House of Commons
Prayers
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Oral Answers to Questions
(1 week, 3 days ago)
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John Slinger (Rugby) (Lab)
Tracy Gilbert (Edinburgh North and Leith) (Lab)
The Secretary of State for Work and Pensions (Liz Kendall)
This morning the nation fell silent to pay tribute to all those who have served and continue to serve in our armed forces, and those who have made the ultimate sacrifice. Today we honour and remember them. I quote the words inscribed on Lutyens’ beautiful Arch of Remembrance in Leicester from the hymn “O Valiant Hearts”:
“All they hoped for, all they had, they gave to save mankind—themselves they scorned to save”.
Some 4.3 million children are growing up in poverty—700,000 more than in 2010. That is why the work of our cross-Government child poverty taskforce is so urgent, and why we will use all levers available to increase family incomes, reduce family costs and give every child the best start in life.
John Slinger
I have had the privilege of assisting the brilliant volunteers at the Make Lunch organisation in Rugby, which provides holiday lunch clubs with play activities for entire families, including those with complex needs. Last summer it fed 25 families, last Christmas it bought slow cookers for families and this Christmas it is offering hampers. They treat families with dignity. As with food banks, is it not an indictment of the record of the last Government that such charitable support is needed in the first place?
Liz Kendall
Make Lunch sounds like an absolutely brilliant charity, and I ask my hon. Friend to pass on our great thanks for its fantastic work. That work is urgent, because the Child Poverty Action Group estimates that a quarter of children in my hon. Friend’s constituency are growing up poor. Our child poverty strategy will be published in the spring, but we will not wait to act. That is why the Budget announced a new fair repayment rate to slash universal credit deductions and give 1.2 million of the poorest households £420 on average a year, lifting thousands of children out of poverty.
Tracy Gilbert
Previous Labour Governments have tackled not only poverty but its root causes. Can my right hon. Friend outline how the child poverty taskforce will identify and tackle the root causes of poverty in my constituency and across the UK, to ensure a permanent end to child poverty?
Liz Kendall
I am sure that, like me, my hon. Friend thinks that it is unacceptable that an estimated one in six children in her constituency is growing up poor. We have taken immediate action to help the poorest families in Scotland through our fair repayment rate, which will benefit 110,000 households in Scotland. We are tackling the root causes of poverty with our reforms to make work pay, tackle exploitative zero-hours contracts and create more good-quality jobs in every part of the country.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
Child poverty is a scourge in British society, and I am grateful that the Secretary of State is bringing forward a child poverty strategy. Has she decided how to measure child poverty? May I warn her against using the much discredited relative measure, which, as we know, shows poverty decreasing during times of economic decline and increasing during times of economic growth? I implore her to use an absolute measure, which has a much better record of showing deprivation and long-term increases and improvements in living standards.
Liz Kendall
I am afraid I will disappoint the hon. Gentleman: we will look at relative poverty after housing costs, but we will go further and look to alleviate the very deepest poverty. It is appalling that hundreds of thousands of families are forced to rely on food banks—something that I know only too well from my time chairing Feeding Leicester. We will look at relative poverty, deep poverty and what it will take to give every child the very best start in life, by bringing together support from public services, charities and other groups. That is the way to bring down poverty and make the changes sustainable.
Jim Shannon (Strangford) (DUP)
Northern Ireland has some of the highest child poverty figures in the whole of the United Kingdom of Great Britain and Northern Ireland. I am sure that the Secretary of State wants to help. We have had a 70% increase in food bank usage in my constituency in the past 12 months, which is an incredible indication. Will she kindly tell me what discussions she has had with her counterpart in the Northern Ireland Assembly on what more can be done to help?
Liz Kendall
The Minister from Northern Ireland is a member of our child poverty taskforce. I hope to visit soon and the co-chair of the taskforce, the Secretary of State for Education, my right hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), also plans to visit. We have introduced the new fair repayment rate to slash the level of universal credit deductions because, as food banks in my constituency have told me, that really pushes people into poverty. That is not what the Government should be doing, and that is why we have taken action. I look forward to coming to Northern Ireland to talk to the hon. Gentleman, his constituents and the organisations fighting poverty to see what more we can do.
Ian Roome (North Devon) (LD)
The Minister for Social Security and Disability (Sir Stephen Timms)
The application process for personal independence payment is being kept under review. An online process is being trialled and we are looking at further potential improvements.
Ian Roome
One of my constituents in receipt of PIP is sight-impaired, deaf-blind registered and cannot use a phone or fill out forms. Can the Minister tell me why PIP reassessments are being scheduled for people with incurable disabilities and terminal illnesses?
Sir Stephen Timms
The hon. Gentleman raises a very fair point. It is, of course, important that we keep the awards under review, because sometimes they go up as well as down and we want to ensure that the support being provided is appropriate for the claimant. We also need to ensure that the process is accessible—I agree with him about that. Help can be provided to manage the assessment process. If he would like to send me more details about his constituent, I would be glad to see what we can do to help.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Yesterday, it was reported in the Sunday papers that a blind woman with additional complex needs had her PIP assessment over the phone, which was approved, but was then sent a letter to confirm that. The charity Sense says that over half the people it surveyed feel humiliated by the process. I know my right hon. Friend is very keen to get this right, so will he expand a little more on the type of things the Department is changing?
Mr Speaker
Before the Minister replies, may I ask Members to look at the Chair, as third party, when they are asking or answering questions? I am being cut out. Those are not my rules but those of the House on how we should address each other, so if anybody has a problem, please have a word with the Clerks.
Sir Stephen Timms
My hon. Friend raises a very important point. Indeed, she and I worked on an excellent Select Committee report on health assessments for benefits, which provides some very important and valuable recommendations to the Department. We will continue to look at this issue. I am not familiar with the case that she refers to, but I will dig out the details. Clearly, it is vital that the process should be accessible to people with sight impairments or any other impairments. I completely agree with her.
Andrew Pakes (Peterborough) (Lab)
The Secretary of State for Work and Pensions (Liz Kendall)
The legacy we inherited is almost 1 million young people not in education, employment or training—nearly one in eight—with all the long-term consequences we know that can bring for their future earnings, job prospects and health. That is why our new youth guarantee will ensure that every young person is earning or learning, which is better for them, better for the economy and better for our country as a whole.
Andrew Pakes
The DWP has described Peterborough as a national youth unemployment hotspot. In September, the youth claimant count was running at nearly double the national average. Places like Peterborough college, through its Jobsmart provision, are already pulling together a coalition to respond to that challenge. I welcome the Government’s youth guarantee and “Get Britain Working” plans to ensure that young people in places like Peterborough are given the opportunity to earn or learn. Will the Secretary of State please confirm a timetable for the publication of the White Paper?
Liz Kendall
The “Get Britain Working” White Paper will be published imminently, backed by £240 million of investment announced by the Chancellor in the Budget. I look forward very much to talking to my hon. Friend and the organisations that are working so hard locally, because I believe that the man, or even woman, in Whitehall can never know what is best in Peterborough, Leicester or Leeds.
Mr Richard Holden (Basildon and Billericay) (Con)
A small business in my constituency to which I have spoken over the last few weeks has raised concerns about the impact of the national insurance rises in the Budget on, in particular, those in lower-paid work, who in many cases are young people starting their jobs. What impact do the Government think that those rises will have on young people and youth unemployment?
Liz Kendall
Just last week I visited a very large employer in my constituency, Tesco, and saw the fantastic work that it is doing with the King’s Trust to ensure that more people get into work and stay in work. It is determined to work with us and our local schools, and employment and other providers, because they know that rather than writing off nearly a million young people, which led to the situation that we inherited, this new Government have a plan to get people into work, enable them to get on in work, and ensure that every young person has the chance in life that he or she deserves.
Mr Speaker
I call the new shadow Secretary of State, and welcome her to her post.
Helen Whately (Faversham and Mid Kent) (Con)
May I say how nice it is to be sitting opposite the right hon. Lady again, albeit, regrettably, having swapped places with her? I enjoyed our exchanges on social care during the last Parliament, and appreciated our constructive conversations during the pandemic, although, given how well she knows the care brief, I suspect that she was gutted, as I was, to see the incoming Government abandon the care cap and scrap more than £50 million of funding for social care training. The consistent feedback from jobcentres was that the biggest barrier to young people taking up job opportunities in social care was lack of career progression, hence our reforms to create a career path for care workers and investment in training. Has the right hon. Lady spoken to her counterpart in the Department of Health and Social Care about the impact of those social care cuts on her ambitions to get more young people working or learning?
Liz Kendall
I, too, welcome the hon. Lady to her post. As she has said, while we will always have our political differences we have also worked closely and constructively on issues that matter across the House, such as the terrible problems facing social care during the pandemic. I will continue that work, and I hope that the hon. Lady will as well, in her new role.
The hon. Lady asked about the impact of what is happening in social care on people’s opportunities and chances to learn. I have already had many discussions with, among others, members of integrated care boards, and they are passionate about the opportunities that exist to get more people into work and enable them to get on in their work, including jobs in social care. Joined-up working between the Department of Health and Social Care and the Department for Work and Pensions will be at the heart of our plans to get Britain working, because, unlike some Opposition Members, we do not find it acceptable for 2.8 million people to be locked out of the workforce owing to long-term sickness. We have a proper plan to get Britain working and growing again.
Helen Whately
The right hon. Lady will know that under the Conservative Government youth unemployment fell by 380,000, and that we were tackling inactivity with our WorkWell programme, helping people to stay in work or return to work, which I am delighted to see the right hon. Lady continuing. Unfortunately, however, as a result of her Government’s Budget and Employment Rights Bill, businesses will slash the number of their employees. Moreover, the Government have just broken another promise and hiked up university fees. What advice would the right hon. Lady give a young person who is currently out of work and education, and must choose between worse job prospects and more expensive university degrees thanks to her Government’s choices?
Liz Kendall
The hon. Lady’s party left nearly a million young people not in education, employment or training, and almost a record number of people—2.8 million— out of work owing to long-term sickness. They failed to introduce reforms to join up work, health and skills properly, and they have not learnt from those mistakes. I am proud that this Government are investing an extra £240 million to get Britain working again, giving people the opportunities that they need to work and build a better life.
Lewis Atkinson (Sunderland Central) (Lab)
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Tonia Antoniazzi (Gower) (Lab)
The Parliamentary Secretary, His Majesty's Treasury (Emma Reynolds)
We have launched the next phase of our pension credit campaign on radio, TV and print media, and the Government have written to 120,000 pensioners on housing benefit who may be eligible but are not currently claiming pension credit. After less than five months in government, we are bringing forward the merger of housing benefit and pension credit, which the Conservatives announced 13 years ago but failed to deliver.
Lewis Atkinson
Under the previous Conservative Government, many eligible pensioners in Sunderland Central did not receive the pension credit that they were due. When I speak to organisations such as Age UK Sunderland, they tell me that that was often because people did not know how and whether to claim. How many pensioners are now taking up pension credit thanks to the actions taken by this Government?
Emma Reynolds
We have seen a 152% increase in pension credit claims since late July, with over 74,000 pension credit claims up to mid-September. We know that many local authorities and, indeed, Members of this House—including me last Thursday—are helping pensioners on low incomes to ascertain whether they are due pension credit.
Jamie Stone
There will be people who are eligible for pension credit living in very remote areas, where connectivity is less than great. It is an appalling thought that they might miss out on what they are due. May I suggest to the Department that the way to reach out to those people might be through a database, followed by a mailshot?
Emma Reynolds
In addition to merging housing benefit and pension credit, which will help some of the people whom the hon. Gentleman has in mind, the Secretary of State and I have asked the Department to look at what can be done to make the application form simpler. The Department will report back to us by the end of the month, and we will update the House in due course.
Tonia Antoniazzi
I welcome the Government’s campaign to get people to sign up for pension credit, and I urge every pensioner in Gower to sign up and attend my pension credit event on 22 November. Does the Minister agree that we should highlight the fact that pensioners who go over the threshold could still be eligible because they receive another benefit, such as attendance allowance, or because higher housing costs are taken into account when applying?
Emma Reynolds
Yes, indeed. Assessing somebody for pension credit is a complex procedure, so we urge all those on low incomes to check whether they are eligible. We have seen an increase in the number of people applying online with the help of local authorities, Members of Parliament and charities, and we urge everybody who thinks that they might have an eligible family member to encourage their loved ones to apply.
