Westminster update: chancellor says "difficult decisions" needed to fill financial blackhole

One thing you need to do

Read our new research showing that, by next year, a couple with two children will need to be surviving on just £41 a day to qualify for full legal aid.

We are calling on the government to implement the changes recommended by last year’s means test review.

This would restore access to free legal help with unfair evictions or domestic abuse for more than five million people and families. 

What you need to know

1. "Difficult decisions" needed to fill financial blackhole, chancellor says

In a major statement to the Commons on Monday 29 July, the chancellor of the exchequer, Rachel Reeves, announced that since taking office she had uncovered a £22 billion overspend in the government’s budget for this year already, which will require “difficult decisions” to bring under control.

Reeves accused the previous Conservative government of covering up unfunded spending commitments.

She confirmed that the government will be accepting the public sector pay bodies’ recommendations of above inflation pay increases for prison staff, judges and other public sector workers.

To balance the books, the chancellor announced several measures including:

• cutting a series of transport upgrades
• reviewing the 40 new hospitals the last government had commissioned
• ending the scheme to remove asylum seekers to Rwanda
• confirming the winter fuel allowance for pensioners will now be means tested

Reeves said this is only the beginning of “difficult decisions” and that the government will not spend money unless it can show where it is coming from.

The statement also confirmed that there will be a budget on 30 October, as well as a new approach to comprehensive spending reviews, which will now take place every two years.

We look forward to using both these fiscal moments to campaign for the funding our justice system needs and for taking a new approach to creating savings through long-term investment.

Responding for the Conservatives, the shadow chancellor Jeremy Hunt accused Labour of trying to lay the ground for tax rises. He also said that the government had worsened the fiscal picture by accepting the recommendations on public sector pay.

2. Select committee elections timetable announced

The timetable for the election of chairs of parliamentary select committees has been confirmed by the speaker of the House of Commons.

The chairships have been divided up amongst the parties according to the relative strength of the parties, meaning Labour will chair the majority of committees.

The Conservatives have been allocated five committees, including the influential Home Affairs Committee, while three have gone to the Lib Dems, including the Health and Social Care Committee.

Labour will chair the Justice Select Committee.

MPs will be able to nominate themselves with 15 supporting signatures from members of their own party (or 10% of the MPs elected to the house of that party, whichever is the lower) until 4pm on Monday 9 September.

The ballot is scheduled for Wednesday 11 September between 10am and 4pm.

A number of MPs have already signalled their intention to stand for election as committee chairs.

Former barrister Andy Slaughter (Labour) has thrown his hat into the ring for the chairship of the Justice Select Committee.

He has long been a strong advocate for legal issues and recently spoke during the king’s speech debates about the need to support access to justice, pressing the government to act urgently on legal aid.

Former shadow attorney general Emily Thornberry (Labour) is standing for election as chair of the Foreign Affairs Committee.

With the Commons due to rise for its conference recess on 12 September, it is unlikely that the rest of the committee memberships will be appointed until October at the earliest.

Committees may not begin to formally meet until later that month.

3. New housing secretary sets out plan to build more houses

On Wednesday 30 July the housing secretary Angela Rayner set out the government’s first major steps on housebuilding.

This announcement is linked to the government's ambition for sustained economic growth, with a focus on stability, investment and reform.

Rayner pledged to restore and raise housing targets by strengthening the requirements for local authorities to deliver housing.

As announced in the king’s speech, the government will introduce the Planning and Infrastructure Bill, which will modernise planning committees by:

• introducing a national scheme of delegation
• enabling local authorities to put their planning departments on a sustainable footing
• further reform to compulsory purchase compensation rules
• streamlining the delivery process for critical infrastructure 
• providing any necessary legal underpinning to ensure development is used to fund nature recovery

The government will also take a more strategic approach to greenbelt release, setting out a sequential approach, with local authorities asked to give consideration first to brownfield land, before moving on to grey-belt sites and then to higher performing green-belt land.

Development on green belts will need to include at least 50% affordable housing supported by the necessary infrastructure, such as schools, GP surgeries and transport links, and must provide accessible green space.

4. Revival of the Arbitration Bill

On Tuesday 30 July, the Arbitration Bill had its second reading under the new government.

The bill was dropped when the election was called, but was included in last month’s king’s speech.

The legislation comes directly from recommendations by the Law Commission, following two consultations in 2021, with the addition of amendments added by the Special Public Bill Committee when the bill was debated pre-election.

The bill will reform the 1996 Act to bring the law up to date and modernise the arbitral framework.

The new justice minister Lord Ponsonby led the debate, using statistics from our briefing.

He noted that “the sector is worth at least £2.5 billion to the British economy each year, while according to industry estimates, international arbitration grew by some 26% between 2016 and 2020. Of course, London remains the world’s most popular seat for arbitration by some stretch.”

The bill received support from Lord Hacking (Labour) and Lord Beith (Liberal Democrat), with the former asking for another round of committee to clarify final details.

The former Conservative minster Lord Bellamy welcomed Lord Ponsonby to his place and supported the bill as a whole, urging that it reach the statute book as soon as possible.

The bill now moves to a committee of the whole House with Lord Ponsonby’s commitment to conclude the bill swiftly.

5. Home secretary pressed on immigration

On Monday 29 July, home secretary Yvette Cooper took to the dispatch box to answer her first round of Home Office questions. As expected, many of them focused on the issue of immigration.

While Lee Anderson (Reform) said the UK should stop paying the French any money to tackle illegal crossings “until they stop being complicit in this evil trade”, Chris Murray (Labour) said “the best way to secure a border is to have a constructive relationship with the country that it is shared with”.

Several MPs asked that those in the asylum system be provided with welfare support if they are not given the right to work.

Home Office minister Angela Eagle said the Home Office is not entertaining these proposals and that the priority is to process and act on asylum applications efficiently.

Several questions were also asked about the government’s plans to reduce violence against women and girls.

The home secretary said that the issue will be tackled across government, the education secretary also talked about tackling toxic misogyny in schools.

When Elise Blundell (Labour) asked what measures the government will put in place to target perpetrators and address the root causes of abuse and violence, the home secretary said the government will set out a new perpetrators programme to properly ensure that the police pursue the most dangerous offenders.

Coming up:

The public affairs team have identified a number of bills of relevance to solicitors and the wider legal profession.

We will be working closely with MPs and peers to influence a number of these bills:

• Arbitration Bill will have its committee stage in the Lords on 11 September.