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UK Gross Domestic Product
13 June 2022
Lead MP
John Glen
Debate Type
Ministerial Statement
Tags
NHSUkraineEconomyTaxation
Other Contributors: 22
At a Glance
John Glen raised concerns about uk gross domestic product 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
The Minister outlined that the UK is experiencing economic challenges similar to those faced by other advanced economies, including impacts from global supply shocks and Russia's invasion of Ukraine. The Office for National Statistics reported a 0.3% decline in GDP in April with specific sectors like services, production, and construction experiencing declines. This fall was partly due to the winding down of NHS covid testing which detracted 0.5 percentage points from growth. However, excluding this factor, the economy showed a slight increase. The Minister highlighted that despite these challenges, UK support measures and record employment levels put the country in a good position for recovery. He emphasised the Government's focus on long-term economic growth through investments in infrastructure, skills, and innovation as outlined by the Chancellor.
Pat McFadden
Lab
Wolverhampton South East
Question
The MP criticised the government's handling of the economy, citing multiple negative indicators and questioning the ability to turn things around under current leadership. He highlighted several issues such as inflation, trade deficits, and leadership instability.
Minister reply
The Minister responded by attributing recent economic declines partly to the reduction in NHS testing but acknowledged broader global challenges affecting many G7 economies. He emphasised the government's commitment to supporting growth through investments in R&D, infrastructure, and fiscal adjustments for businesses.
Question
The MP questioned why the UK is increasing taxes at a time of monetary tightening and high inflation, suggesting it could slow economic recovery.
Minister reply
The Minister highlighted recent tax cuts for businesses through increases in employment allowance and reductions in fuel duty. He assured that the government continues to support growth with incentives like the annual investment allowance and super deduction.
Question
The MP questioned the impact of the testing scheme on GDP and suggested additional support for businesses facing increased energy prices and inflation.
Minister reply
The Minister acknowledged the significant impact of vaccine roll-out and testing but emphasised ongoing interventions to help vulnerable populations, including those affected by national insurance hikes and rising food costs.
Question
The MP suggested a temporary reduction in VAT on business energy bills from 20% to 5%, citing potential job losses due to inflation and surging energy costs.
Minister reply
The Minister responded positively to the suggestion, noting existing measures like VAT cuts for energy efficiency and investment but expressing willingness to discuss further interventions in autumn.
Stephen Timms
Lab
East Ham
Question
It is, I think, clear that, as anticipated, we are starting to see an economic penalty from the new barriers to our trade with the European Union. Does the Minister agree that we need to work hard to improve relations with the EU with a view to reducing some of the barriers that are causing problems for us?
Minister reply
Absolutely. We must always, with all our trading partners, seek to develop the best possible relationships. That has been my objective in conversations that I have had on visits to Berlin, Luxembourg, Madrid and the US over the past six months on financial services and as regards the work that the right hon. Gentleman is undertaking as we advance the conversation with the Swiss on the mutual recognition agreement.
Mike Wood
Con
Kingswinford and South Staffordshire
Question
With the largest ever research and development budget, the Government are securing the UK’s status as a science superpower. Does my hon. Friend agree that when it comes to growth that status is vital in making sure that we attract high-skilled, high-paid jobs? Does he also agree that locating the Advanced Research and Invention Agency in the west midlands will allow the west midlands to lead the growth that the UK needs and deserves?
Minister reply
My hon. Friend predictably, and reasonably, makes a plea for investment to be located in his constituency, but he also draws attention to the significant investment of £20 billion in R&D by 2024-25.
Hilary Benn
Lab
Leeds South
Question
Figures published recently by Her Majesty’s Revenue and Customs show that the number of UK businesses exporting goods to the European Union fell by an astonishing 33% between 2020 and 2021. Do the Government recognise that the cost, bureaucracy and paperwork that they have imposed on businesses, particularly small ones, are the principal cause of that loss of export opportunities for British firms?
Minister reply
No, I do not. I accept that that was a challenging period for economies everywhere. There was a period of adjustment, and the Government will be working in a co-ordinated fashion to remove any frictions and to ease the passage of trade, particularly for smaller businesses.
Question
Much of the discussion in the House today has been about the fiscal aspects of inflation, but a huge part of the rise in inflation in this country and across the western world is the monetary system, in particular quantitative easing, which has continued long beyond the financial crisis, when it was put in place. We all know the Bank of England is independent in setting interest rates, but what is the Treasury’s view on working with the Bank of England to bring down inflation, bearing in mind the significant impact that quantitative easing has had on that? Will the Minister say a bit more about that?