Kirsty Blackman (Aberdeen North) (SNP)
Temperatures are set to drop to zero across Scotland by next weekend. Many pensioners are scared to put on their heating, with the Big Issue reporting a three-month delay in claims for pension credit. Can the Minister let us know what she is doing to ensure that those claims are processed as quickly as possible so that people can get the money into their pockets?
Emma Reynolds
I thank the hon. Lady for her question. We want people who are eligible to get support, and we have redeployed 500 staff to process those claims. I can assure her that that is something that we are focused on.
Danny Kruger (East Wiltshire) (Con)
The withdrawal of the winter fuel payment from 10 million households, including 70% of disabled pensioners, is a huge change, as is using pension credit to distribute the benefit to the minority of people who will still get it, yet the Government have rushed this change through without giving their own statutory advisory committee the chance to properly scrutinise it. Ministers have not even responded to the chair of the committee, who wrote to them several weeks ago with suggestions on how to mitigate the effect of the policy. On top of that, they have failed to provide a full impact assessment to show what the effect on poverty would be. Will they finally produce a full impact assessment of this policy, and when will the Minister respond to the chair of the advisory committee?
Emma Reynolds
I welcome the hon. Gentleman to his place. In answer to his questions, we have published an equality analysis, which he can find on the Government’s website. Owing to the legislation, we do not have to produce an impact assessment, but there is an equality analysis. I urge him to have a look at that. All I would say to him is that the new Leader of the Opposition argued in 2022 that winter fuel payments should be means-tested. I wonder how the hon. Gentleman might means-test the winter fuel payment, if he had the chance.
Danny Kruger
The Minister mentions the equality assessment. That was a high-level equality assessment that was only dragged out of the Government in response to a freedom of information request. The fact is that they are avoiding accountability for this policy and avoiding scrutiny by the House. The Government are saying that the impact of the cut on the poorest pensioners will be mitigated by pension credit, and we have heard from the Minister about the very small numbers who are taking up pension credit in response to this announcement. Their own figures predict that fully a third of eligible pensioners—that is 750,000 of the poorest people in the country—will not get pension credit and will not get the winter fuel payment.
That is what the Government are banking on. That is how they are making the savings that they predict from this policy: by cutting benefits to some of the poorest people in our country—[Interruption.] The Minister shakes her head, so she might want to put me right. Does she want all eligible pensioners to claim pension credit? [Interruption.] The Secretary of State says yes. If she does want that, does she then accept that the Government’s savings from this policy will be completely wiped out?
Steve Darling (Torbay) (LD)
On Armistice Day, it is important that we as a Chamber reflect on the Royal British Legion and its “Credit their Service” campaign. This is a campaign to ensure that when benefits are calculated, military compensation is disregarded. In the light of this, will the Secretary of State give serious consideration to disregarding military compensation when calculating pension credit?
Emma Reynolds
I associate myself with the hon. Gentleman’s comments and those of my right hon. Friend the Secretary of State. I will look carefully at what the hon. Gentleman has suggested and get back to him.
Torcuil Crichton (Na h-Eileanan an Iar) (Lab)
The Minister for Employment (Alison McGovern)
After 14 years of Conservative Government, 8 million adults and 4.3 million children were left in poverty. Among other things, £240 million was recently announced in the Budget to support better work so that people can get the dignity of a good job and the security of a proper wage. Details will soon be available, as the Secretary of State mentioned, in our “Get Britain Working” White Paper.
Torcuil Crichton
I thank the Minister for that answer and the assurance from the Dispatch Box that the maximum level of debt repayment from a household’s universal credit is to be reduced from 25% to 15% each month. That is great news for Scottish families, who could benefit by an average of £420 a year. Much of that debt management is carried out at the DWP centre in Stornoway in my constituency, and some 65 of the 80 staff there are involved in responding to calls nationally. That is a good example of job dispersal, and their service is high quality and is now involved in reducing poverty. I encourage the Minister to come and meet the staff there, to meet clients and to see the operation for herself.
Alison McGovern
My hon. Friend mentions the new fair repayment rate, which is another crucial part of the Budget and a downpayment on the action that we will take on poverty. I am fond of an invitation to Scotland, and I will happily accept that one.
Mike Martin (Tunbridge Wells) (LD)
The Minister for Social Security and Disability (Sir Stephen Timms)
The Department has adopted an iterative approach, updating the universal credit system to reflect user needs as they develop. The new Government are committed to reviewing universal credit to make sure that it is doing the job we need it to.
Mike Martin
One of my constituents spent six hours fully awake during an operation that went wrong, as doctors battled to save her life. Obviously, this affected her mental health, and she was deemed unfit for work by her GP and by a clinical psychologist. She then went through a half-hour telephone assessment for her universal credit health check, which deemed her fit to work, so she does not get universal credit and it was not backdated to the operation. Does the Minister think that that sounds right? If not, will he review the case?
Sir Stephen Timms
I am grateful to the hon. Gentleman for drawing my attention to that. What he has described sounds very odd indeed, and I will be happy to look at the details if he will let me see them. We are absolutely committed to making sure that universal credit does the job that we need it to, including for people in the situation that his constituent has found herself in.
Graeme Downie (Dunfermline and Dollar) (Lab)
Last week, I was made aware of a constituent who is a carer for his wife, who experienced a stroke in 2016. The constituent is a veteran who lives with chronic obstructive pulmonary disease and was awarded carer’s allowance in 2017. Late last year, the DWP began demanding the return of more than £51,000 in alleged universal credit overpayments, and this April, under the previous Government, the DWP began taking it from his state pension without warning. Will the Minister meet me to discuss this case in more detail so that I can help my constituent?
Sir Stephen Timms
As my hon. Friend will know, there have been some very troubling cases of carer’s allowance overpayment. I am not sure whether carer’s allowance is part of the overpayment he describes, but I will be very happy to meet him to discuss what has gone wrong in this case.
Lewis Cocking (Broxbourne) (Con)
The Minister for Employment (Alison McGovern)
Jobcentres serving the Broxbourne constituency and elsewhere will change following the “Get Britain Working” White Paper, which has already been mentioned. This fundamental reform will have three parts: a new public employment service to get more people into work and to help them get on in work; a joined-up work, health and skills plan; and a guarantee for young people aged 18 to 21.
Lewis Cocking
The Budget has made it even harder for small businesses in my Broxbourne constituency to create jobs. What can the Minister do to make sure that jobcentres connect with local businesses to help those who are looking for work to find sustainable employment?
Alison McGovern
I thank the Minister for his question—[Interruption.] Honestly, I am still getting used to being on this side of the House.
The hon. Gentleman is absolutely right that jobcentres everywhere need to be locally responsive to employers, and that we need to provide an excellent service to local employers. If he has further thoughts on how we can make that work in his constituency, I would be very happy to discuss it with him.
Munira Wilson (Twickenham) (LD)
The Minister for Social Security and Disability (Sir Stephen Timms)
The last Labour Government dramatically reduced child poverty, and we want to repeat their success. The child poverty taskforce is exploring how to harness all available levers, including social security reform, and it will publish its strategy next spring.
Munira Wilson
The Prime Minister has said that he wants to break down the barriers to opportunity and tackle child poverty. He has also said that
“insecurity is the enemy of opportunity.”
Given that by the time the child poverty taskforce reports next spring, a further 16,000 children will have been dragged into poverty, and given the devastating impact that poverty can have on a child’s education, their health and their vulnerability to the criminal justice system, why will the Minister not do the right thing and scrap the two-child benefit cap to lift 300,000 children out of poverty immediately?
Sir Stephen Timms
The strategy will be very clear about how we will tackle the scourge of child poverty, and the hon. Lady is absolutely right to highlight the importance of doing that. Labour voted against the two-child limit, but we will not promise change until we know how we are going to pay for it. That will be addressed in the work of the taskforce, with the results published in the spring.
Warinder Juss (Wolverhampton West) (Lab)
Alistair Strathern (Hitchin) (Lab)
Damien Egan (Bristol North East) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
No specific assessment has been made of the impact of the household support fund on low-income households in 2025-26, although we hear routinely from local authorities across the country about the impact of the fund in supporting those who are struggling. An evaluation of the fourth iteration of the scheme, running from April 2023 to March 2024, will be published shortly, exploring the benefits of the more than 19 million awards made during this period.
Warinder Juss
I agree that the payment of winter fuel allowance should be means-tested, because many pensioners who receive the winter fuel allowance simply do not need it. However, there are pensioners who are not entitled to pension credit who will struggle to heat their homes. Can the Minister please confirm the extent to which the household support fund will assist those pensioners in my Wolverhampton West constituency?
Andrew Western
The household support fund is intended to support a wide range of households in need, including pensioner households. There has been no ringfencing of funding for specific groups since October 2022, meaning that local authorities have the flexibility to support pensioners who are just above the pension credit threshold. In the 2023-24 financial year, 26% of household support funding went towards meeting energy costs.
Alistair Strathern
I welcome the Government’s decision to provide more than £1 billion in new funding for the household support fund, extending it all the way through next year, and to give much more notice to the local authorities that deliver it. The funding is so important not just to countless vulnerable residents, but to great local organisations, such as the Need Project food banks in my constituency. How will the Department work with local authorities to make the most of the notice and to ensure the funding goes as far as possible?
Andrew Western
My hon. Friend is absolutely right. As a former local authority leader, I know that above all else, certainty will allow councils to design and deliver sustainable plans for local welfare assistance. The Government’s commitment to funding the HSF until March 2026 offers that certainty and time to plan with greater confidence. To that end, we will confirm individual allocations for the forthcoming one-year extension to the HSF as soon as possible, and ahead of the scheme beginning on 1 April.
Damien Egan
Because the household support fund is devolved to local councils, there are lots of different examples of how the funding is spent, so how will the Minister ensure that the money from councils goes to the people who really need it?
Andrew Western
Like me, my hon. Friend is a former local authority leader—albeit a directly elected mayor, and with a far greater mandate, therefore, than I ever enjoyed. Like me, he will appreciate the importance of empowering local areas to respond to local need. That said, all councils must develop delivery plans to show how they are targeting the funds to support the most vulnerable, to ensure that the spirit of the HSF is upheld in helping low-income households with the cost of essentials.
Brendan O'Hara (Argyll, Bute and South Lochaber) (SNP)
The Parliamentary Secretary, His Majesty's Treasury (Emma Reynolds)
The last Labour Government lifted more than 1 million pensioners out of poverty, and this Government remain absolutely committed to supporting pensioners. We know that there are low-income pensioners who are not claiming pension credit, and we urge them to apply. This will passport them to receive other benefits too.
Brendan O'Hara
These are extremely worrying times for millions of pensioners who simply cannot fathom why one of the first acts of this new Labour Government was to remove their winter fuel payments. The Minister will be aware that last month the SNP Scottish Government opened applications for the pension age disability payment, which could be worth up to £434 a month for pensioners with disabilities or long-term health conditions. It will be piloted in Scotland next year. Will the Minister join me in welcoming this initiative and encouraging those who are eligible to apply for it?
Emma Reynolds
It is good to see that the SNP Government are focusing on that issue now, because during their 17 years in government, we have seen increases in pensioner poverty across Scotland.
Rachael Maskell (York Central) (Lab/Co-op)
Pensioners in poverty now have just 40 days to apply for the winter fuel payment via the pension credit system. Will the Minister look at extending the deadline so that more people can claim pension credit and get the winter fuel payment?
Emma Reynolds
I reassure my hon. Friend that we have redeployed 500 additional staff to process the claims. We are working at pace to process them, but 21 December remains the deadline.
Samantha Niblett (South Derbyshire) (Lab)
The Secretary of State for Work and Pensions (Liz Kendall)
As a lifelong champion of unpaid family carers, I am proud that the first Labour Government in 14 years have given unpaid carers the biggest ever cash boost to the amount they can earn while still receiving carer’s allowance. That means family carers can earn an extra £2,000 a year and still keep their allowance. That is the difference this Labour Government are making: supporting families who do the most important thing, which is caring for the people that they love.
Samantha Niblett
I have spoken to many people in my constituency of South Derbyshire who are taking on caring responsibilities for loved ones. I know how hard that is and I am so grateful for the job they do, but it is often a thankless task. I am glad that the Government have taken action to support people in our communities who take on caring responsibilities, but it is disproportionately women who do so. Will the Secretary of State outline how the increase in the threshold will benefit women and allow them greater freedom to work?
