18:57 - The House divided: - Ayes: 401 / Noes: 120 - Question accordingly agreed to.
19:12 - The House divided: - Ayes: 400 / Noes: 120 - Question accordingly agreed to.
19:26 - The House divided: - Ayes: 400 / Noes: 122 - Question accordingly agreed to.
19:40 - The House divided: - Ayes: 455 / Noes: 125 - Question accordingly agreed to.
19:55 - The House divided: - Ayes: 454 / Noes: 124 - Question accordingly agreed to.
20:10 - The House divided: - Ayes: 450 / Noes: 120 - Question accordingly agreed to.
20:25 - The House divided: - Ayes: 383 / Noes: 184 - Question accordingly agreed to.
20:37 - The House divided: - Ayes: 378 / Noes: 116 - Question accordingly agreed to.
20:49 - The House divided: - Ayes: 373 / Noes: 110 - Question accordingly agreed to.
21:00 - The House divided: - Ayes: 371 / Noes: 77 - Question accordingly agreed to.
The Secretary of State for Business and Trade (Jonathan Reynolds)
It is a pleasure to open this final day of the debate on the Chancellor’s growth Budget. Can I welcome the new shadow team? It is lovely to see them in place. I think many of us on this side would admit that we were shadow Ministers for longer than we ideally would have been, and I know that it is a tough and thankless job at times. On a personal level, I wish them well for the future.
As the Chancellor rightly stated, growth is our only path to prosperity, to increasing living standards and to delivering the change that the British people voted for so decisively over the summer, and we on these Benches recognise that we cannot have growth without investment. Growth demands investment in our infrastructure, into our public services, into the cities and regions that have gone overlooked and under-invested in by past Administrations, and that is what this Budget chooses. It chooses investment over decline, with more than £100 billion of public investment into our roads and our railways, our parks and our playgrounds, our schools and our surgeries—all the things upon which a successful economy and a healthy society depend.
This was a Budget for affordable homes, for the NHS, for the school rebuilding programme and—a personal priority for me as MP for Stalybridge and Hyde—for the trans-Pennine route upgrade, including a new station at Mossley, which is something I am sure the whole House can be excited about and get behind. This is literally rebuilding Britain in action, and make no mistake, businesses need that public investment too, because it creates the right environment for them to thrive now and long into the future. That is why the Office for Budget Responsibility says that our increases in spending will drive up the long-term increase in GDP by up to 1.4%.
Kit Malthouse (North West Hampshire) (Con)
The Secretary of State makes much of growth. Of course we all want growth, but the OBR report actually says that growth in real GDP will start to slow over the next three years and that in years four and five of the Parliament it will go negative. It is telling us that the Government’s Budget is actually going to result in a smaller private sector, not a larger one. How is he going to explain that to business?
Jonathan Reynolds
That is not what it says. First, on the figures, we cannot make a like-for-like comparison because we know that the information provided by the previous Government in their financial information was erroneous. They did not square their own spending pledges with what was in those documents. The analysis by the OBR shows that long-term improvement in GDP growth is vital, but the right hon. Gentleman will recognise that it cannot model some of the wider parts of the Government’s agenda. It cannot model those changes in the planning system that are so important to the Government. It cannot model the changes involved in having a long-term industrial strategy. It cannot model our changes to trade policy.
I recognise that there is more to do to prove the case of the Government’s overall commitment, but I can tell the right hon. Gentleman that fundamentally fixing the foundations, honesty and stability in the public finances, and a focus on long-term public investment are essential to the long-term growth of the country. Also, one thing that has not had sufficient recognition is that many of the real benefits of greater public investment do not accrue in this Parliament; they accrue beyond it, and it is about time we had some long-term focus again in this country. Not before time, if I may say so.
