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UK Economy
19 February 2024
Lead MP
Bim Afolami
Debate Type
Ministerial Statement
Tags
EconomyTaxationEmploymentBusiness & Trade
Other Contributors: 33
At a Glance
Bim Afolami raised concerns about uk economy in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
High inflation remains the top priority, having been halved from over 11% to 4%, with forecasts predicting it will reach around 2% by early summer. The Bank of England's prediction of a century-long recession did not materialise, as the British economy has shown resilience despite unprecedented shocks. Growth is expected to strengthen in future years, outpacing Japan, Germany, France, Italy and others. Wages have been higher than inflation for six months straight, unemployment remains low, business tax cuts are being delivered, and investment zones are expanding. The Government unveiled 110 growth measures at the autumn statement, including unlocking £20 billion of business investment. Despite this progress, the Labour party's lack of a clear economic plan is concerning, particularly their commitment to a costly energy policy.
Rachel Reeves
Lab
Leeds West and Pudsey
Question
The Chancellor should be here explaining why Britain has fallen into recession. Will the Minister explain why he has been left to answer these questions, where exactly the Chancellor is? The economy is now smaller than when the current Prime Minister entered 10 Downing Street. Does the Minister accept the misery that this Government have caused homeowners with their kamikaze Budget?
Minister reply
I thank the shadow Chancellor for her questions.
Question
It is good news that unemployment has stayed low by European standards, and the economy is still generating plenty of job vacancies. Will the Government take more steps to help more people into those jobs?
Minister reply
The national insurance tax cut was scored at the last fiscal event as significantly increasing the number of people in work.
Question
The Minister spoke about resilience, but the fourth quarter contraction in the economy was the biggest quarterly fall since early 2021. How modest the Minister’s ambitions are. National debt is approaching 100% of GDP—£3 trillion. Where will the investment for growth come from?
Minister reply
The way we get resilience for ordinary people and households is to ensure that real household incomes increase, which have risen by 12% since 2010. Full expensing will enable more businesses to invest, dealing with the chronic weakness of weak British investment.
Question
May I thank my hon. Friend for his distinguished service? Andrew Haldane referred to a “double blow” to the credibility of the Bank of England, which was late to put interest rates up and missed inflation, and has been slow to reduce them. Does my hon. Friend agree that the Bank's independence must be questioned?
Minister reply
It is very important that we leave the Bank of England to do its work and respect its independent mandate.
Angela Eagle
Lab
Wallasey
Question
The Minister is failing the audition. Labour will not take lectures from him about borrowing, which was at 67% of GDP when we left office and is now nearly 100%. Is it not time that the junior Minister went back to his boss and told him, “It’s all over. Time’s up. Call the general election.”?
Minister reply
Real household incomes are up 12% since 2010, with a rise in national living wage for full-time minimum wages of about 30% in real terms.
Stella Creasy
Lab Co-op
Walthamstow
Question
The Minister says the Government’s priority is backing British business, cutting inflation and reducing the pressure on British families. When the Government admit this measure will increase inflation, when British business is tearing its hair out at the chaos caused by not knowing what the charge will be and who will pay it—with less than 10 weeks to go—and when British consumers will find that it causes food shortages and an increase in food prices, why on earth are the Government going ahead with the Brexit border tax? Will the Minister commit here and now to cancelling it, so that we can stop this inflationary measure—yes or no?
Minister reply
I thank the hon. Lady for focusing on inflation. She is right that it is critical, and bringing it down is a focus for the Government. The House has heard her point about the European Union, but I would add that we have a clear plan for bringing down inflation, which we will continue to carry out. She has to ask those on her Front Bench why they do not have one.
Edward Leigh
Con
Gainsborough
Question
For too long, too many people in the Treasury—not my hon. Friend, who is an excellent Minister—have thought that the best way to grow the economy is to fill the country with more and more people. Will the Government recommit to insisting that anyone who comes here to work should earn the average UK earnings of around £33,000 a year? That means no shortage schemes and no exemption for care workers or the NHS, but that in those sectors we pay proper wages, we get people off benefits—too many people are on them, dragging down our economy—and we seriously cut mass legal migration; and, by the way, if there is a general election, let us give our people something to vote for.