Liz Kendall
My hon. Friend is right: 60% of unpaid carers are women, but women spend more hours caring, so they are disproportionately represented when it comes to receiving carer’s allowance. This is a small, but significant and important, step forward. It is a signal that the new Government understand that as people live for longer and care for longer, we will have to do more to help families balance work and caring responsibilities. That is the truth of family now: it is as much about caring for our elderly and disabled loved ones as it is about caring for our own wonderful children.
Clive Jones (Wokingham) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
Estimates for pensioners who are eligible for but not receiving pension credit were published in early October. The estimates show that more than 800,000 pensioners—individual pensioners, not households—are entitled to pension credit but are not claiming it.
Clive Jones
As the Minister will know, the Chancellor’s cruel decision to tie winter fuel allowance to pension credit, despite knowing that the uptake of pension credit is very low, will force thousands of vulnerable pensioners to choose heating or eating this winter. With 16,577 pensioners in Wokingham expected to be affected by the cuts, will she extend the deadline to apply for pension credit and consider pledging further support to increase take-up?
Emma Reynolds
I refer the hon. Gentleman to my answer to my hon. Friend the Member for York Central (Rachael Maskell): the deadline remains 21 December. Thanks to the Government’s steadfast commitment to the triple lock, more than 12 million pensioners will see their pension increase by more than 4% in April next years, up to £470. Over this Parliament, they will be better off by around £1,900, thanks to the triple lock. Low-income pensioners can also apply for the warm home discount scheme and, thanks to the extension of the household support fund, local authorities can target that support on low-income pensioners. In the longer term, the warm homes plan will transform homes across the country by making them cleaner and cheaper to run.
Mrs Emma Lewell-Buck (South Shields) (Lab)
The Minister for Employment (Alison McGovern)
As well as putting in place breakfast clubs that mean children are ready to learn, and as well as the fair payment rate—we have discussed that—which will stop families being tipped into destitution by debt, the ministerial taskforce, chaired by the Work and Pensions and Education Secretaries, will publish the child poverty strategy in spring 2025, using all available levers across government to bring about an enduring reduction in child poverty in this Parliament, as part of a 10-year strategy for lasting change.
Mrs Lewell-Buck
We know that the previous Government presided over shameful levels of child poverty, including nearly 500,000 children who are eligible for free school meals but who are missing out. Will my hon. Friend, alongside the Education Secretary, urgently look at the proposal by Feeding Britain for auto-enrolment to free school meals as part of the single application process for families claiming UC?
Alison McGovern
One person who has never looked the other way when people were facing poverty in this country is my hon. Friend. Through her innovation, she has ensured that household food insecurity is measured properly, and I pay tribute to her efforts. I have listened to what she said about Feeding Britain, and I will take that as an input into the child poverty taskforce. I hope that she and Feeding Britain will meet me to discuss how we can take that forward.
Tom Hayes (Bournemouth East) (Lab)
The Minister for Employment (Alison McGovern)
Helping parents to have fulfilling and sustainable work helps our economy and prevents child poverty. As we have mentioned several times, the “Get Britain Working” White Paper will rewrite employment policy and set our ambition for an 80% employment rate, but we will not get there without parents.
Tom Hayes
In recent weeks, I have met the DWP in Bournemouth and advice agencies including the citizens advice bureau for Bournemouth, Christchurch and Poole. Advice agencies welcome the record increase in carers allowance that was announced in the Budget. They and in-work parents with disabled children have also asked about the transition from child tax credit to universal credit. That may be a matter for the “Get Britain Working” White Paper, but can the Minister say how the Government will further support such parents to work and earn, and flexibly meet their families’ needs?
Alison McGovern
I thank my hon. Friend for bringing this matter to the House, and I pay tribute to all those he has worked with to understand the challenge that we face. He is right that we will take this forward through the “Get Britain Working” White Paper. Citizens Advice is playing an important role in supporting that work, and the work of the child poverty taskforce.
Alan Gemmell (Central Ayrshire) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
I am leading the Government’s landmark pensions investment review, which aims to increase pensions investment in the UK economy and improve retirement outcomes for future pensioners. An interim report will be published soon. Phase 2 of the review, which will focus on pension adequacy, will be launched later this year.
Alan Gemmell
David Carson and Patricia Kennedy, constituents of mine in Central Ayrshire, face massively reduced pensions payments from their pre-1997 contributions to their Hewlett Packard pension, because current legislation index-links contributions from 1997 only. What assessment has the pensions review made so far of the challenges facing pension schemes, and will the Minister meet me to discuss David and Patricia’s case? The issue affects some hundreds of thousands of people.
Emma Reynolds
I thank my hon. Friend for raising that case. I would be very happy meet him, or any other hon. Member who has such cases in their constituency; however, the pensions review will look more at how current pension schemes can improve outcomes for future pensioners. We are looking at driving scale in consolidation of defined contribution pension schemes and local government pension schemes, and at a shift away from cost to value. I know that there is interest in that from across the House, and I hope that we can work on it across the parties.
Rebecca Smith (South West Devon) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
The Government remain absolutely committed to supporting pensioners. We are urging pensioners to check their eligibility for pension credit to ensure that as many people as possible have access to the support to which they are entitled.
Rebecca Smith
Ninety-seven-year-old Joyce from my constituency was worried about losing her winter fuel payment, so she contacted my office. It sounds like the Minister has had a similar experience. Fortunately, my team was able to assist Joyce. We ran a full benefits check, and helped her to secure pension credit, and therefore her winter fuel payment entitlement. However, does the Minister think that it is right that the oldest and most vulnerable should have to resort to getting their MP to help them claim pension credit?
Emma Reynolds
I am glad to hear that the hon. Lady was able to help her constituent. We are looking at the form, as I mentioned in a previous answer, and we will update the House soon on those developments.
Sarah Olney (Richmond Park) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
The Department does not have a pension credit application target. Published application numbers show that we received around 74,400 pension credit claims in the eight weeks from the end of July to mid-September.
Sarah Olney
In the weeks following the Chancellor’s announcements on the winter fuel allowance, the number of pension credit applications doubled, then nearly tripled. Now the DWP is delaying releasing any more data on this subject. I am concerned that the Government know that they will not be able to process the applications on time, and that the information is not being put into the public domain. Will the Minister tell me exactly how many pension credit applications have been submitted since 16 September, and whether the backlog will be cleared before older people start having to make a choice between heating and eating?
Emma Reynolds
I gently say to the hon. Lady that we are not delaying the publication of statistics. A new set of statistics will be published soon. As I said in previous answers, we have redeployed 500 additional staff to helping to process pension credit applications. We urge all those who have loved ones who are pensioners, or who are pensioners themselves, to apply if they think that they are eligible.
Calum Miller (Bicester and Woodstock) (LD)
The Secretary of State for Work and Pensions (Liz Kendall)
The Budget took the first steps in this Government’s plan to drive up opportunity and drive down poverty in every corner of the country: it included an additional £214 million for our plan to get Britain working, a new fair repayment rate in universal credit to help over 1 million of the poorest households, and the biggest ever package to reduce fraud and error in the system, ensuring that every pound of taxpayers’ money is wisely spent. There is much, much more to do, but in the Department for Work and Pensions, change has begun.
Calum Miller
My constituent Kevin had to stop work in 2018 due to a medical condition. He is desperate to find a job, but has consistently found that he is not eligible for support from his local jobcentre. Kevin asked me, “How does someone who has fallen out of work get back into work?” Will the Secretary of State or a Minister meet me to discuss Kevin’s case, and see if, together, we can answer his question?
Liz Kendall
The hon. Gentleman raises an extremely important point. It is not right that his constituent, who wants to work, has suffered from a mental health problem but does not have the support that he needs. In parts of the country, steps have been taken to help provide the healthcare and other support that people need, but we need to go further, faster. My hon. Friend the Minister for Employment will indeed meet the hon. Gentleman. Let’s get cracking on this and see what we can do.
Josh Dean (Hertford and Stortford) (Lab)
The Minister for Employment (Alison McGovern)
There have been changes to ensure that referrals are GDPR-compliant, but I will happily discuss this issue with my hon. Friend. The very best jobcentres are closely linked with local support organisations, and we must ensure that that is the case everywhere.
Helen Whately (Faversham and Mid Kent) (Con)
The Conservatives are the party of work and aspiration, and once again, we left office with unemployment at a historic low. We all know that Labour always leaves unemployment higher than when it came into office, but rarely has it seemed in such a hurry to achieve that. Its first Budget will, according to the Office for Budget Responsibility, cost the country 50,000 jobs in the next few years alone. What assessment has the right hon. Lady made of the cost to her Department of those job losses?
Liz Kendall
May I gently say this to the hon. Lady? She should be apologising, because we have record numbers of people out of work due to long-term sickness; one in eight young people is not in education, employment or training; and people are locked out of the world of work because the Conservatives failed to make proper plans to get people into work and on in their work. Until Conservative Members face up to their responsibilities, and to the cost to the taxpayer of their mistakes in not getting people with long-term sickness into work—£25 billion extra over the course of the forecast period—they will remain on the Opposition Benches.
Helen Whately
I wonder if the Secretary of State did not hear my earlier question; I said that I was grateful that she is continuing the work that we did in government, through the WorkWell programme, to help people in ill health into work by joining up healthcare and employment. However, the point I was just making, to which she did not respond, was that 50,000 jobs will be lost as a result of Labour’s Budget. That is not the only thing frightening the life out of businesses at the moment—
Mr Speaker
Order. The hon. Lady can keep pointing at me, but this is topical questions, and I have all these Back Benchers to get in, so questions really need to be shorter.
Helen Whately
Thank you, Mr Speaker. The Budget is not the only thing frightening the life out of businesses at the moment. Labour’s Employment Rights Bill is a wrecking ball for the UK labour market. Labour’s own impact assessment predicts that businesses could cut staff—
Mr Speaker
Order. I did make the suggestion that you might come to the end of your question, but you decided to carry on reading, so I will have to stop you. I call the Secretary of State.
Liz Kendall
I am very proud of a Budget that invests in the long-term growth that this country needs, that gives a pay rise to the 3 million lowest-paid workers, and that invests in the NHS so that people can get back to health and back to work. That is the change that this country desperately needs.
Ben Goldsborough (South Norfolk) (Lab)
The Minister for Social Security and Disability (Sir Stephen Timms)
My hon. Friend is absolutely right. If a person is paid four-weekly, they receive 13 payments a year, so in one of the 12 monthly assessment periods each year, they are paid twice. That means that they probably get no universal credit that month, which completely messes up budgeting. I would be delighted to meet USDAW, and perhaps my hon. Friend, to discuss what we can do through our review of universal credit.
Steve Darling (Torbay) (LD)
I am sure all Members in this Chamber are aware of the Women Against State Pension Inequality campaign and the parliamentary ombudsman’s findings. Will the Secretary of State commit to making a statement in the House before Christmas on progress with her review of the ombudsman’s report?
The Parliamentary Under-Secretary of State for Work and Pensions (Emma Reynolds)
As the hon. Gentleman will know, the ombudsman took six years to consider a range of complex cases, and we are looking at their complexity. I was the first Minister in six years to meet representatives of the WASPI campaign. We hope to be able to update the House in the coming weeks.
Paul Davies (Colne Valley) (Lab)
Sir Stephen Timms
My hon. Friend is absolutely right to highlight that research from Carers UK. The Budget increased the earnings threshold, so people will be able to earn £10,000 a year from work and still claim carer’s allowance, and an extra 60,000 carers will become entitled to the allowance. It is a very big step forward.
Mike Martin (Tunbridge Wells) (LD)
Sir Stephen Timms
As I mentioned earlier, we are committed to reviewing universal credit. The way it works means that in each assessment period—each month—there is a new calculation based on the income that the person has received, as reported by His Majesty’s Revenue and Customs. However, I would be very happy to meet the hon. Gentleman to talk about how the system needs to be improved further.
Torsten Bell (Swansea West) (Lab)
Sir Stephen Timms
My hon. Friend is absolutely right. The threshold will increase on 7 April next year, and all current claimants will receive an annual uprating letter in the spring that will set out the new limit. As I mentioned a moment ago, 60,000 new unpaid carers will also become eligible for the allowance at that point.
Rosie Duffield (Canterbury) (Ind)
Given the new Government’s collective condemnation of the two-child limit over the eight years since it was introduced, which includes condemnation from many Government Members on Select Committees, will they at the very least commit to scrapping its heinous, sexist and frankly disgusting rape clause element?