Graham Stuart (Beverley and Holderness) (Con)
The right hon. Gentleman will, I hope, be aware that the long-term economic growth of this country relies not primarily on public investment or indeed public infrastructure, but on a healthy private sector—the wealth creators from whom we can take the funding to deliver into those goods that he talks about and that are part of a balanced and successful society. This Budget does not help them. It does the opposite.
Jonathan Reynolds
I am sorry but, again, the right hon. Gentleman is wrong. I agree with part of his assessment, such as that a strong and thriving private sector is crucial to growth, but I find his analysis a little simplistic. Private firms will say that they also need skilled workers, and that they need a decent transport system so they can get to work.
Under the last Government, I would often get up in the morning and check my phone for updates from people using the trans-Pennine line I just mentioned—the one we are upgrading—and it would be full of people saying, “I cannot get to work.” I need the right hon. Gentleman to make a slightly broader analysis.
Despite the previous Government leaving us with a raging skip fire in many areas—we have to raise money, not to deliver our pledges but to deliver their pledges that they did not properly fund—we have had a regard and a heed for the level of competitiveness in the UK economy. For instance, on the rise in employers’ national insurance contributions, over half of all firms with national insurance liabilities will actually pay less or the same, not only because of the changes to the employment allowance but because of how we have removed the threshold so that all firms now qualify.
Despite the frankly terrible inheritance bequeathed to us, we have done our best to meet those needs and to deliver a long-term focus on the future.
Jonathan Reynolds
I was going to move on, but I cannot resist the hon. Gentleman.
Jim Shannon
I hope the Minister will not be disappointed.
There are many good things in what the Government have brought forward, but what is missing, unfortunately, is support for farmers on inheritance tax. Farmers are the backbone of Britain, and they produce almost all the food we eat across this United Kingdom of Great Britain and Northern Ireland. Farmers will be impacted greatly.
I declare an interest as a member of the Ulster Farmers Union and the National Farmers’ Union, and all the farmers I talk to in Northern Ireland have indicated that every farmer in Northern Ireland will be affected by inheritance tax. If the Government want to get it right, the threshold needs to be raised, and it is not too late. Raise the threshold to £4 million or £5 million so that family farms, the backbone of Britain, can continue.
Jonathan Reynolds
I always listen to the hon. Gentleman because he is genuine and conscientious in representing his constituency’s interests. I will always listen to what he has to say. We can judge the exact impact of these changes by looking at the value of claims to date. The Conservative party’s analysis has forgotten to aggregate the impact of the changes to those allowances, such as agricultural property relief, alongside the existing nil-rate band and the ability to transfer the allowances between spouses in all cases. The total number of farms across the UK that will be affected by this change is actually only 500 for the 2026-27 financial year. That has been missed, and I remind colleagues that any inheritance tax liability has a 10-year, interest-free payment period. To be frank, there has been some scaremongering from the Opposition, and we have to be clear with people.
We have had to restore economic stability to deliver that investment, and we should not shy away from explaining why this has been so necessary. The previous Government’s scattergun approach to growth left our country starved of investment, economically divided and struggling to maintain a competitive edge in the global economy.
The previous Government’s claim to have delivered the fastest-growing economy in the G7, based on its performance in the first half of this year, is laughably false. I believe that The Sunday Times likened it to someone walking a marathon in six hours but, because they ran the last 100 yards, claiming to be the fastest runner in the world. The truth is that consistency and stability have been sorely lacking. We have had seven growth strategies since 2010 and 11 Business Secretaries in as many years, to say nothing of the UK’s revolving door of Prime Ministers.
Jonathan Reynolds
I have already given the right hon. Gentleman a go. I will make a little progress, and we will see whether he can do a better one next time.
The result was a protracted period of anaemic growth. Had our economy grown at the average rate of other OECD countries over this period, it would have been £171 billion larger. Imagine the difference that would have made to all of our communities and to today’s Budget debate. British firms, facing such uncertainty, have not seen investing domestically as a sufficiently attractive proposition. They have been reluctant to adopt new technology, to upskill their employees or to plough money into research and development. We have even heard that, in any given year, roughly 40% of UK firms choose not to invest at all. We want to change that for good. We want to give businesses certainty, confidence and stability so that they can make decisions for the long term.