Minister reply
My right hon. Friend makes an important point about migration. I completely agree that we need higher earnings for British people, not an economy where we import too many people and keep earnings down. That is why we have been focusing on raising the national living wage and ensuring that ordinary household incomes will go up as a result of this Government’s policies, as I have explained. It is worth pointing out that certain things happened last year, such as people fleeing Ukraine and Hong Kong, which meant that the immigration numbers were particularly high. The broad thrust of what my right hon. Friend said is correct: we want a high-skill, high-wage economy.
Emma Hardy
Lab
Kingston upon Hull West and Haltemprice
Question
I do not know whether the Minister realises quite how infuriating people find watching his Government tell them, “Everything is fine”, “It is all going really well” and “There’s nothing to see here”, when every day they feel poorer and small businesses are closing. If the Prime Minister and the Chancellor cannot face reality, how on earth can anyone trust them to solve the economic crisis that their Government created?
Minister reply
Let me be clear with the hon. Lady, whom I have a huge amount of time for as a very good Member of Parliament: it is not our position that everything is okay. There has been a challenging international context: a once-in-100-years pandemic, and an energy crisis caused by Putin’s war in Ukraine. This Government have done everything we possibly can to build an economy for growth, and I hope we have her support.
Desmond Swayne
Con
New Forest West
Question
What distinguishes this recession is the 800 jobs that have been created every day since this Government came to power in 2010—the very antithesis of anything ever achieved by a Labour Government, who have always left unemployment higher than they found it—is it not?
Minister reply
It is—and I would add something else: the figures for home repossession were much higher when there was a recession under the Labour Government in 2008-09, in comparison with our record now, and unemployment now is much lower than it was then. Though we are in challenging times, the economy is turning a corner. Our record compares very favourably Labour’s.
Keir Mather
Lab
Selby
Question
The Chancellor said last May that he was comfortable with the prospect of a recession. Now that my constituents in Selby and Ainsty are suffering under that recession’s effects, would the Minister chalk it up as a job well done?
Minister reply
The hon. Gentleman will do well. There is nobody on the Government Benches who welcomes adverse economic situations for anybody. That is why we are doing everything we can—straining every sinew—to grow the economy. All the measures I have laid out will continue, but they would be put at risk by those on his Front Bench being in office.
Question
Before I came to this House, I was a director of quite a large retail group in North Norfolk. No one has made the point that in the last quarter of the year the country saw Babet, Ciaran, Debi, Elin, Fergus and Gerrit—six major storms and floods. How many were there in the previous year? Absolutely none at all. Will the Economic Secretary tell everybody that of course the economy will not function properly in the grip of storms and floods every fortnight? We are not in recession, but the more we talk it up, the more we will be.
Minister reply
I thank my hon. Friend for that question—I would say that the loss of large retail groups in Norfolk is the House’s gain. His point about the international context is serious and important. Although Labour Members do not like to hear it, facing a once-in-100-years pandemic and Putin’s illegal war in Ukraine, which caused energy prices to skyrocket, will have adverse impacts on the economy. The country understands that and the House understands that; the Labour Front Bench should also understand it.
Wera Hobhouse
Lib Dem
Bath
Question
This recession is a direct result of the choices that this Government have made. Years of potential growth have been missed, and the Government have failed particularly to capitalise on the green transition. Green investment will be worth £1 trillion globally by 2030, including half a million jobs in this country. When will the Government bring forward a green investment programme to match the ones in the US or in Europe?
Minister reply
First, our record on decarbonisation beats anywhere else in the G7, so we do not take lessons from the United States or any other country in that regard. In relation to the green investment plan by 2030, the hon. Lady should direct her ire at those on the Labour Front Bench for not being clear as to what their plan is. The Leader of the Opposition says—[Interruption.] Well, it is important because politics is a contest of ideas, as indeed it is a contest between two parties. If Labour Members believe they can spend an extra £28 billion without that having an impact on taxes and borrowing, they are trying to pull the wool over the eyes of the British people.
Question
The past couple of years have been very difficult economically, and I certainly do not treat the state of our economy as the giggle-fest that Labour Members seem to be having today. Over the past few weeks, I have met many businesses in my constituency—large and small—and a number have told me that they feel conditions are getting better, demand is growing and orders are coming back. Constituents have also told me that they have noticed food prices dropping in our supermarkets. Does the Minister agree that the most damaging thing that could happen to our economy now would be for those on the Labour Benches to continue to talk our economy down?