Alison McGovern
The hon. Lady raises some of the worst aspects of the consequences of 14 years of Conservative Government. We will consider all those issues through the child poverty taskforce.
Dan Aldridge (Weston-super-Mare) (Lab)
Sir Stephen Timms
I congratulate my hon. Friend on being the Labour Member for Weston-super-Mare. I have met Liz Sayce, who will carry out the review, and she is raring to go. The terms of reference and timelines have not yet been set, but they will be in the next few weeks. As soon as they are, the details will be placed in the Library.
Suella Braverman (Fareham and Waterlooville) (Con)
Kevin is a pensioner in Waterlooville who has chronic obstructive pulmonary disease and struggles to breathe in the cold. His personal budget puts him, on average, about £55 above the poverty line, but he is one of many thousands of people who will be hit by the Government’s cruel cut to the winter fuel allowance. Political point scoring aside, what practical advice does the Minister have for Kevin to get him through the harsh winter ahead?
Emma Reynolds
I would suggest a number of things: the warm home discount scheme is available for those on low incomes, including pensions; we have extended the household support fund that local authorities can and should use to help people on low incomes; and in the longer term, the warm homes plan will help to make homes across the country more energy efficient and cheaper to heat. I will also say that thanks to the Government’s commitment to the triple lock, pensioners will be about £1,900 better off over this Parliament.
David Burton-Sampson (Southend West and Leigh) (Lab)
Emma Reynolds
As I said in answer to a previous question, we are looking at the form. Some 90% of applicants now apply online, but we note that the paper form is long and we are considering how we can simplify it.
Josh Babarinde (Eastbourne) (LD)
Eastbourne veteran Pauline was awarded military compensation for injuries that she sustained in the service of our country, but she said that that has caused her pension credit entitlement to plummet from £70 to just £10.42 a week. Will the Minister meet me to discuss her case and ensure that no veteran is penalised for their service to our country?
Emma Reynolds
The hon. Member is the second person to raise that issue and I happy to meet them both.
Euan Stainbank (Falkirk) (Lab)
How many current Department employees cannot receive further sponsorship due to the previous Government’s changes to the skilled worker visa salary threshold?
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
My hon. Friend asks an important question and I will be delighted to follow up with him in writing.
Nick Timothy (West Suffolk) (Con)
According to the census, 72% of Somalis here live in social housing, compared with 16% of the population overall. In answer to my written question, the Department says it is “exploring the feasibility” of publishing benefits claimed by nationality, which is important for a proper debate on benefits policy and immigration policy. Can the Minister confirm that that work is going ahead and tell us when the data will be published?
Andrew Western
The hon. Gentleman will be aware that nationality and country of origin are not factors in assessing benefit eligibility. We may look at that in future, but I would be delighted to follow up with him in writing about how we will take it forward.
Mr Mark Sewards (Leeds South West and Morley) (Lab)
When I speak to my constituents, from Lofthouse to Farnley, they are extremely concerned about the amount of money being lost to fraud and error in benefits. Can the Minister confirm a timeline and a plan to get back the £35 billion that has been lost since the pandemic?
Andrew Western
My hon. Friend is right to raise that issue. The spiralling nature of fraud in this country since the pandemic and on the last Government’s watch is totally unacceptable. We will bring forward a fraud, error and debt Bill in the coming months, which is part of a much broader package—the largest-ever package brought forward by any Government—to take out more than £7.6 billion of fraud over the forecast period.
Martin Wrigley (Newton Abbot) (LD)
Citizens Advice tells me that the DWP continues to start action on alleged overpayments more than six years after the event. That is longer than bank records are kept to prove otherwise. Does the Secretary of State think that that is fair and right?
Sir Stephen Timms
I am not sure whether the hon. Gentleman is asking specifically about carer’s allowance or about other benefits, but if benefits have been overpaid, the Department has an obligation to recover the money. What is important is that overpayments are identified sooner and that people are notified when there is a problem, so that we do not get the very large sums that have accrued in overpayments in the past.
Defence: 2.5% GDP Spending Commitment
(1 week, 3 days ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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James Cartlidge (South Suffolk) (Con)
(Urgent Question): To ask the Secretary of State for Defence if he will make a statement on his commitment to spend 2.5% of GDP on defence.
The Secretary of State for Defence (John Healey)
I congratulate the shadow Defence Secretary on securing the first Defence urgent question of the new Parliament. Previous Defence Secretaries answered just two urgent questions in the whole of the last five years. Although I cannot promise to answer every future UQ, I wanted to answer the hon. Gentleman’s first one today to underline just how seriously I take our Department’s responsibility to report to this House.
The Government have a cast-iron commitment to spending 2.5% of GDP on defence. We promised it in our manifesto at the election, the Prime Minister promised it at NATO in Washington in July, and my right hon. Friend the Chancellor promised it in the Budget two weeks ago, as well as announcing a £3 billion boost for defence spending next year to start to fix the foundations for our armed forces. That, of course, is on top of £3 billion each year for Ukraine. I remind the House that the last time this country spent 2.5% of GDP on defence was in 2010, with the last Labour Government—a level not matched in any of the 14 Tory years since.
Everyone agrees that defence spending must increase to match and deal with the threats we face. One of our very first acts as a Government was to launch the strategic defence review, which is working at pace to look at the threats we face, the capabilities we need and the resources we have available. It is not just about how much we spend, but about how we spend it. The Prime Minister said at NATO that our plan in the SDR will come first, and then we will set out the pathway to spending 2.5%; the Chief Secretary to the Treasury said yesterday that this will come in the spring.
Today is Armistice Day. At the eleventh hour, I had the honour of laying a wreath at the Cenotaph. Today is a reminder of what is at stake in this new era of insecurity; a reminder that our dedicated servicemen and women, around the clock, around the world, work to keep us safe; and a reminder of the ultimate sacrifice that so many have made in the past so that we may live in freedom today. We will remember them.
James Cartlidge
Thank you for granting this urgent question, Mr Speaker, especially on Armistice Day. I am grateful for the Secretary of State’s response, but he keeps going back to 2010 when we spent 2.5%. That is true, but he says it without adding the fact that his Government had bankrupted the country. In fact, I asked the House of Commons Library about this. The Institute for Fiscal Studies has confirmed that if Labour had returned to government, it was planning cuts to the defence budget of 20% to 25%.
But this question is about today. The threat picture is far graver than it has been for many generations, as the Chief of the Defence Staff confirmed at the weekend. As the Secretary of State says, the Labour party committed in its general election manifesto to a
“path to spending 2.5 per cent of GDP on defence.”
The Prime Minister said shortly after taking office that it was “cast iron”, which the Secretary of State has repeated today.
With President Trump’s election victory, there will inevitably be a greater focus on what more European NATO members can do to boost Europe’s own defence, but yesterday the Chief Secretary to the Treasury and this morning the Secretary of State himself were unable to say whether the Government would deliver on 2.5% in the current Parliament. In addition, yesterday The Sunday Times reported that Defence Equipment and Support in Abbey Wood has effectively been instructed to avoid any new procurement at all for the rest of this financial year.
Spending 2.5% is not an end in itself. The key reason that in April we set out a fully funded multi-year pathway to 2.5% was to enable the Ministry of Defence to procure, at pace and at scale, the munitions that we need to urgently replenish our stocks to warfighting levels. With the whole world wanting to buy more munitions, we cannot afford to delay any further.
I have key questions for the Secretary of State, because at the same time we are having this debate, there are a whole load of new burdens coming for the MOD which it will have to cover. In which financial year does he expect the share of GDP spent on defence to start rising significantly, and will he guarantee to hit 2.5% in this Parliament—yes or no? Not including existing programmes, is it true that there is a freeze on new procurement of defence equipment and support for the rest of this financial year? Will the MOD be 100% compensated by the Treasury for higher employer national insurance contributions and for the cost of increasing continuity of education allowance, and will service families be 100% compensated for the extra VAT on school fees? Penultimately, on Armistice Day can the Secretary of State absolutely rule out surviving spouses of service personnel being taxed on death in service benefits? Finally, on the Chagos islands, in the Department’s written answer to me it refused to say how much the MOD will contribute to renting back our own military base, so this is a very simple question: the Secretary of State will not tell us how much it is going to cost, but does he know how much it is going to cost?
Mr Speaker
Please remember that when I grant urgent questions, the time each person has is limited. It is two minutes for the main Opposition party and one minute for the other Opposition party.
John Healey
Fourteen years the Conservative Government had to increase defence spending to 2.5% of GDP, and there was not a plan or a pathway from the last Government, as the shadow Defence Secretary tries to claim. It was a political ploy that was announced four weeks before they called the general election. It was unfunded, and it was a con on the armed forces and on the British people, who gave their answer emphatically by sweeping away Tory MPs in many of the proudest military communities and constituencies across the country.
On the shadow Defence Secretary’s accusations about a total spending freeze, I am putting in place a grip on the out-of-control spending that the last Government left. We are securing value for money, we are cutting waste and we are getting a grip on defence spending in a way his Government did not.
We greatly value the continuity of education allowance and greatly recognise the role it plays in helping avoid disruption to the education of the children of serving personnel. In line with how the allowance operates, we will continue to pay up to 90% of private school fees following the VAT increase in January. By uprating the cap, we will take account of any increase in spending.
On the Chagos islands, of course I know the details because I was heavily involved in the negotiations. This secures Britain’s military base, and it secures a military base for our US allies, which is why they welcomed it so strongly. I have said to the shadow Secretary of State and to the House that when it debates the treaty, this House will have the full information.
Nobody knows better the defence inheritance that 14 years of Conservative government have left us for the past four months than the shadow Defence Secretary: he was a Defence Minister at the heart of the problems, with billion-pound black holes, service morale at record lows, and a crisis in the recruitment and retention of personnel. Never again must a Government leave our armed forces in a worse state than they found them, and this new Government will make this country more secure at home and strong abroad.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
We live in an increasingly dangerous and volatile world, with hundreds of thousands of people dying or being injured on our own continent in Ukraine, and wars and conflicts raging in the middle east, Africa and beyond, not to mention the increased nefarious activity in the grey zone. Without a shadow of a doubt, we are dealing with exceptional circumstances and we need to grasp the gravity of the situation. I have a great deal of time and respect for the Secretary of State because I know that he gets it, but do others in government understand the gravity of the situation, because we need clarity? We need a timetable so that not only our allies, but those in our defence community, know where we are heading.
John Healey
Yes, they do. Everyone agrees that defence spending must increase, and it is increasing under this Government. It increased in the first Budget of this new Government by nearly £3 billion for next year. Alongside that is the cast-iron commitment that we are a Government who will set a path to spending 2.5% of GDP on defence.
Helen Maguire (Epsom and Ewell) (LD)
We are deeply concerned about the impact of the US elections on Ukraine and Europe. President Trump is an unreliable partner and, within days of his election, US support to Ukraine is regrettably under question. Clearly the UK needs to urgently set out a path to spending 2.5% of GDP on defence. We need to lead in Europe. Does the Secretary of State agree that the previous Government’s legacy on our Army, which is the smallest since the Napoleonic era, is deeply regrettable? Will he commit to securing a UK-EU defence and security agreement, as was on the table while Theresa May was Prime Minister? Will the Government convene a summit on saving Ukraine, to begin the process of seizure of frozen Russian assets, so that the UK and our European allies can support Ukraine regardless of the path the US takes?
John Healey
We do not need a summit to release the interest on the frozen assets—the corrupt Russian money—as we are doing that already. The Chancellor and I are working closely on that, and we have announced that, from early next year, £2.3 billion will be available for Ukraine for that purpose. I give the hon. Lady the assurance that we will pursue a UK-EU security pact, alongside the deep bilateral agreements we have already started to strike, including the one last month with Germany, which was the most comprehensive defence agreement this country has signed in many years. Finally, the hon. Lady is right—I have argued this before—that at a time of increasing global threats, European nations in NATO must do more of the heavy lifting. We must be prepared to spend more on defence, but we must also be prepared to work together to increase the level of deterrence we can offer to those who would do us harm.
Dan Carden (Liverpool Walton) (Lab)
Was President Trump not right in his first term, when he pushed NATO countries to increase defence spending? The numbers have gone from six countries meeting the 2% target back in 2021, up to 23 countries meeting the target now. Is this not serious, because if President Trump makes decisions on Ukraine in his second term, we might be faced with a choice either to accept those decisions or to step up and ensure Europe’s defence ourselves?