That is why, at the Budget, the Chancellor reaffirmed our new modern industrial strategy. Invest 2035 will be a central pillar of our growth mission. The strategy will allow businesses to plan not just for the next 10 months, but for the next 10 years. It has already won the backing of Make UK, which has told us that businesses will no longer have to
“fear the constant chop and change in policy we have seen over the last decade.”
Instead, they can focus on the long term.
Our industrial strategy will create a strong pro-business environment, making it simpler and cheaper for companies to scale up and invest. It will unleash the potential of our high-productivity services and industries, because our recent economic history has taught us that we have to play to our strengths. Over the last 25 years, high-productivity sectors were responsible for roughly 60% of our economy’s entire productivity growth. Looking at the figures since 1990, over half of the UK economy’s GDP growth has come from just three sectors—information and communications technology, financial and professional services, and advanced manufacturing.
That is why our industrial strategy will channel support to eight key growth-driving sectors, those in which the UK services sector will excel both today and tomorrow—the services and industries that present the greatest opportunity for output and productivity growth over the long term.
Charlie Maynard (Witney) (LD)
How does that all gel with the fact that the OBR is saying that business investment will fall by 0.6%, as a share of GDP, by 2029? It sounds great, but it does not add up in the OBR’s eyes. Will the Minister please elaborate?
Jonathan Reynolds
We have a similar question. The Government’s wider pro-business changes cannot be modelled by the OBR, and we know that we have to prove them. There is simply no way that we will get to the higher business investment, the higher productivity growth and the stronger economic growth that we need in all parts of the country unless we are honest, robust and responsible with the public finances, as this Budget is and the previous Government were not. If the Budget does not set the trajectory for strong long-term public investment, to leverage in that degree of private investment, we will not have the foundations to succeed. I am so excited by this Budget because it gives us those strong foundations for the future.
Dr Andrew Murrison (South West Wiltshire) (Con)
The problem with our economy is that, too often, people build small businesses and then sell them off. They do not sit and develop them before potentially handing them on. Can the Minister explain how the proposed inheritance tax changes will encourage people to take risks in nurturing and growing their businesses in order to pass them on to succeeding generations? Plainly, his suggestion will have the reverse effect and will, therefore, make the situation worse, which will damage growth.
Jonathan Reynolds
I ask the right hon. Gentleman to look at the detail of our plans. From the data held by the Treasury, we can plan for how many firms will be affected, and it is a very small number. In most cases, given the existing inheritance tax nil-rate band, especially where property is involved or where there is a transfer from one spouse to another in the inheritance chain, the allowance is so great that it is already considerably in excess of the average claim for relief in this area.
The right hon. Gentleman is talking about a very small number of firms at the very large end. I think the revenue can be raised in a way that protects the kind of family firms he and I want to see continue to thrive. We all know there are cases where, for instance, people advertise the sale of agricultural land or certain types of investments specifically to avoid inheritance tax, which is not right. That is not good for business. We have to recognise that these fair and proportionate changes will pay for the last Government’s spending commitments. The changes will always have a benchmark for international competitiveness, in a way that the right hon. Gentleman should recognise rather than scaremonger.
At the Budget, as a statement of intent for our new industrial strategy, we saw the Chancellor make the first of many down payments with multi-year funding commitments for these areas of our economy. There will be significant tax relief for our world-leading creative industries, up to £0.5 billion for a brand-new life sciences innovative manufacturing fund, and nearly £1 billion for our aerospace sector to fund vital research and development into jet zero technology, which will boost industries in the east midlands, the south-west and Scotland. There is also £2 billion for our automotive sector, ensuring that the next generation of electric vehicles are designed, developed and built right here in the UK.
