Spending Review 2020 and OBR Forecast — House of Commons, 2020-11-25
Topic: Macroeconomics
Rishi Sunak (Conservative, Centre-right): I will address all the points made by the hon. Lady in turn, but it is important to note, up front, that despite her criticisms, there is actually a lot that she and her Opposition colleagues should welcome: more funding for public services; a pay increase for NHS workers; support for those on the lowest incomes; a once-in-a-generation investment in infrastructure; a multi-billion pound commitment to support those looking for work; a new schools building programme; and the Prime Minister’s 10- point plan. I could go on, Mr Speaker It is right that the hon. Lady should provide challenge, but I think, even if she does not, that the British people will judge this spending review as a reflection of their priorities: protecting jobs, defeating coronavirus, strengthening our public services and upgrading our infrastructure. If there is any politics here at all, surely it is unifying, and I think that, deep down, she will recognise that Let me address the specific points. The hon. Lady asked about pay and the importance of consumption, and I agree that of course there is an impact on consumption from pay. She will know that the marginal propensity to consume is obviously greater the lower down the income spectrum you go, which is why, in particular, we have protected the incomes of those on lower incomes Anyone in the public sector earning less than the UK median salary of £24,000 will receive a pay rise of £250 or more. Taken together with all the other things we have done, including giving a pay rise for those who work in the NHS, this will mean that the majority of public sector workers will see an increase in their pay next year. Also, pay progression and promotions—all of that—will carry on. We have increased wages for those on the national living wage: an extra £345 a year, as the wage rate goes up to £8.91. That, again, will help to drive consumption The hon. Lady rightly talked about delivery. We believe very firmly in making sure we can deliver the change we promised the British people. The Chief Secretary to the Treasury, my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay) and I chair something called project speed, which is already delivering benefits, with plans for the landmark A66 upgrade shortened in time and reduced in cost, so we can get on with delivering what the people want on time and on budget, making a difference in their communities The hon. Lady asked about the levelling up fund and, I thought rather bizarrely, seemed to suggest that local Members of Parliament were not a good reflection on their local communities and able to articulate the local needs of their communities. I say to colleagues on the Opposition Benches that I am more than happy to hear from them and their local areas about the needs that they want met, because this Government will meet the needs of local communities up and down the country The hon. Lady talked about support for businesses during coronavirus. We have already put in place support through this winter period. The local restrictions grants we announced a while ago are paid monthly and they work. If your business has been closed, you will receive a grant of up to £3,000 per month depending on your rateable value. If you are a hospitality, leisure or accommodation business in a tier 2 area, where obviously the restrictions have an impact on your ability, you will receive a grant of 70% of that value up to £2,100. Those amounts mean that the business can help to cover the fixed costs of rent. They, of course, have access to the furlough scheme right the way through winter That comes on top of the other recent support announced for businesses. Today, I announced major reforms to the way the apprenticeship system works, giving businesses what they have long asked for: the flexibility to spend unused apprenticeship levy funds down the supply chain with small and medium-sized enterprises, and the ability to frontload payments for training. We are also looking at ways to introduce even more flexibility for some professions. We also recently announced an extension of the annual investment allowance for a further year up to £1 million, giving 98% of small and medium-sized businesses the ability to write off investments in full next year, which will help to drive their recovery The hon. Lady talked about welfare. Again, I stand proud of this Government’s and previous Conservative Governments’ record on this issue since 2010: hundreds of thousands fewer people in absolute poverty; several hundred thousand fewer children living in workless households; and income inequality lower coming into this crisis than when we first came into office This Government care greatly about those who are most vulnerable. We have demonstrated that during this crisis by the support we have put in place. The evidence shows that those on the lowest incomes have been protected the most by this Conservative Government. And that does not stop. The temporary uplift in universal credit runs all the way through to next spring, providing security for those families. Of course we will look, when we come to next spring, at the best way to support people and their families when we have a better sense of where the economy is and where we are with the virus, but we are providing extra support for next year: £670 million to help struggling families meet their council tax bills, worth about £150 each for families up and down the country. We also said we will maintain the £1 billion increase in the local housing allowance that we instituted this year into next year, providing support for many millions of families. We are also making available further funds, as the House knows, to provide extra support for food and meals for children throughout the holidays next year The hon. Lady talked about support for local authorities. Perhaps she has not seen it yet in the document—that is fair enough—but we announced over £3.5 billion of extra support for local authorities next year specifically to deal with coronavirus. That comes on top of their core spending power increasing at decade-level highs of 4.5%. That £3.5 billion is there to help to meet the shortfall in sales fees and charges, and the unrecoverable losses in business rates and council tax that they have experienced this year, as well as £1.5 billion for general pressures. Let no one say that we are not standing behind our local authorities at this difficult time Finally, the hon. Lady asked about green issues. I think she compared us with France and Germany and questioned this Government’s and the Prime Minister’s ambition. Let me say this about our plans. They are, I believe, among the most comprehensive and ambitious of any developed economy. She talked about France and Germany, but in this country we are phasing out certain vehicles in 2030; in France, it is 2040. In this country, we are phasing out coal in 2025; in Germany, it is 2038. She talked about the billions of pounds being spent by our friends, but it is important when we make these international comparisons that we understand the detail of what the other countries promise. The German numbers include the subsidies for renewables; ours do not. That happens separately outside our plan and is worth £44 billion, supporting renewable energy in this country through the tariff system, which is what Germany alluded to. The German numbers also include support for public transport, which ours of course do not, because that is something we do just in the ordinary course of business. I am proud of this Conservative Government’s record. We are the first major economy in the world to legislate for net zero, and our economy has decarbonised faster than any other in the last 20 years. This Conservative Government will deliver the Prime Minister’s plans to get us to net zero, and that is something that I hope the whole House can welcome and support In conclusion, this spending review puts the full force of the Government behind the priorities of the British people, and while we may have many disagreements with the Opposition, I am confident that, in private at least, they will recognise the significant investment we are making to protect jobs, strengthen our public services and improve our infrastructure. We in this House are all answerable to the people we represent, and it is in their interests that we serve. Today, we have made some difficult choices to fulfil that responsibility, but with the positive news about the development of vaccines, the winter covid plan being announced by the Prime Minister and the very real hope that we are finally entering the final stages of our fight against coronavirus, now is the time for us to come together. The British people have been through so much this year, as have right hon. and hon. Members, and it is my belief that, with this spending review and the fresh hope given by medical advances, we can finally begin our recovery. Now, difficult decisions and all, we must deliver on the priorities of the British people.