John Healey
I welcome the fact that 23 NATO nations will hit the 2% spend this year. I regard that as a floor, not a ceiling. The UK, under Governments of both parties, has always spent well above and set the pace for other European countries. We will continue to do that, because European countries in NATO must take on more of the NATO leadership. We are determined that the UK will do that, which is why we have said that our approach to defence will be a NATO-first policy. We will, wherever we can, look to be first in NATO, so that we set the pace on the sort of transformation to the better equipped, better able and more lethal forces that our nations need to deter adversaries and to defend ourselves if required.
Sir Julian Lewis (New Forest East) (Con)
The Secretary of State is right that we used to spend a lot more than 2%: in the 1980s we spent between 4.5% and 5.1% of GDP on defence. Does he share my concern at what I heard on the radio this morning, when a Labour politician in another place was saying that he could see an outcome in Ukraine whereby Russia gets to keep the territory it has occupied, while Ukraine does not get any guarantee of joining NATO but merely some more security assurances? We know what happened last time with the security assurances previously given. Does the Secretary of State agree that, whether we spend 2.5% on defence now or in the near future, it is important that whoever we send to Washington does not capitulate in advance?
John Healey
The right hon. Gentleman made the important point, implicitly in his question, that it is the Ukrainians who are fighting and the Ukrainians who will make the call about whether to talk and on what terms. Our task, as one of the leading supporters of Ukraine and its fight for sovereignty, freedom and its own future, is to support it and to step up our support for its fight, and then to step up our support, if necessary and whenever required, in any negotiations, as well as to play our part, as we have made the commitment to do, in providing any security guarantees for the longer term.
Ms Marie Rimmer (St Helens South and Whiston) (Lab)
Russia has gone to war in Europe, starting in Ukraine. It was America and Britain that saved Europe in the last war; it looks like this will be the same. Europe simply must step up. What discussions has the Secretary of State had with Lloyd Austin about America’s role in the way forward?
John Healey
To be quite honest with my hon. Friend, it is a little early to have discussions with America. It is less than a week since the presidential elections and the current Administration have more than two months to go. As she would expect, I am in detailed discussions with the current Administration and my counterpart there, in particular about how we together, as two of Ukraine’s leading allies, can step up our support over the couple of months ahead.
In the future, I expect a President Trump-led Administration to recognise that it is in America’s interests, NATO’s interests and the interests of all countries that believe in the international rules-based order and a stable and secure peace that Putin does not prevail, because if large countries like Russia are able to redraw international boundaries by force, that sends a signal that undermines the security of all nations. If reports are right that President Trump has already spoken to President Putin and warned him against the escalation that we see from Russia in Ukraine, that is a good first step and early sign.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
The right hon. Gentleman knows that I have the highest respect for him, even if we have occasionally clashed across the Floor. I ask him this simple question. In China today, one shipyard building naval vessels is out-building the whole of the United States’ naval capability—and it has many hundreds. Given that, and the threat from Russia, Iran and this totalitarian state axis, if Lord Robertson comes back and spells out exactly what I believe he will—that this is the biggest threat we have faced since the cold war—will the right hon. Gentleman not ask but tell the Prime Minister that the No. 1 responsibility is the defence of the realm, with 2.5% now?
John Healey
The Prime Minister does not need me to tell him that the first duty of any Government and of this Government is to defend the country and keep our citizens safe. He will not need me for that because he commissioned the strategic defence review; my job is to oversee it successfully. He will not need any persuading of the arguments, assessments of threats and capability recommendations that that strategic defence review, externally led by Lord Robertson, is likely to produce.
Mr Toby Perkins (Chesterfield) (Lab)
My right hon. Friend is absolutely right not to give a scintilla of credibility to the idea that the Conservative party, having spent 14 years never reaching 2.5%, would do that if only it had one more chance. He is also right that what is important is not just identifying more money for defence spending but making sure that we start spending it better. Can he say any more about what he is doing to ensure that the huge wastage in defence procurement that we saw under the Conservatives is brought into hand under his stewardship?
John Healey
I am almost tempted to encourage the shadow Defence Secretary to answer that question, because he was Minister for Defence Procurement until four months ago, so he is principally responsible, for instance, for the fact that only two of the 49 largest defence projects are on time and on budget. He failed to fix what the Public Accounts Committee of this House—an all-party Committee—termed the “broken” procurement system that has been failing our forces and failing British taxpayers. This is a deep task of reform. It is not a glamourous task, but I have made it one of my first priorities as Defence Secretary.
Mike Martin (Tunbridge Wells) (LD)
Is the UK able to provide an armoured division to NATO on an enduring basis?
John Healey
The armed forces will always respond to the requirements placed on them. We will always seek to fulfil our NATO obligations. One reason why I conducted a NATO test in the first 100 days is that I was concerned that part of the failures of the last 14 years had led to our falling short. That is part of the inheritance that we take on as a new Government. My determination as Defence Secretary is that we make our forces fitter to fight and better able to deter and to play a leading part in NATO, as it steps up our level of deterrence and defence across the 32 nations.
Johanna Baxter (Paisley and Renfrewshire South) (Lab)
Today, on Armistice Day, we honour those who have served, those who have fought and those who have made the ultimate sacrifice to protect the freedoms we enjoy. Does the Secretary of State agree that today and every day we must remember everything that our armed forces are doing to keep us safe? Will he come to my constituency to meet Sight Scotland Veterans, an incredible charity that provides amazing support to all our visually impaired veterans?
John Healey
At the risk of upsetting my diary secretary, I welcome the opportunity to visit my hon. Friend’s constituency and her local veterans group. She is right that, today of all days, we remember not just those who gave their lives for the way of life we enjoy today but the serving personnel—the men and women in our armed forces around the world. We currently have 10,000 personnel on operations in 50 different countries around the world. This is a reminder of their work day in, day out to keep us all safe.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
Let me assure the Secretary of State that those of us who have followed the defence debate over the last 10, 20 or even 30 years know that he takes these matters extremely seriously and understands the scale of the challenge that we face. In that vein, I encourage him to start telling the truth: that we will have to spend far more than 2.5% of GDP on defence within quite a short number of years. A former Chief of the General Staff has warned that this country might be directly at war within the lifetime of this Parliament. May I suggest that the Secretary of State use his friends throughout this House to influence both his Government and the Treasury influences on the Conservative side, because we are going to have to bust a gut for a major rearmament programme that we have not seen in this country since the 1930s?
John Healey
The hon. Gentleman has been consistent in his arguments, and I welcome his contribution. The Treasury will have noted it, and will probably take it as an early representation for the next Budget. In the meantime, I will ensure that the strategic defence review starts with the threats that we face: war in Europe, conflict in the middle east and growing threats globally, as well as Russian aggression more widely beyond Ukraine. We will ensure that we are able to match the capabilities that we develop with the threats that we face, and we will do so within the resources that we have available.
Tim Roca (Macclesfield) (Lab)
My hon. Friend the Member for Chesterfield (Mr Perkins) made the important point that the new Government inherited £167 billion-worth of projects, none of which were rated green by the National Audit Office. Does the Secretary of State agree that more money is one part of the equation, but spending it well is the other part?
John Healey
Indeed; that is one reason why, early doors in Washington, the Prime Minister not only reaffirmed our iron-clad commitment to increasing defence spending to 2.5% but said that the strategic defence review comes first, as a pathway to 2.5%. That is exactly so that we can ensure that we increase what we spend, but also spend it better.
Dame Caroline Dinenage (Gosport) (Con)
In 2023, I asked the Secretary of State’s colleague, the right hon. Member for Houghton and Sunderland South (Bridget Phillipson), who is now the Education Secretary, how Labour’s plans for VAT on school fees would impact the continuity of education allowance for forces families. I was told that I
“need not be concerned about what we are discussing today.”—[Official Report, 11 January 2023; Vol. 725, c. 570.]
It is two years on and VAT on school fees goes live in January, but details of the rates of continuity of education allowance still have not been articulated to the forces families in my constituency. As the proud MP for a military constituency, I can tell the Secretary of State that I am concerned and my constituents are concerned. What is the plan to better communicate with them?
John Healey
I am sorry that our confirmation of the steps we are taking from January has not reached the hon. Lady. I will ensure that they are. There will be an uprating in the continuity of education allowance, which will ensure that our armed forces who take advantage of the allowance will be able to get up to 90% of the school fees they have to pay covered by that allowance, and that that takes into account any rise in school fees as a result of the VAT being levied.
Andrew Lewin (Welwyn Hatfield) (Lab)
The shadow Secretary of State referenced his so-called plan for defence spending back in April this year, a plan that the Institute for Government said did “not add up” and was “fictitious”. Does my right hon. Friend the Secretary of State agree that under this Labour Government we will never make funding commitments to our armed forces unless they are fully funded?
John Healey
I do. My hon. Friend is right. The Institute for Fiscal Studies described that so-called plan, the election pitch four weeks before the Conservatives called the election, as “misleading” and an empty promise. I give the House the undertaking that the plans we put in place will be openly discussed in this House. We will ensure that we can match the resources available to our plans.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
Defence professionals across Whitehall will have their heads in their hands at this Government’s commitment to 2.5% at some point and when fiscal conditions permit. To fail to commit on defence investment with the multiple security threats facing us, from the Ukraine war to the middle east and a plethora of global cyber-threats, is strategically illiterate. Those threats will not wait for the Chancellor to get a grip, so what urgent steps will the Secretary of State take with the Chancellor to ensure at least the 2.5% promised by the Labour party on defence is spent when the threat assessment demands it, which is now, and not when the Chancellor feels it to be convenient?
John Healey
Mr Speaker, I am going to take what I can from the hon. Gentleman, which is an SNP welcome and an urging for an increase in defence spending. That will happen under a Labour Government. The Scottish workforce, the Scottish military and the Scottish-based military will play an important part in the defence of this country in the future.
Kevin Bonavia (Stevenage) (Lab)
We have heard some chutzpah from the shadow Secretary of State for Defence today. The Conservatives had 14 years to get to 2.5%, yet they demand it from us now. I am very pleased that the Secretary of State has set out how we will get towards 2.5% after our strategic defence review, but in the meantime we have to clear up the mess the previous Government left behind. Can he assure the House that he and his colleagues are working to clear up the waste and mismanagement they found when they came to the Ministry of Defence?
John Healey
I can indeed. It was one of my predecessors as Defence Secretary who admitted to this House that under 14 years of the previous Government the armed forces had been “hollowed out and underfunded”. That is no surprise when we look at the record of the Conservative Government when they came into office in 2010, compared with the record of this Government. Our first Budget has a £3 billion boost to defence. Their first Budget had a £2 billion real-terms cut. Our manifesto had a commitment to increase defence spending to 2.5%. Their first five years in government saw an 18% real cut in defence spending, which laid the foundations for the degradation and the poor state of our armed forces, and the poor state of the finances that we have now inherited.
Dr Andrew Murrison (South West Wiltshire) (Con)
The last Government extended to state school pupils the undoubted advantage of the combined cadet forces, which had been the almost exclusive prerogative of private school students. Why, then—
Mr Speaker
Order. May I ask the right hon. Gentleman to look at me while he is asking his question?
Dr Murrison
Why, then, Mr Speaker, did this Government decide, last week of all weeks, to defund combined cadet forces and thus remove the advantages that state school pupils are now enjoying as a result of decisions taken by the last Government?
John Healey
I simply do not recognise the right hon. Gentleman’s description of any decisions that we have taken, and it would run contrary to what he and I agree is the value of combined cadet forces. Most of us, in our constituencies, have contact and working relations with good cadet forces that give young people opportunities that they simply would not have at school or in any other walk of life. They have an important part to play in the future of individuals, and also in the wider understanding of our armed forces.
Gregor Poynton (Livingston) (Lab)
I welcome the Secretary of State’s recent announcement of the Armed Forces Commissioner Bill—a promise made and a promise being kept—but does he agree that this is just one part of the puzzle when it comes to showing that we can support our troops as they work to keep us safe?
John Healey
Indeed I do. My hon. Friend is a strong champion in his constituency in Scotland for the armed forces and veterans. I greatly valued the visit that I was able to make with him before the election to talk to veterans in his constituency and talk about our plans to increase support in respect of employment, mental health and housing for the future.
Suella Braverman (Fareham and Waterlooville) (Con)
One of the big achievements of the last 14 years was the delivery of the aircraft carriers, both of which are stationed in Portsmouth, near my constituency. However, it remains clear that they are underpowered. We need more Type 45s, more Type 26s and more Type 31s. If the Government are serious about the 2.5%, when will they set out their plan to invest in our Royal Navy and, in particular, our aircraft carriers, so that our carrier strike group can provide a world-class capability?