At the same time, we recognise that our industrial strategy’s success rests upon working in partnership with mayors and multinationals, councils and CEOs, unions and academics. That is why this Government are championing local growth plans—growth plans for the long term—to be delivered by strong local political leadership, which will work together with the Government to create the right conditions for success.
Crucially, our new industrial strategy will be international from the start, taking learnings from the best of what has been achieved globally so that we enable businesses of all sizes and sectors to thrive in our market. To that end, it will work in lockstep with our trade strategy and our twin-track approach to trade, acceding to the comprehensive and progressive agreement for trans-Pacific partnership and negotiating deals with the Gulf Co-operation Council and India, all to the benefit of British business.
Unlike the previous Administration, we are also making it much easier for UK firms to do business in and with Europe. Although the Opposition might not want to hear it, the EU is not just our closest trading partner but is still our largest trading partner, by quite some margin, yet the previous Government’s adversarial approach to working with the EU—all that incendiary rhetoric—was not conducive to good business. We are changing course, aiming to remove unnecessary barriers to trade, so that British companies will be able to operate more easily in France, Germany, Italy and across Europe.
We are making real progress. Earlier this month, the Prime Minister and the President of the European Commission issued a joint statement to deepen our co-operation on the economy, energy and security. We have agreed to regular EU-UK summits to strengthen our connections in all those areas, including the close business and investment ties that connect our economies.
Mr Gregory Campbell (East Londonderry) (DUP)
On the sectors that will benefit, does the Secretary of State agree that the hospitality sector would benefit more from some honesty and openness? The Government announced a 6% increase for people on the minimum wage, many of whom are employed in the private hospitality sector, but while our constituents will pay for that, the Treasury will benefit by hundreds of millions of pounds, because almost all those minimum wage earners will become taxpayers overnight.
Andrew Griffith
I will happily give way to the Secretary of State if he wants to explain why he no longer deems it important to invest in these crucial parts of the economy.
Jonathan Reynolds
Let us reflect on where we are today—the first day of the constructive Opposition. The new Leader of the Conservative party stood at the Dispatch Box two hours ago and called for both tax cuts and massive public spending on defence. How are you going to pay for projects that you promised but never delivered, and that you knew you could never pay for?
Madam Deputy Speaker (Caroline Nokes)
Order. The Secretary of State knows better than to say “you”.
The Economic Secretary to the Treasury (Tulip Siddiq)
It is an absolute honour to make the closing speech on this historic Budget. It is historic for two reasons. First, it is the first ever Budget to be delivered by a woman—the first female Chancellor of the Exchequer after 800 years. She has smashed the glass ceiling, and I hope all the women and young girls watching know that they can be in the driving seat of a Labour Government. Secondly, it is historic because we are finally wiping the slate clean and turning the page on 14 years of Tory incompetence, chaos and outright instability. This Budget will make meaningful change by focusing on the fundamentals.
Ms Julie Minns (Carlisle) (Lab)
Does the Minister agree that one of the best ways of celebrating this Budget is with a pint of locally brewed beer? Does she agree that the consultation on the pubs code announced by the Government in the Budget statement will be joyful to the ears of local, independent breweries in all our constituencies?
Tulip Siddiq
I thank my hon. Friend for her intervention. I know that she is a doughty champion of the pubs in Carlisle. The pubs in my constituency are celebrating the penny off pints.
Let me get back to the previous Government, who were wrong when they claimed that they would fix the roof while the sun was shining. While chasing a budget surplus— for which, 14 years later, all they had to show was catastrophic public finances—they merely painted over the ever-growing cracks in the bedrock of our society and our country. That is why this Government are right to focus on fixing the foundations of our economy, because that is the only way that we can change the country, deliver for working people and rebuild Britain. Of course, buying a home is harder if the seller has misled us about its true condition by underestimating the size and cost of any required repairs. In that sense, rebuilding our economy is no different, because the previous Government’s public spending plans existed only on paper; there was no real allocation of money to back up any of the spending plans. They behaved no better than some huckster trying desperately to sell a flat that they know will never be built.