Minister reply
As hon. Members would expect, the Treasury has a strong and frequent dialogue with different members of the Bank of England and deputy governors. However, our main inflation tools for an independent monetary policy—fiscal responsibility and supply-side activism—will remain the best weaponry for dealing with the challenges we face.
Christine Jardine
Lib Dem
Edinburgh West
Question
Today’s figures should be a wake-up call to the Government. Instead of reciting a list of events that are affecting other countries across the world and being better dealt with by other Governments in the G7, do the Government not recognise that the time has come to change direction? They must get away from the massive tax hikes that are pulling the squeezed middle into debt and creating misery across this country—tax hikes that include the £11 billion national insurance hike, which was wiped out by the Government’s own incompetence in not insuring against the money created for quantitative easing. Will the Government recognise that they are getting it wrong and, instead of making excuses, act to change things?
Minister reply
The Government will always look constructively at all the options. In light of the representations made across this House and across the country for more interventions to support those facing increases in the cost of energy at home, we made those interventions.
Question
Like most MPs, in my constituency I have businesses that the Government spent billions of pounds supporting through the pandemic that are now incredibly stressed by the current conditions. Most understand that the state cannot fix everything; they are looking at wider options and not expecting hand-outs. UK hospitality businesses are asking the Government to look at pausing green levies for businesses to relieve energy cost pressures, as other countries are doing or are considering. Will my hon. Friend say more about what the Treasury are looking at in that regard and whether that is something they are seriously considering?
Minister reply
In Gloucestershire, as across the country, we remain focused on the challenges facing both small and large businesses. As my hon. Friend mentions, during the pandemic we made a number of sector-specific interventions for retail, hospitality and leisure businesses, which will continue to benefit from the business rates holidays.
Justin Madders
Lab
Ellesmere Port and Bromborough
Question
In the past week or so I have been contacted by a number of community nurses at their wits’ end because it is costing them more to travel to see patients than they can claim back in mileage allowance, and they are not alone—taxi drivers, couriers and others, such as domiciliary care workers, are struggling because of the surge in fuel costs. The Government have already taken 5p off fuel duty, but given that they have raked in far more in increased VAT receipts since then, how much more has the Treasury recovered in VAT receipts this year?
Minister reply
Perhaps unsurprisingly, I cannot give the hon. Gentleman that figure at the Dispatch Box at this point, but we have introduced timely, temporary and targeted interventions.
Richard Fuller
Con
North Bedfordshire
Question
My right hon. Friend has rightly spoken about the importance of growth in bringing together people, capital and ideas, but there is a fourth element, which is regulation. What Conservatives want to see is a comprehensive Government strategy for light-touch, pro-growth deregulation. Can he tell me what he is doing in his Department to set an example to other Departments of achieving better regulation that will support growth?
Minister reply
Yes, I can. In a few weeks’ time I shall introduce to the House a financial services and markets Bill that will fundamentally reset the way that our financial services industry, which constitutes 10% of the economy, will be regulated into the future.
Diana R. Johnson
Lab
Kingston upon Hull North and Cottingham
Question
In the coalition years, we heard from the Government about rebalancing the economy, and under Chancellor Osborne and the northern powerhouse, we were told that we were going to see the proceeds of growth fairly shared across the country. Will the Minister say something about the flagship levelling-up agenda, how it will be implemented when we face a no-growth economy, and whether the levelling-up agenda will really mean levelling down for everybody?
Minister reply
No, it will not. It will involve targeted investments across the country in schemes that will give us a lift in productivity and address the fact that under previous Governments, despite all the rhetoric, there was not that reset in investment across other parts of the country and we did not see the level of growth that was anticipated.
Question
I am grateful to the Treasury for the £77 billion package of support that will stand alongside hard-pressed families and drive the growth that we need to see. But as I drove into central London this morning I saw fuel prices cheaper than where I live in Brecon. Rural fuel costs are simply horrendous, and with next to no public transport, that is really hampering growth in rural areas. Can my right hon. Friend confirm that the Treasury will continue to monitor that aggressively?
Minister reply
Absolutely we will. It is very concerning that we are not seeing the savings passed on and we will continue to look very carefully at what is happening.
Clive Efford
Lab
Eltham and Chislehurst
Question
The Minister has tried to explain away today’s disastrous figures by suggesting that it is mainly to do with the winding down of mass covid testing. That stretches credulity. Today the Office for National Statistics said: “All main sectors contributed negatively to growth in April 2022”. Does that not show that the problem is much more widespread than the Government are prepared to accept?
Minister reply
No, I think there is a pretty clear consensus that the rapid wind-down of the testing had a significant effect—around 0.5% of GDP. If that had not happened, we would have seen very modest growth during this past month.