John Healey
The aircraft carriers constitute an important defence programme. We are considering the threats that we face and the future capabilities that we need as part of the strategic defence review, which will report in the spring, and we will follow that within our clear path and our commitment to spending 2.5% of GDP on defence, just as the Chief Secretary to the Treasury told the media yesterday.
Peter Swallow (Bracknell) (Lab)
Today is Armistice Day, which provides an important moment in which to pause and remember the huge amount that our armed forces have done to keep us safe. On this day, does the Secretary of State agree that we must not only set out our ironclad commitment to 2.5%, but support the armed forces, their families and our veterans?
John Healey
Indeed. The forces families who support those who put on the uniform are too often overlooked, which is one reason why we introduced legislation last week for an independent armed forces commissioner, as we promised to do at the election. The holder of this post will report directly to Parliament, will have access to personnel, sites and information, and will be able to look into the concerns of not just those who serve but the families who support them, in order to improve service life for the future.
John Glen (Salisbury) (Con)
May I commend to the Secretary of State the role of Ploughshare, which is used to deal with the increasing commercialisation of opportunities at the Defence Science and Technology Laboratory at Porton Down, in my constituency? In the context of the Ministry’s holistic review, which is now under way, will he undertake to ensure that that organisation is not held back from extending its opportunities to commercialise assets emerging from MOD research?
John Healey
One of the weaknesses in our system is that the often-excellent innovation, research and development does not get developed, invested in or commercialised, so potentially brilliant small companies do not grow and expand. I have to say to the right hon. Gentleman that I am not familiar with Planshare—[Interruption.] Ploughshare. I did not even hear the name correctly. If the right hon. Gentleman would like to write to me with some details, I would welcome his letter and certainly have a look.
Graeme Downie (Dunfermline and Dollar) (Lab)
Like others on this side of the House, I welcome the increase in defence spending that was announced in the Budget, after years of Tory cuts to our armed forces. Does the Secretary of State agree that we need to increase defence spending in response to emerging threats around the world, from Ukraine to the middle east and Asia-Pacific, and that the figure of 2.5% should be kept under review in the light of changing events around the world?
John Healey
Yes, I do. My hon. Friend makes the important point that the starting point for any defence planning must be the threats that we face. At the heart of any defence plans must be the people who serve and on whom we depend. I make that heartfelt point particularly forcefully today, on Armistice Day.
Richard Foord (Honiton and Sidmouth) (LD)
In 2021, when Boris Johnson was Prime Minister, defence spending in the UK was 2.3% of GDP. In 2022, following Russia’s full-scale invasion of Ukraine, defence spending was 2.3% of GDP. Now that an isolationist President-elect is about to go into the White House, defence spending is 2.3% of GDP. When will defence spending rise beyond 2.3% of GDP?
John Healey
I am not sure that I heard the hon. Gentleman welcome the fact that this Government have made a commitment to set a path to increase defence spending to 2.5% of GDP—a level that we have not had in this country for the last 14 years. Everyone agrees that an increase in defence spending is needed, and it is needed in order to deal with precisely the increasing threats that he cites.
Mr Mark Sewards (Leeds South West and Morley) (Lab)
I welcome the Opposition’s new-found enthusiasm for meeting the 2.5% defence spending target, especially given that they were not able to meet it even once in 14 years. I gently remind them that the last party in decades to meet the target was the Labour party. Does the Secretary of State agree that not only do we need to increase our spending to 2.5% of GDP, but we must remain steadfast in our support for the people of Ukraine to protect the entire continent of Europe?
John Healey
I do agree. I pay tribute to the last Government for ensuring that the UK led in providing support for Ukraine. As a new Government, we have been determined to continue that over the last four months. We have stepped up the military aid that we are supplying to Ukraine. We have sped up that support in a way that President Zelensky now cites as a model for other countries, and we are now spending more on military aid to Ukraine than ever before—£3 billion this year, next year and every year for as long as it takes, plus the £2.3 billion that we will be able to release from the frozen assets seized from the corrupt regime of Putin’s Russia.
Ben Obese-Jecty (Huntingdon) (Con)
I would urge the Secretary of State to exercise a little bit of caution when referring to defence spending under the last Labour Government. As someone who served in Iraq and Afghanistan, and who used some of the kit and equipment that was issued then, I know that there were some serious concerns at the time, particularly around the Snatch Land Rovers, for example. I spent a lot of time driving around Basra in one of those, and a lot of people lost their lives in those vehicles, so I would exercise a little caution and restraint.
My question is on a different topic: the CEA. How much will meeting the additional cost of VAT cost the MOD from its own budget?
John Healey
We will publish the financial figures for the CEA in due course and in the normal way.
On the hon. Gentleman’s previous point, I am very conscious of what he and those who served in Afghanistan and Iraq faced. I am very conscious that at times during the last Labour Government, as with any Government, the kit and equipment was lacking. That is why we tried to replace the vehicles, using urgent operational requirements at the time. Although we inevitably fell short in some areas, we were spending 2.5% of GDP on defence in 2010, when we were last in government, and the strength of the full-time British Army was over 100,000 soldiers.
John Slinger (Rugby) (Lab)
I associate myself with the comments of hon. and right hon. Members about Armistice Day. During the previous Government, the size of our armed forces shrank from 192,000 to 138,000—a 28% decrease. Does my right hon. Friend agree that it will take this Labour Government to put our defences back on the firm footing that we need in an increasingly dangerous world after many years of underinvestment?
John Healey
My hon. Friend is right. He is pointing to armed forces numbers and to the heart of a deep, long-running problem: the crisis in recruitment and retention in our forces. Recruitment targets were set every year for 14 years and missed every year for 14 years. We are taking steps to start to deal with this, including through the largest pay rise for our armed forces for over 20 years, so that I can now stand here as the first Defence Secretary to be able to say that all those in uniform are now being paid at least the national living wage. The introduction of an independent armed forces commissioner to improve service life will start to reset the nation’s contract with those who serve and the families that support them.
Jeremy Corbyn (Islington North) (Ind)
Last year, global arms expenditure reached $2.4 trillion, the highest level since the end of the cold war. UK arms expenditure went up, and it will no doubt go up a lot more because of the statement that the Secretary of State has made today. He rightly mentioned the conflict in Ukraine and the conflict in Gaza, and I think he could have mentioned Sudan as well. What actions are he and his Government taking to try to bring about a cessation of those conflicts and of global tension to allow defence expenditure to be reduced globally so that some of that money can be used to deal with the serious environmental and inequality issues that face this planet?
John Healey
We cannot wish away the threats, and we cannot wish away the conflicts, which is why it behoves any Government to ensure that we have the armed forces that are capable and equipped to deter those who would do us harm. On the question of conflicts, our support for Ukraine is steadfast. That conflict could be ended today if Putin withdrew from his illegal invasion of that sovereign country. On the middle east, we have argued and worked—in opposition and now in government—for a ceasefire in Gaza that would allow the immediate release of all hostages and the necessary flooding of humanitarian aid to Palestinian civilians. That is a first step towards a political process that must be directed towards a two-state solution, which is the only guarantee of long-term peace and security in that region.
Alistair Strathern (Hitchin) (Lab)
I had the privilege of starting my day in Shefford, just up the road from the Chicksands base in my constituency, marking Armistice Day with local veterans and the wider community. I welcome today’s commitment to ensure that we finally have a credible plan to get to spending 2.5% of GDP on defence, but as the Secretary of State has set out, it is about not just what we spend but how we spend it. The last Government spent millions on armed forces accommodation but all too often left the forces in my constituency in shocking situations. Will this Government be different in ensuring that our armed services can finally access the quality of accommodation they deserve on local bases?
John Healey
My hon. Friend is right. Time and again surveys of armed forces personnel show that poor-quality housing, which would be intolerable in civilian life, is cited as a reason for low morale and an intention to leave the forces early. This is an underlying problem that we will fix. We will not be able to do that overnight but we are determined that we will provide the accommodation and housing that our heroes in uniform have a right to expect.
David Reed (Exmouth and Exeter East) (Con)
I completely agree with the Defence Secretary that defence spending must increase to meet the threats we face. Given that the threats are visible and increasing, I found myself nodding in agreement with Admiral Lord West’s recent Guardian article, in which he said we should be bold and move directly to spending 3% of GDP on defence. Does the Defence Secretary agree with his revered Labour colleague’s assertion? If not, why not?
John Healey
In our first Budget, we increased next year’s defence spending by nearly £3 billion. We have a cast-iron commitment to increasing defence spending to 2.5% of GDP—a level that, over the past 14 years, Conservative Governments simply never matched.
Martin Wrigley (Newton Abbot) (LD)
The Secretary of State rightly refers to R&D spending and small firms, yet small firms in my constituency tell me that spending has dried up. Can he assure me that this is just a blip and that normal flow will resume as soon as possible?
John Healey
I think the shadow Secretary of State will agree that one of the necessary reforms to our procurement system, especially in an era in which innovation and technological development will be at an increasing premium, is to do much more to support small and innovative firms, perhaps including some in the hon. Gentleman’s constituency. We have to reform our procurement system to ensure that happens, and we will.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his answers to all the questions.
I seek an assurance that our spending will focus not only on cyber-security, which is obviously essential, but on recruitment and retention. That spending must take account of the fact that, in April 2024, the Army fell below its target size for the first time since it was set, meaning that all three service branches are currently below target—the Army by 1%, the Royal Navy and the Royal Marines by 5%, and the RAF by 10%. Overall, the UK armed forces were 5,440 personnel, or 1%, below target. We need an assurance on recruitment.
John Healey
The hon. Gentleman sets out some of the details and dimensions of the crisis we face in recruitment and retention. We will start to turn that around, but we will not be able to do so straightaway. We have made a start with proper, fully funded pay awards for our armed forces this year. We are also making a start with new legislation to set up an armed forces commissioner to improve service life. We will take further steps to renew the nation’s contract on the support we can offer to those who serve and the families who support them.
Point of Order
(1 week, 3 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
James Cartlidge
On a point of order, Mr Speaker. You know how strongly the House feels about the Government’s decision on the Chagos islands. The Defence Secretary has made it very clear today that the Government know what the cost of that settlement will be to the Ministry of Defence. Many colleagues have repeatedly asked, through oral questions and written questions, what the cost will be. This is public money. Given that the Government refuse to tell us what the cost will be, can you advise us on how else we can probe to find out how much public money will be used?
Mr Speaker
The hon. Gentleman has certainly put that question on the record again, and I am sure the Secretary of State is listening very carefully. He may wish to respond—or perhaps not. I am sure the shadow Secretary of State will not give up at this stage and will find other ways to seek that information, which I am sure will be forthcoming at some point. I am sure he will continue to ask the question.
Rail Performance
(1 week, 3 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Transport (Louise Haigh)
With permission, Mr Speaker, I shall make a statement about rail performance. I welcome the shadow Secretary of State for Transport, the hon. Member for Orpington (Gareth Bacon), to his place. I am sure the Opposition will be interested in what we have to update the House about this afternoon.
After 14 years of neglect, our inheritance was a railway that was failing its passengers, with cancellations at a 10-year high and punctuality that is consistently inconsistent across the network. Back in 2015, cancellations represented around 2% of all services, but thanks to our inheritance of extraordinary failure, that doubled to 4% when the last Government left office. The situation is holding back our economy, stifling our businesses and making life miserable for passengers. That is why, as part of this Government’s public service reform agenda, we are pushing ahead with the biggest overhaul of our railways in more than 30 years. I am grateful to you, Mr Speaker, for this opportunity to update the House on the progress we are making.
As Members will be aware, the Passenger Railway Services (Public Ownership) Bill is making its way through the other place. It will allow the Government to give three months’ notice to the first private train operating company to be taken into public ownership, which we will announce as soon as Royal Assent has been achieved. No one has ever pretended that public ownership alone is a silver bullet. The people impacted by delays and cancellations, who can no longer rely on the train to get where they need to, do not care who owns the trains—they care whether they are working or not. Under the model we inherited, no one could argue that they were working, so we will soon launch our consultation setting out plans for unification across the railway.