That is why the OBR has said that, had it been made aware of the scale of the spending pressures during the spring 2024 Budget, its assessment of the previous Government’s spending plans would have been “materially different”. That is why it was right that we took our time to conduct a full survey of the economic inheritance that they left us.
Tulip Siddiq
The right hon. Gentleman has intervened 18 times. I shall not give him another chance.
Let me continue. That is the only way that we can really fix the foundations. Of course, that involves taking tough decisions, particularly on spending and taxation, but I will take no lectures from those who were content to levy a £22 billion pound tax on this country’s future, and, through their unfunded spending commitments, attempt to undemocratically bind the hands of a future Government. Well, guess what? This Government will do things differently. While the previous Government allowed investment in our country to fall to its lowest level on record, this Government will put investment at the heart of everything that we do.
That is why we held the international investment summit in October—to show firms at home and abroad that Britain is open for business once more. That is why we have introduced a new fiscal rule—the investment rule—which, alongside appropriate guardrails provided by the OBR and our new stability rule, means that this Government can meaningfully invest in our country’s future.
Of course, investment means taking a long-term view. As anyone who has bought a property, built a business or raised a family will know, the early days are always the hardest. But if they take the hard calls now, in time they will get back far more than they put in. I pick those examples deliberately, but with regret. The sad truth is that, for working people—particularly young people—up and down the country, home ownership, entrepreneurship and starting a family have never been more distant. This Budget will start to change that.
Our manifesto made a clear commitment to get Britain building again. This Budget puts the first shovels in the ground, with a commitment to spend an average of 2.6% of GDP on public sector net investment over the course of this Parliament. This will include an additional £500 million in new funding for social and affordable homes, which brings total investment in housing supply to more than £5 billion and supports the delivery of tens of thousands of new homes.
We will build more than just homes; we need to build communities. Infrastructure is key to tying those communities together while ensuring that they plug into the wider economy. [Interruption.] The shadow Foreign Secretary asks how. If she listens, she will learn, so she should pay attention. Getting our country moving again will be key to growing the economy. [Interruption.] She should not chunter from the Front Bench. She needs to listen, because our commitment to infrastructure investment will help us to do so—by, for instance, increasing local roads investment by £500 million in 2024-25. These are the things that the previous Government failed to do, but we will deliver for our country. For working families, that means less time wasted dodging potholes and more time for the things that actually matter. Of course, infrastructure helps not just families but firms. In an increasingly volatile world, Government should play an important role in securing our energy supply so that firms can price that into their business plan.
We heard powerful and authentic maiden speeches today from my hon. Friends the Members for North Ayrshire and Arran (Irene Campbell), for Stoke-on-Trent North (David Williams) and for Sherwood Forest (Michelle Welsh). We will see them as huge assets to Parliament. Some of them mentioned that their families did not think that they would get here; I am really pleased that their families were wrong.
I will finish by echoing something that the shadow Minister, the hon. Member for North Bedfordshire (Richard Fuller), said. It is not often that I agree with him, but he said that we had choices. The truth is that we did have choices, and guess what? We chose to act. In 10 years’ time, the country will look back on this Budget as the moment when we got Britain’s future back. In the future, the economy will have grown because at this moment we chose to prioritise a healthy workforce; we will have record levels of investment because we prioritised fiscal and economic responsibility; and people will have more money in their pockets because we prioritised protecting hard-working people’s payslips. The merry-go-round of austerity and economic irresponsibility is over. We made a choice—a choice to rebuild Britain.
Question put and agreed to.
Resolved,
That income tax is charged for the tax year 2025-26.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
Madam Deputy Speaker (Ms Nusrat Ghani)
Let me explain what will happen next. I am now required under Standing Order No. 51(3) to put successively, without further debate, the Question on each of the Ways and Means motions numbered 2 to 62, and the money motion on which the Finance Bill is to be brought in. These motions are set out in a separate paper distributed with today’s Order Paper.
