducted multilaterally and a speech on this issue will be given in a couple of weeks.
Question
What discussions has he had with Departments, particularly the Finance Department at the Northern Ireland Assembly regarding public debt?
Minister reply
The Minister leads for the Treasury on inter-ministerial relationships with Finance Ministers in devolved Governments. He regularly meets his counterparts and will meet them in Wales to discuss future spending plans.
Government Response
Financial market movements, including changes in Government bond or gilt yields, which represent the Government’s borrowing costs, are determined by a wide range of international and domestic factors. In recent months, moves in financial markets have been largely driven by data and global geopolitical events, leading to normal fluctuations in gilt prices and yields. UK gilt markets continue to function in an orderly way with strong underlying demand from a diversified investor base. The Debt Management Office’s sales operations show high levels of interest. An updated economic and fiscal forecast is being prepared for 26 March by the OBR, which will provide accurate predictions about public finances. The Government remains committed to economic stability and sound public finances, adhering strictly to fiscal rules.