As part of that, Great British Railways, as the single directing mind, will plan services on a whole-system basis, to better deliver for passengers and freight customers, unlock growth and provide the services a modern, efficient railway should. That will lay the groundwork for the introduction of the railways Bill, later this Session, which will establish Great British Railways and end the fragmentation that has hampered our railways for over 30 years of privatisation.
But we do not want to wait for legislation. The Government are already making improvements and taking steps to deliver reform across the railways. I have appointed Laura Shoaf as chair of shadow Great British Railways, bringing together Network Rail, the publicly owned train operating companies and my Department to drive better integration now. Working with operators already in public ownership, we are seeking to drive savings by eliminating duplication and deliver the improvements that passengers want, such as allowing tickets to be accepted across those TOCs in public ownership during disruption.
Shadow GBR gives us the tools to assess the structure of the timetable, question resource plans and review performance measures and targets. We are using those tools to unlock the punctuality and reliability that passengers deserve across the country. For example, Southeastern is now performing much better. Its cancellations are low, with its punctuality ranking among the top five operators contracted to my Department, and that level of service will increase by 44 additional trains per day when the timetable is updated in December. That is what shadow Great British Railways is delivering now.
We are demonstrating what integration between track and train can deliver for passengers. Take those who rely on Euston station, for example. Indecision on HS2 left passengers with fewer platforms and greater overcrowding, victims of the so-called “Euston dash”. Convening Network Rail and train operators at Euston in the interest of passengers is an excellent example of the benefits that our reform agenda can achieve. Euston now not only has an integrated station management team, but a 100-day plan of rapid improvements that puts the interests of passengers first and individual organisations second. Platform announcements are made earlier, crowding has been reduced and, yes, the advertising screen has been temporarily switched off.
Delays and cancellations were not the only inheritance. For two years, strike followed strike, and disruption followed disruption, in the longest industrial dispute on our railways. I have made it my priority to get around the table, reversing the previous Government’s antagonistic approach by resetting industrial relations and settling the pay disputes that saw the country grinding to a halt. I am working with the sector to speed up training and accelerate the driver recruitment pipeline, which will reduce the railway’s reliance on rest day working agreements and lower the burden on taxpayers. Settling this saga allows us to move forward with long-overdue negotiations on workforce reform, bringing our railways into the 21st century. That is what moving fast and fixing things looks like.
We are putting passengers first and, today, I can inform the House that since the resolution of the LNER driver dispute, we have seen green shoots emerging, with the number of LNER cancellations falling. Not only have cancellations due to a lack of driver resource dropped to near zero as a direct consequence of getting around the table with unions, but revenue is £15 million higher for the recent rail periods this year versus the same periods last year. Overall cancellations are down from 7% to 5%, and LNER has run 100 more train services in the last four weeks than in the comparable period last year.
Elsewhere, passengers will see a tangible impact on reliability on Northern Rail trains. Thanks to our agreement on rest day working, hundreds more driver shifts have been covered this weekend, cutting cancellations now and in the long run. At TransPennine Express, operator-caused, on-the-day cancellations averaged around 2% in the last year, compared to 5% in the year before it was taken into public ownership. On CrossCountry, we took immediate steps to implement a remedial plan to reduce its cancellations and get services back on track. Its reduced timetable has brought greater stability, and I expect even greater reliability in the long term as the full timetable returns today.
Those are early signs of what happens when a Government get a grip and put passengers at the heart of decision making. Resetting industrial relations is already having a direct impact on better services, but it will take time to pass all the benefits on to passengers. We have to be clear-eyed about the problems, but we are committed to full transparency. I can announce today that we will be fully transparent with passengers by displaying performance data at stations to demonstrate how the railway is working and to allow the public to hold us to account as we deliver change. That is important, because the railway is a promise—a promise to passengers from the moment they buy a ticket that the train will arrive on time, as the timetable says.
While there are encouraging signs, I am not naive to the reality that passengers will see only a broken promise so long as the departure board shows trains delayed and services cancelled. That is why I have approached the situation with the urgency it demands, including focusing on performance today; bringing together industry to make it clear that improvements that can be made now must be made now; and using every tool at our disposal to drive improvements as fast as possible.
At the same time, the root of the problem grows deeper. Decades of muddled decision making have left the railway fragmented. We have tolerated an unworkable system of track in one organisation and trains in another for decades too long. This Government will turn the page on that chapter of fragmentation. I have wasted no time in kick-starting the long-term reform that our railway desperately needs. We have wasted no time in bringing train operating companies under public ownership. As today’s figures show, we have wasted no time in getting around the table with unions and making change happen now. That is what moving fast and fixing things looks like, and I commend this statement to the House.
Gareth Bacon (Orpington) (Con)
I thank the Secretary of State for her statement and for sharing an advance copy. I agree that rail performance is a key concern to passengers throughout the country, and it is a fair criticism to say that several operators have consistently underperformed. That is why, when we were in government, we took action to improve performance on our railways, investing more than £100 billion to operate and enhance our railways since 2010, and electrifying more than 1,200 miles of track—compared to just 63 miles under the last Labour Government.
I am glad that the Government are taking forward the framework offered in the previous Conservative Government’s Williams-Shapps review. Having a more joined-up rail network should indeed deliver key improvements. However, it is disappointing that the Government have progressed with their plans for the effective nationalisation of the rail operators by ending private rail operator franchising, despite all the evidence pointing to the fact that that will be contrary to the aim of improving rail performance.
We know that while in some cases it has been necessary in the short term to bring rail operators into public control, it has not made the difference in performance that the Government would have us believe. It takes only a cursory glance at passenger rail performance statistics to see that some of the rail operators operating under public control have done little or nothing to improve cancellations or delays in relation to other operators. For example, the Secretary of State mentioned TransPennine Express and a decrease in cancellations since the operator was taken into public ownership, but she made no reference to delays. Data from the Office for Rail and Road show that in the four years prior to the train operator coming under public control, passengers faced an average of 8,130 delay minutes per month. From period 2 of 2023-24, when the operator was brought into public ownership, up to period 4 of 2024-25, average monthly delays have increased by 1,677 minutes, to 9,807 a month. In addition, for the year ’23-24, data shows that train operators run by private companies in England had an average on time rate of 64.36%. For train operators in public control, by contrast, the average was 57.7%—a difference of just under seven percentage points.
Public ownership is not the panacea that the right hon. Lady claims, so it is disingenuous for the Government to argue that wholesale public control of rail operation will do everything to improve performance, particularly for operators that are already performing well. Under the Government’s plans to end private rail operator franchising, the first contracts set to expire and be picked up by the Government are some of the highest performing franchises. The Government risk making the mistake of taking credit for comparatively strong performance, which will occur not as a result of their measures but as a result of the successes of the previous private franchising. That would mean the Government drawing the wrong conclusions from their actions, and it would have implications for future decision making.
It should be appreciated that the role of open access operators has been one of the greatest success stories within our rail network. It is therefore incumbent on the Government to provide greater clarity to the sector on how their plans for the rail network will impact on open access operators. It is also essential that the Secretary of State finally clarifies the long-term plan for rolling stock under the Government’s measures.
I appreciate that in Labour’s brave new world, all decisions are reflected through the ideological prism of “public good, private bad”, but there is a fundamental risk that the Government are taking ideological action to the long-term detriment of rail performance. Among our counterparts in Europe, it is widely acknowledged that rail privatisation has been successful in increasing passenger numbers, encouraging investment and controlling costs. In Italy, for example, prices have reduced by 31%, and Austria has witnessed a 41% increase in service frequency. There is a serious risk that the Government’s plans will take us backwards on those key areas without offering any promise of improvement on performance, or improved journeys or fares for passengers.
We all fully acknowledge the difficulties facing our railways, and nobody should accept poor performance —we have, unfortunately, seen that in some areas of our network—but merely enacting demonstrative but counterintuitive measures designed to communicate action is no substitute for making measured and pragmatic choices. For example, the Government and the Secretary of State have chosen to offer inflation-busting pay rises with no working practice reform in exchange. Without substantial working practice reform, it is deeply unlikely that the cost of the pay deals will be offset by improved performance, and the failure to introduce working practice reform will mean continued performance difficulties on our railways.
Can the Secretary of State offer a guarantee today that ending private rail franchising without implementing working practice reform will lead to demonstrably improved performance? If she cannot offer that guarantee, the Government should shelve the ideology and take a step back to pause and examine whether their package of measures will truly improve rail performance. It surely makes more sense to learn from the performance statistics; to understand from the experience of the continent and our past the improvements that the private sector can bring; and to prioritise the practical over the ideological.
Louise Haigh
I am grateful to the shadow Secretary of State for acknowledging that we provided the statement in advance, and I suggest that next time he reads it before he responds. He will have heard me say that public ownership is not a silver bullet, hence why we are setting out a substantial package of reforms. As I also mentioned, that includes substantial workforce reform, including developing training policies—that is one of the ways in which the recruitment of drivers has been really held back—and reducing reliance on rest day working agreements.
The shadow Minister might also want to check the latest statistics on TransPennine Express. It had the largest increase in punctuality of any operator contracted to my Department, including all those in private ownership. We have been clear that open access should continue where it does not abstract revenue from the overall network and where there is capacity. There have been good examples, such as Lumo and Grand Central, and we are very happy to continue working with them. We will publish a long-term rolling stock plan in due course.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Chair of the Transport Committee.
Ruth Cadbury (Brentford and Isleworth) (Lab)
The Transport Secretary’s statement is hugely welcome. Bringing privately owned train operating companies into public ownership as well as setting up GBR will inevitably add to her Department’s workload, so what preparations is she making to manage that additional workload?
Louise Haigh
I am grateful that my hon. Friend is concerned about my work-life balance—so am I. We are staffing up the operator of last resort, as it is currently known—we will shortly change its name, as it will no longer be the operator of last resort—and the Department has significantly increased its capability. Under the previous Administration, no one in government took responsibility for the running of the railways. We are taking a very deliberately different approach and, as passengers-in-chief, we will ensure that both the operator of last resort and the Department are sufficiently staffed up to manage the quick and successful transition of franchises into public ownership.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Mr Paul Kohler (Wimbledon) (LD)
I thank the Secretary of State for advance sight of her statement. I also welcome the new shadow Secretary of State, the hon. Member for Orpington (Gareth Bacon), to his position.
The Lib Dems welcome the Secretary of State’s statement that performance is improved, and commuters and businesses are relieved that industrial action has been curtailed. It is disappointing, however, that the unions were not required to agree any meaningful improvements to productivity as part of the settlement. Clearly, we are not yet out of the woods—or perhaps I should say the tunnel. Under the Conservatives, delays, cancellations and overcrowding became commonplace. Last year, more than 55,000 rush hour trains were either partly or fully cancelled—a 10% rise on the previous year, and the worst of any year since 2019. Although the latest news is welcome, there are many miles left to go on this journey. The Government’s policy of nationalisation is, as the Secretary of State herself concedes, no silver bullet. Earlier this year, the Office of Rail and Road found that four of the eight least reliable operators, with the highest cancellation rates, were public, while the three most reliable operators, with the lowest cancellation rates, were private.
I have three questions for the Secretary of State. First, what steps is she taking to ensure that the worst, rather than the best, private operators are nationalised first? Secondly, where a private operator’s performance is of a higher standard than that in the public sector, will she consider extending its contract? Finally, given the still shocking level of accessibility on much of the network, will she urgently provide an update on when the stalled Access for All programme will be back on track?
Louise Haigh
To confirm, we are working with the trade unions at the moment on productivity improvements. We are clear that some of the practices in place on the railways are not acceptable or fit for modern and efficient railways. In the pay deal, there was a side letter and agreement to work through training improvements, and we want to ensure that that is delivered. The previous Government’s approach meant that they not only failed to deliver any workforce reform improvements, but presided over the longest industrial dispute in our railways’ history, costing the taxpayer and passengers hundreds of millions of pounds.
The hon. Gentleman is right to point out that cancellations are high in the publicly owned TOCs. That is a result not least of the fact that the ones that are in public ownership were already the worst performing, and we need to look at how they have improved under public ownership. The real benefits will be brought about under Great British Railways, when we will be truly able to integrate track and train and deliver those improvements. We will set out the schedule for bringing the private TOCs into public ownership once Royal Assent has been given to the Passenger Railway Services (Public Ownership) Bill, but the right balance must be struck between performance and return for the taxpayer, because we are spending hundreds of millions of pounds in dividend payouts and management fees.