Jack Brereton
Con
Stoke-on-Trent North
Question
A recent report shows that Stoke-on-Trent is set to grow jobs third-fastest, so does my hon. Friend agree that the record of this Government economically should be judged by our jobs miracle and in particular our efforts to level up our whole country with better skills and better paid employment right across it?
Minister reply
Absolutely. It is clear we are seeing the best unemployment figures for well over a generation. It is very pleasing to see the impact that is having on constituencies such as that of my hon. Friend. It is important that we build on that and look to increase that investment to get businesses investing in new capital and more productive jobs to increase productivity in the economy as a whole.
Tony Lloyd
Lab
Manchester Central
Question
The Minister has already conceded that the Treasury wants to reduce friction with our European trading partners—that is the right thing to do—but can he tell the House whether Treasury policy agrees that this is the right time to rip up the Northern Ireland protocol and risk a trade war with Europe?
Minister reply
Clearly in different markets there will be different challenges. We must make sure that we have a deep dialogue and look to find consensus. Where we cannot, we must take action.
Chris Bryant
Lab
Rhondda
Question
Does the Minister accept that one of the problems in lots of sectors is that they simply have not got enough staff to employ, let alone staff with the right skills? For instance, in the construction industry, there are projects on hold because they cannot get enough construction workers. We have farmers ploughing onions back into the fields, because they do not have enough people to harvest them. Last year, 25% of British strawberries did not get picked. We have bars, hotels and restaurants failing to open full-time because they do not have enough staff. How do we make sure that we have the staff—the workers—to be able to grow the economy?
Minister reply
The hon. Gentleman will also know that the Government invested in a seasonal workers scheme for 30,000 across agriculture, which has made a significant impact. We will continue to work with industry to see what further interventions can be made and need to be made.
Patricia Gibson
SNP
Greenock and Inverclyde
Question
Cuts to VAT on fuel duty are now beyond urgent. Some £46 of tax is paid on the average fuel tank, as fuel prices rocket to new highs. As households and businesses struggle, the Treasury is raking in additional billions in VAT on fuel, which is driving inflation across the whole economy. Finally, can we at last have a temporary 10% reduction in VAT on fuel to assist households, businesses and consumers and to help get inflation back under some kind of control, which will help everyone?
Minister reply
The hon. Lady will know that just two weeks ago, the Chancellor came to this Dispatch Box and made a series of targeted interventions, in a greater way than many were calling for, to give assistance to the most vulnerable in our society—to pensioners, to those on means-tested benefits and to the disabled—with more support for pensioners on top of that. She will also know that as we approach the fiscal event, we will look at the state of the economy and the best possible interventions to assist not only that growth narrative, but the most vulnerable.
Jonathan Gullis
Con
Brent North
Question
It does not shock me that the Labour party uses any opportunity it has to come in here and bash Britain and sneer at places such as Stoke-on-Trent. It is thanks to this Conservative Government and a Conservative-led council that thousands of new jobs have been created through the successful Ceramics Valley enterprise zone. We also have the 500 new Home Office jobs and up to 1,700 new jobs thanks to the Kidsgrove town deal. Does the Minister agree that it is this Government who are putting places such as Stoke-on-Trent firmly on the map?
Minister reply
I do not think Stoke-on-Trent could have a better advocate than my hon. Friend, with his passionate desire to highlight the successes going on in his constituency. I absolutely agree that it is that positivity, and focusing on interventions that make a real difference to people who live in his community, that people will remember as we move forward.
Jim Shannon
DUP
Strangford
Question
I thank the Minister for his answers. In Strangford, small and medium-sized businesses are the backbone of our society. Some of them are crumbling at present due to high transport costs, which are heightened in Northern Ireland due to the Northern Ireland protocol. Can he confirm whether the Chancellor and the Treasury will follow other nations in substantially reducing fuel duty to aid transport costs as well as disposable incomes for families, so that money can go back into the local economy and everyone will gain?
Minister reply
The hon. Gentleman makes a reasonable point about the challenges facing the rural economy, of which I know that he has great personal experience and experience in his constituency. That is why, as we made clear, there will be an additional £500 million to supplement the household support fund and bring it to a total of £1.5 billion, so that local authorities can give additional money to those most affected where existing measures have not been helpful.
Shadow Comment
Pat McFadden
Shadow Comment
The Shadow Minister criticised the current situation under the Conservative government, citing high inflation, a growing trade deficit, and falling currency values. He argued that businesses, universities, and people are not receiving adequate support from the Government and highlighted various delays and issues across different sectors like passports and healthcare. The Labour party suggested that installing new leadership could have brought more stability to economic management but noted the current Prime Minister’s continuation in office.
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