Minister reply
My right hon. Friend is correct that things are starting to get better for many people across the country, including small businesses. We have more than halved inflation, which is now down below 4%; we think that in the coming months it will go to 2%, which is the target. Of course, once it hits that target, we hope that interest rates will also start coming down, which will make a big difference to ordinary people up and down the country.
Stephen Timms
Lab
East Ham
Question
I applaud the Minister’s willingness to take on this unenviable assignment, unlike his right hon. Friends. The international context that he refers to is that Japan and the UK are the only G7 countries in recession. Inflation in the UK, which he has referred to, is the highest in the whole G7. Why is the UK economy doing so much worse than comparable economies elsewhere?
Minister reply
The right hon. Gentleman makes an interesting point, but I would say that our economy entered difficult times at a different point in the cycle from certain other economies. To fully assess the performance of all economies, we have to wait for the end of this whole period, so I would not prejudge exactly at this stage. I simply say that the difficulties we are facing have affected every single economy, although the nature of different economies means that they are affected at different times. We are putting in place comprehensive growth measures and comprehensive measures to bring inflation down. I also note that UK interest rates are roughly middle-of-the-pack compared with other countries of comparable size. We will keep all this under review and, at the next fiscal event, will take further measures to increase our potential growth rate over the long term.
Question
Does the Minister welcome the news that the South Yorkshire Mayor has finally recognised the economic importance of Doncaster-Sheffield Airport and is at last starting to use the powers given to him to begin the process of getting it up and running again? Does he agree that that has taken far too long—it is years since the airport closed —and that the South Yorkshire Mayor should have used his powers years ago, rather than waiting until nine weeks before he is re-elected?
Minister reply
I thank my hon. Friend for pointing out once again what a brilliant champion he is for his constituency. I am sure his constituents have heard that comment, and that he will continue to make that point.
Chris Bryant
Lab
Rhondda and Ogmore
Question
Criticises the Minister for false claims about tax cuts, debt falling as a percentage of GDP when it is going up, and overestimates the NHS's share of government spending. Asks if people are voting to remove the Government due to living standards.
Minister reply
Clarifies comments about tax cuts and spending on NHS; acknowledges difficulties but asserts government's actions in dealing with challenges; states cost of living support package worth over £100 billion, more than £3,700 per person.
Question
Asks why the Government is delaying proposed reforms to long-term sickness benefits for another year.
Minister reply
Will take point away; Chancellor will consider it at next fiscal event, the Budget.
Barbara Keeley
Lab
Central Barnsley
Question
Points out delays in HMRC processing A1 forms for musicians touring in Europe and asks if the Minister agrees that these delays are unacceptable.
Minister reply
Agrees to speed up processing of A1 forms; Treasury will take this point seriously.
Dwyfor Meirionnydd
Question
Asks if the Government will act on extending and backdating windfall tax on energy companies that are profiteering from households.
Minister reply
Corrects previous statement about real household incomes since 2010; cannot speculate on taxes at next fiscal event.
Clive Efford
Lab
Eltham and Chislehurst
Question
Asks if now is a reasonable time to talk about tax cuts given debt forecast.
Minister reply
Asserts current Chancellor and Government are different from previous ones; repeats fiscal rule on reducing debt in the fifth year of forecast.
Question
Inquires about importance to UK Treasury of North sea oil and whether funds can be found to ensure restart of HydroCracker at Grangemouth Refinery.
Minister reply
Will take away specific point; Government supports the North sea oil and gas sector for tax revenues, livelihoods, and prosperity.
Debbie Abrahams
Lab
Oldham East and Saddleworth
Question
Asks about assessment of impacts of increasing economic inequalities on shrinking growth.
Minister reply
Notes increase in national living wage; those on full-time national living wage will be 30% better off than in 2010.
Warrington North
Question
Inquires about measures to bring down food inflation.
Minister reply
Aims to continue bringing inflation down; introduced full expensing at last fiscal event which will enable food manufacturers and supermarkets to invest more, reducing costs and the cost of food.
Matt Rodda
Lab
Reading Central
Question
Asks how Government plans address economic recession.