The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).
2. Income tax (main rates)
Resolved,
That for the tax year 2025-26 the main rates of income tax are as follows—
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
3. Income tax (default and savings rates)
Resolved,
That—
(1) For the tax year 2025-26 the default rates of income tax are as follows—
(a) the default basic rate is 20%,
(b) the default higher rate is 40%, and
(c) the default additional rate is 45%.
(2) For the tax year 2025-26 the savings rates of income tax are as follows—
(a) the savings basic rate is 20%,
(b) the savings higher rate is 40%, and
(c) the savings additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
4. Income tax (starting rate limit for savings)
Resolved,
That—
(1) For the tax year 2025-26 the amount specified in section 12(3) of the Income Tax Act 2007 (the starting rate limit for savings) is “£5,000”.
(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for that tax year.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
5. Income tax (appropriate percentage for cars)
Resolved,
That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made taking effect in a future year increasing the appropriate percentages mentioned in sections 139 to 142 of the Income Tax (Earnings and Pensions) Act 2003.
6. Capital gains tax (the main rates)
Question put,
That—
(1) In section 1H of the Taxation of Chargeable Gains Act 1992 (the main rates of CGT)—
(a) omit subsection (1A) (which sets out the rates for residential property gains accruing to individuals),
(b) in subsection (3) (which sets out the rates for gains accruing to individuals that are not residential property gains or carried interest gains)—
(i) for “10%” substitute “18%”, and
(ii) for “20%” substitute “24%”,
(c) omit subsection (4A) (which sets out the rates for residential property gains accruing to personal representatives),
(d) in subsection (6) (which sets out the rates for gains accruing to personal representatives that are not residential property gains or carried interest gains), for “20%” substitute “24%”,
(e) omit subsection (7) (which sets out the rates for residential property gains accruing to trustees), and
(f) in subsection (8) (which sets out the rates for gains accruing to trustees that are not residential property gains or carried interest gains)—
(i) omit “Other”, and
(ii) for “20%” substitute “24%”.
(2) The amendments made by this Resolution have effect in relation to disposals made on or after 30 October 2024.
(3) If an asset is transferred on or after 30 October 2024 under an unconditional contract made before that date, the disposal is, despite section 28(1) of the Taxation of Chargeable Gains Act 1992, to be treated for the purposes of the amendments made by this Resolution as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
(4) A contract is an excluded contract if—
(a) obtaining an advantage by reason of the application of section 28(1) of the Taxation of Chargeable Gains Act 1992 was no purpose of entering into the contract, and
(b) where the parties to the contract are connected persons, the contract was entered into wholly for commercial reasons.
(5) A contract is not to be regarded as an excluded contract unless the person making the transfer makes a claim which includes a statement that the contract meets the conditions to be an excluded contract.
(6) But no claim is required if the total amount of—
(a) the chargeable gain accruing on the disposal, and
(b) the chargeable gains accruing on all other disposals made under excluded contracts, does not exceed £100,000.
(7) For this purpose the amount of any gain accruing on a qualifying business disposal is to be taken to be the amount of the gain under section 169N(2) of the Taxation of Chargeable Gains Act 1992.
(8) If the person making the transfer makes—
(a) a claim under section 169M of the Taxation of Chargeable Gains Act 1992 in relation to a qualifying business disposal (business asset disposal relief), or
(b) a claim under section 169VM of that Act (investors’ relief) in relation to a disposal, section 169M(2) and (3) of that Act, or (as the case may be) section 169VM(1) and (2) of that Act, apply to a claim under paragraph (5) in relation to the disposal as they apply to a claim under the section concerned.
(9) In this Resolution “qualifying business disposal” has the meaning given by Chapter 3 of Part 5 of the Taxation of Chargeable Gains Act 1992.
(10) In this Resolution any reference to the transfer of an asset includes its conveyance.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.