Spending Review: Economic Growth

I know that my hon. Friend is working closely with the local Labour council in Southport to regenerate the local town centre, and we will make sure that this Government back him every step of the way.

Whether it is the Marine Lake Events Centre, the Enterprise Arcade or the new Market Quarter in my Southport constituency, my town has benefited from state-led investment in neighbourhoods and the public realm. Does the Chancellor agree that investment policies of this sort are essential to driving economic growth in our regions and nations and will help us to finally turn the page on the failed austerity policies of the Conservative party?

I absolutely agree, and that is why we have reversed the Conservatives’ decisions to cut capital spending. Instead, we are preserving that capital investment, which means spending £113 billion more on road, rail, energy, homes and digital infrastructure than would have been spent in the plans we inherited. We are also spending on day-to-day things, such as making sure that we have police on our streets, and working with our mayors, including Mayor Steve Rotheram, to ensure we get investment into the places that most need it.

Small businesses are the backbone of our economy. In Ilford South we have many small businesses, ranging from restaurants like Delhi O Delhi, Mr Bunns Bakery, tea shops like Mi Chaii to local shops like the Chopra convenience stores. They make Ilford an amazing place to eat, shop and do business. Will the Chancellor join me in commending the local businesses that make the high street the beating heart of Ilford South, and will she lay out what steps she is taking to support these entrepreneurs?

At the Budget, we more than doubled the employment allowance to £10,500 to take many small businesses out of paying national insurance altogether. On corporation tax, we have maintained the small profits rate to help smaller businesses, and to help entrepreneurs raise finance and grow, the Government have extended the enterprise investment scheme and the venture capital trust scheme. I very much add my words of support to businesses across Ilford, and I commend the work my hon. Friend does to champion them.

Clwyd North is a proud coastal constituency, home to a dedicated hospitality sector with many small businesses, including the recently opened Bobcats Coffee, where young entrepreneur Bobby is an example to us all. Economic circumstances have been tough after a decade of neglect by the Tories. Will the Chancellor outline the Treasury’s plans to support the small businesses that are such a vital part of our local economy?

From the next financial year, this Government will introduce permanently lower rates for high street, retail, hospitality and leisure properties with rateable values below £500,000, and we are doing that exactly to support the sort of businesses that my hon. Friend champions.

I draw attention to my entry in the Register of Members’ Financial Interests. Earlier this month, Harbour Energy announced that it would be cutting 25% of its onshore workforce, blaming the Government’s punitive fiscal position and challenging regulatory environment. When the news was announced, the Chancellor said that this was just a commercial decision by one company, so how does she explain the other energy sector jobs that have been lost in north-east Scotland in just the last few weeks? Belmar Engineering is entering liquidation, with 48 job losses. Well-Safe Solutions faces 45 job losses. Beam, a subsea technology company, has made all 200 staff redundant. With Harbour Energy’s cut of 25% of its workforce—250 jobs—we are talking about 600 jobs in total. How can the Chancellor explain that, and how will she support the industry in the spending review?

My hon. Friend the Exchequer Secretary to the Treasury is working closely with businesses right across the energy sector. The previous Government increased the rate of tax on energy companies to 75%, and we increased it by three percentage points to 78%, reflecting the fact that energy companies have enjoyed huge profits since Russia’s illegal invasion of Ukraine. When people’s bills have gone up, it is right that we ask the energy companies making those profits to contribute a little more.

What changes will the Chancellor introduce in the spring statement to compensate for the growth-threatening sword of Damocles she has just placed over the Scottish fishing industry? She should know, but probably does not, that 70% of revenue from fishing and aquaculture comes from Scotland, and she should know, but probably does not, that the fishing industry in Scotland is 50 times larger for Scotland’s economy than for the UK’s. Can she explain what discussions she had with the Scottish Fishermen’s Federation or the Scottish Government before making this damaging decision?

I was very pleased that the Scottish salmon association welcomed the trade deal that we secured with the EU yesterday. Some 70% of the fish that is caught in UK waters is sold into European markets. That will now benefit from the sanitary and phytosanitary deal that we have secured within that deal. We have rolled over the deal that the previous Government secured, giving certainty to fishermen in Scotland and across the UK. We have made it easier for them to export into European markets. We have ensured that we can sell shellfish again into European markets, and we announced yesterday the £360 million package of measures to support coastal and fishing industries. The Scottish National party is now in an absurd situation where it supports Reform and the Tories in opposing the deal with the EU.

I welcome the Chancellor’s answers on growth. She has been a strong champion of the Oxford-Cambridge growth corridor, but my constituents are concerned to know that she will lend her support to Lord Vallance’s efforts to join up across Departments and ensure that there is the social infrastructure to support the growth. My constituents worry that hospitals, schools and roads will not keep up with the ambitious pace that Lord Vallance is proposing.

That is an opportune question, because I will be meeting Lord Vallance this afternoon to discuss the work he is taking forward on the Ox-Cam corridor to bring more good jobs, paying good wages, not only to Oxford and Cambridge, but, crucially, to the towns and cities in between. Some of the extra money we are putting into capital investment will absolutely be going to support the huge growth opportunities in that part of the world.

I call the shadow Minister.

Of course, the best way to improve economic growth is for this Chancellor to stop punishing businesses with higher taxes. Within the spending review, the key is to improve public sector productivity. As the Chancellor knows, one of the key aspects in doing that is the use of technology. This Government have substantial advantages over the next few years with major advances in artificial intelligence technology, but those can only be captured if the Treasury sets clear directions for Departments, including incentives and penalties. What directives has His Majesty’s Treasury given to Departments to improve productivity through the adoption of artificial intelligence? Specifically, does that advice include a requirement for the use of agentic AI during the multi-year spending period?

I thought the hon. Gentleman was going to welcome the investment of Universal Studios in Bedfordshire, which will be a massive boon to the county’s economy. On supporting the adoption of AI, we are doing two key things. First, we are supporting that sector investing in the UK, and the deal we secured with the US will help bring more investment into our digital sector. Secondly, and crucially, we are improving the productivity of our public services. The hon. Gentleman will see more about that when we publish the spending review on 11 June. We are absolutely determined to boost productivity in the public sector, after the mess in which it was left by the Conservatives.