The Prime Minister opened Cabinet by thanking the Defence
Secretary for his work on the announcement of the UK's plan to
raise defence spending to 2.5% GDP by 2030. He added it was a
thorough and fully funded plan to deliver the biggest
transformation and strengthening of our national defence since
the Cold War to meet the challenge of an increasingly dangerous
world.
He then turned to the Work and Pensions Secretary for an update
on welfare reform and the launch of yesterday's PIP Green Paper
which is consulting on the ‘one size fits all' approach. The Work
and Pensions Secretary said that while UK economic inactivity is
lower than France, Italy and the US, it has increased since the
pandemic, in large part due to a rise in long-term sickness and
mental health conditions. He outlined the fundamental reforms the
government is pursuing to the Fit Note system, The Work and
Capability Assessment and Personal Independence Payments.
The Prime Minister said that his government will always reward
hard work, and that behind these reforms stands a fundamental
moral and economic belief in the value of work, both for the
individual and for society.
Cabinet then discussed the economy, with the Prime Minister
confirming that our plan is working and the economy is turning a
corner.
The Chancellor outlined that the economy has outperformed
expectations since the Prime Minister took office, beating growth
forecasts, inflation down from 11.1% to 3.2%, real wages have
grown for nine months in a row, and today's news from the British
Retail Consortium that some prices are falling. He went on to say
the economy has grown faster than France, Germany, Italy and
Japan since 2010, and the UK is ranked third globally for
greenfield inward investment, more than France and Germany
combined. Policies announced by the government at the last three
fiscal events are forecast to increase the size of the economy by
0.7% by 2028-29. An average earner is paying £1,500 less tax, and
1.8 million fewer people are paying income tax, than if tax
thresholds had only gone up by inflation since 2010. And a UK
employee can earn more money before paying tax and social
security contributions than an employee in any other G7 country.
The Prime Minister concluded that if we are to continue cutting
taxes the economy must continue to grow, we must get more people
into work, and we must increase public sector productivity.
Returning public sector productivity to pre-pandemic levels alone
would save £20 billion a year.