Minister reply
Cites challenging international context; halved high inflation; unveiled 110 growth measures at last fiscal event; asserts Labour Opposition lacks a plan.
Question
Claims Brexit is the exacerbating factor leading to economic decline, labour shortages and rampant inflation.
Minister reply
Refuses to admit that claim.
Diana R. Johnson
Lab
Kingston upon Hull North and Cottingham
Question
Asks if money has been ringfenced for compensation as per Sir Brian Langstaff’s recommendations.
Minister reply
Responds that Chancellor will update the House in due course with further details.
Nia Griffith
Lab
Llanelli
Question
The Prime Minister has failed to get growth and industry has completely lost confidence in this Government. With projects cancelled, HS2 cancelled, Building Schools for the Future cancelled, hospitals never built and an absolute failure to bring down high energy prices, it is no wonder that business investment forecasts are down. With the US and the EU incentivising investment, what is the Minister now going to do to get the investment we need in the green manufacturing industries of the future?
Minister reply
To increase investment we brought in full expensing at the last fiscal event, which should represent an increase over the forecast period of £14 billion of investment and deal with the chronic weakness of our economy over generations. In relation to green investment in particular, what we are not doing is having a huge unfunded £28 billion plan.
Bury South
Question
Public sector net debt is set to rise from 89% of GDP this year to 92.8% of GDP in 2028-29, according to the most recent Office for Budget Responsibility forecast. In case the Minister does not understand, that number is higher than today’s. The Prime Minister promised to reduce debt, but it is increasing. The plan isn’t working, is it?
Minister reply
The Prime Minister and the whole Government are committed to reducing debt as we get to the end of this economic forecast period.
Justin Madders
Lab
Ellesmere Port and Bromborough
Question
The Minister’s rosy picture of the economy shows a complete lack of awareness of what is actually going on in this country. He claims that the Labour party is somehow a risk to growth, but it is his party that has taken the country into recession. That shows a complete lack of self-awareness, too. That is the nub of the matter. We are in a recession, yet the Chancellor is nowhere to be seen. I would have thought this was important enough for him to be here to answer questions. Given that growing the economy is yet another of the Prime Minister’s pledges that has not been met, who does the Minister think should carry the can for this failure: the Prime Minister or the Chancellor?
Minister reply
I will have to take the hon. Gentleman’s criticism of my self-awareness on the chin, but his broader point is serious. That is why we cut tax for working people, beginning in January and had a more than £100-billion package of cost of living support.
Janet Daby
Lab
Lewisham East
Question
The Government are failing. An 81-year-old constituent told me that he cannot remember the economy and living standards ever being this bad. Can the Minister not see that, under his Government, Britain is worse off?
Minister reply
I do not agree with the hon. Lady. This Government and this Treasury are sticking to our plan for growth. That is all put at risk by the Labour party.
Richard Foord
Lib Dem
Honiton and Sidmouth
Question
The Office for Budget Responsibility assessed Boris Johnson’s trade and co-operation agreement, which sets out the trading relationship between the UK and the EU, at the beginning of last year, and it said that the TCA has reduced long-run productivity by 4%. Why does the Minister think that is?
Minister reply
We built on the trade and co-operation agreement through the Windsor framework, and the Opposition do not propose to change it. Indeed, the TCA is fundamental to the stability of our relationship with the European Union.
Jim Shannon
DUP
Strangford
Question
The Office for National Statistics has revealed that there was a 0.3% decline in GDP between October and December 2023. Given that the strength of the economy was, and still is, the subject of one of the Prime Minister’s pledges, what steps is the Minister taking to reverse this decline, and to re-instil confidence in the Government’s economic plans?
Minister reply
I have already laid out the steps that we are taking, and there is a critical need to make sure that all the regions of our country benefit from those steps. We hope that these investment zones will continue to increase growth in the economy.
Shadow Comment
Rachel Reeves
Shadow Comment
The Chancellor should be here explaining why Britain has fallen into recession. The Minister must account for the failure in growing the economy since the current Prime Minister entered office, causing homeowners additional monthly mortgage payments of £240 due to the Government's 'kamikaze Budget'. The Chief Secretary’s absence and refusal to acknowledge rising debt levels are unacceptable. The whole country knows that the Conservative government is failing working people, urging for change.
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