The hon. Gentleman is absolutely right to mention the Access for All programme and accessibility, which has not been good enough under Network Rail. I am happy to write to him about specific stations in the programme.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Everyone is praising my right hon. Friend to the heavens now that High Speed 2 will end at Euston. She is welcome to Old Oak Common in my constituency any time to have a look-see at progress there. However, can she help to fix the daily delays that constituents are facing on Crossrail? West Ealing and Acton Main Line are getting a worse service than they were before all this. We want to build, build, build, but people in new homes need to be able to travel.
Louise Haigh
The day when everyone is praising me to the heavens on HS2 is one I look forward to. As my hon. Friend knows, brand-new Elizabeth line trains are on order; the Mayor of London was awarded a £485 million capital settlement in the Budget partly for those trains, which are being produced at Alstom in Derby. That will significantly reduce the overcrowding and delays that she talks about. The Department works with the Mayor of London very closely on addressing those delays.
Dame Harriett Baldwin (West Worcestershire) (Con)
I thank the Secretary of State for coming to the House and updating us, because it gives her an opportunity to correct the record. She may have inadvertently misled the House at the last Transport questions about the Birmingham to Hereford line and West Midlands Railways’ performance. Back in May, a terrible one in 10 of those services was being cancelled, but by October when Transport questions took place, one in six Birmingham to Hereford services was being cancelled. Will the Secretary of State commission her officials to talk to representatives from West Midlands Railways about that line, and find a way to move fast and fix that service?
Louise Haigh
Either the Rail Minister or I will of course seek to meet representatives of West Midlands Trains to address its performance.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Select Committee member Laurence Turner.
Laurence Turner (Birmingham Northfield) (Lab)
The shadow Secretary of State said that we should pay attention to performance statistics. The figures that I have obtained from the Department show that over the past seven years, there was a 35% increase in temporary and emergency speed restrictions on the network. The Secretary of State has a difficult inheritance, but can she set out for us the work that she is doing to refocus the industry on the hard graft of understanding, maintaining and improving our crumbling infrastructure?
Louise Haigh
Shadow Great British Railways brings together the Department, Network Rail, and those operators that are already in public ownership to look at integration and ensure that our investment in the network delivers improvements for passengers as quickly and efficiently as possible. That work will absolutely cover maintaining the network, and we will set out how we will do so in the next control period, as we look towards the second phase of the spending review.
Layla Moran (Oxford West and Abingdon) (LD)
I welcome the gusto with which the Secretary of State approaches her work, and in particular her motto, which is “Move fast and fix things.” Has she spoken to Network Rail recently? Its motto seems to be “Move slow and break things”, at least in Oxford, given the way it has mismanaged the Oxford train station upgrade. For the second Christmas in a row, businesses along the Botley Road will not be open. We have a meeting later this week with those businesses, and I have asked for a meeting with the Rail Minister, but he seems too busy. Would the Secretary of State give me just a moment of her time, so that I can work with her on how we can move forward? This is not acceptable, is it?
Louise Haigh
I completely empathise, and agree that the situation in Oxford is not good enough. The hon. Lady’s characterisation of Network Rail is partly why it is being abolished as we establish Great British Railways. I will of course meet her to discuss how we can improve the situation.
Rachel Hopkins (Luton South and South Bedfordshire) (Lab)
I welcome the Transport Secretary’s comments today, and her emphasis on good industrial relations in the rail industry. Why does she think that this Labour Government were able to work with trade unions such as ASLEF to end the national strikes, improving services for passengers within weeks of taking office, when the previous Conservative Government were unable to do so over several years?
Louise Haigh
The truth is that the previous Government deliberately provoked and prolonged that strike, the longest in the history of our railways. They budgeted for a pay settlement not far off where we landed, and that pay settlement has already paid for itself through increased revenue and improved services for passengers.
Greg Smith (Mid Buckinghamshire) (Con)
Chiltern Railways was absent from the Secretary of State’s statement, but when it comes to rail performance, for my constituents —both those on the Chiltern main line and those on the Aylesbury branch—daily overcrowding is a reality, with passengers often being left on the platform. Given that the previous Government stepped up, with a commitment to ensuring that Chiltern got more rolling stock to tackle the overcrowding challenges, will the Secretary of State make it a double priority to get Chiltern those extra trains and end this overcrowding?
Louise Haigh
The hon. Gentleman is absolutely right. Chiltern was the worst-performing operator last year, in terms of the reduction in punctuality, which further makes the case for public ownership. The previous Government made lots of commitments, few of which were funded, but I will take that question away and determine where the rolling stock order is.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Select Committee member Catherine Atkinson.
Catherine Atkinson (Derby North) (Lab)
I welcome the Secretary of State’s success in ending national industrial disputes as a first step to delivering better services for rail passengers. Does she agree that the establishment of Great British Railways in Derby represents a further positive step in getting Britain moving again? Can she update the House on the governance framework for shadow Great British Railways, and how it will work with stakeholders on functions such as producing a business plan?
Louise Haigh
I was delighted to be in Derby recently to confirm that the headquarters of Great British Railways will be in that rail city. I am also delighted that, as I say, Alstom is manufacturing the new Elizabeth line trains, as a consequence of funding awarded in the Budget. Shadow GBR is really important for engaging with stakeholders and, crucially, putting passengers at the heart of developing a new culture—and a new organisation, in Great British Railways. It has the expert chairing of Laura Shoaf, who brings substantial planning and transport experience from her time as chief executive of West Midlands combined authority.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Select Committee member Rebecca Smith.
Rebecca Smith (South West Devon) (Con)
It has recently been brought to my attention that in Great Western Railway, which serves my constituency in Devon, drivers do not have contracts that ensure a seven-day-a-week service—the contracts do not include Sundays, so trains are regularly cancelled. In fact, four trains were cancelled yesterday, so one lady had been forced to catch the first train today instead. What plans does the Secretary of State have to equalise driver contracts under Great British Railways, to ensure that routes such as Paddington to Devon are fully staffed seven days a week, so that she can fulfil her promise to passengers?
Louise Haigh
The hon. Lady is absolutely right, and unfortunately that is the picture across too much of our railways. The workforce terms and conditions are simply not fit for purpose. Part of our inheritance is that we do not have a workforce that can deliver a modern and efficient railway. We are working with Great Western Railway to address that egregious issue, and we will come back to the House shortly to set out our progress.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Select Committee member Dr Scott Arthur.
Dr Scott Arthur (Edinburgh South West) (Lab)
I thank the Secretary of State for her statement, and for the leadership that she is showing to get our railways back on track—sorry for the pun. I am pleased that she mentioned LNER and Lumo, which do a fantastic job of connecting Edinburgh and London, and of providing a stress-free alternative to flying. When she first took up her post, she was clear that she wanted HS2 to get a grip of costs. Does she feel vindicated, given the reports over the weekend of more than £100 million being spent on a single structure, despite some of those involved saying that they were not aware of the need for it?
Louise Haigh
It was extraordinarily frustrating to see the news of the obscene amounts of money spent on that structure to do with HS2. That happened under HS2’s previous leadership. We are resolving this by bringing in Mark Wild imminently to lead the organisation, and we are also resolving issues around cost control and governance through James Stewart’s governance review of HS2. These things happened under the previous Government, and fortunately the electorate resolved that issue for us on 4 July.
Tim Farron (Westmorland and Lonsdale) (LD)
After a weekend of cancellations at Windermere, Oxenholme and elsewhere, will the Secretary of State have a word with Northern Rail, to remind it that it is meant to run a rail service on a Sunday? Will she also speak to Avanti —many hon. Members may agree with me on this and have the same experience—because services from London Euston to Glasgow Central are habitually stopped at Preston, even when the track is clear all the way to the Scottish border and beyond? It harms my constituents at Oxenholme, and those in Penrith, Lancaster and Carlisle.
Louise Haigh
I have routine conversations with Northern Rail, as the hon. Gentleman would imagine. The most recent was on Thursday. We facilitated a new rest day working agreement with it, which has significantly reduced driver cancellations, but there is an outstanding issue with conductors; there is a very similar situation with Great Western. In parts of Northern Rail, particularly in the north-west, Sundays are not included in the working week. That has led to an unacceptable amount of cancellations, which we are working to resolve. I will raise the issue of stopping at Preston with Avanti separately.
Sally Jameson (Doncaster Central) (Lab/Co-op)
Doncaster has a long and historic relationship with the railways; we are home to both the Mallard and the Flying Scotsman. The financial sustainability and success of rail are critical to our local economy, so can the Secretary of State update the House on the net cost of the solution that she brokered to end the strikes?
Louise Haigh
My hon. Friend is absolutely right. The strikes were costing us £20 million a day in lost revenue. That is aside from the economic impact of people coming off the railways and not making journeys to work, to see friends and family or to visit other towns and cities. Settling the pay disputes that were pervading our railways has already paid for itself.
Dr Andrew Murrison (South West Wiltshire) (Con)
What lessons has the Secretary of State drawn from rail networks in other countries about rail performance and safety, given that many of them are now automated? Will she make herself a heroine in the south-west by dealing at long last with the notorious Tisbury loop, west of Salisbury, which has added inestimable time to rail journeys to the far south-west? The situation could be resolved at very little cost.
Louise Haigh
I will look into the issue for the right hon. Gentleman. It may be that the Rail Minister has to make himself a hero; I will ask him to meet the right hon. Gentleman to discuss the matter.
Mr Luke Charters (York Outer) (Lab)
They say that money doesn’t grow on trees, but apparently it flies out the window for £100 million bat caves. Does my right hon. Friend agree that HS2 should apologise for its fur-brained scheme? How can we quickly learn the lessons to ensure good taxpayer value for money as HS2 continues?
Louise Haigh
I was absolutely horrified, on entering the Department, to learn that there had been no routine ministerial oversight, in any sense of the word, of HS2 for some time. We immediately established a cross-ministerial taskforce, comprising me and the Treasury, to oversee HS2’s costs. I have written to the chair to make it clear that, beyond safety, his first and abiding priority is to bring down costs. I have commissioned a governance review, led by James Stewart. We will look at the structure of HS2 Ltd, which has been too much at arm’s length, and too free to spend taxpayers’ money for too long.
Wera Hobhouse (Bath) (LD)
GWR, which serves my Bath constituency, has been performing in the most disappointing way, to say the least. Especially on Sundays, cancellations and delays are the new norm. Engineering works are among the problems, but the train driver shortage is the biggest problem. What exactly will resolving what the Secretary of State calls the rest day working issue mean for my constituents? When does she expect them to see tangible change?
Louise Haigh
The problem across the entire railway is that we do not have sufficient drivers or staff, so too many parts of the railways are reliant on rest day working agreements. We should not have to rely on people volunteering to come on shift in order to run a Sunday service, but unfortunately that is the case at Great Western Railway. We will not be harmonising contracts or terms and conditions at Great British Railways, as we have established, but we need to get drivers and conductors on modern terms and conditions that reflect the railway that we need. We are attempting to address the specific issue at Great Western Railway; as I say, we will come back to the House soon with an update on progress.
Jim Dickson (Dartford) (Lab)
At a recent meeting with me to discuss rail improvements for my constituents, the chief executive of Southeastern—a nationalised company, as has been confirmed—was able to confirm that additional services between Dartford and central London are due to commence in December, as the Secretary of State mentioned. Can she outline any additional welcome improvements to services in the south-east, or other parts of the country, to which we can look forward?
Louise Haigh
We will see 44 additional trains per day on the new timetable from Southeastern. CrossCountry restored its full timetable today, and we hope to see new timetables from TransPennine Express in the coming weeks. We have procurements out for TransPennine Express and Southeastern, I believe, so my hon. Friend will see new rolling stock in due course.
Lincoln Jopp (Spelthorne) (Con)
People can only go so far out of London into the Spelthorne constituency on their Oyster card; they have to buy a train ticket for the last couple of stops. This anomalous situation means that major employers such as BP and Shepperton Studios send buses up the line to pick up their workers to do a day’s work. The Secretary of State will soon be the proud owner of South Western Railway, Transport for London and Great British Railways, so can she please make herself an absolute hero in Spelthorne and get it into the Oyster zone?
Louise Haigh
The Mayor of London is the owner of Transport for London, but we can absolutely work together to see whether anything of that nature can be achieved. I see no reason why we cannot make progress on that issue.
Alistair Strathern (Hitchin) (Lab)
Commuters at Arlesey and Hitchen stations in my constituency are driven to despair by the shocking state of Thameslink services, with delays and cancellations an all too frequent feature of everyday commutes. I welcome the urgency with which the Secretary of State is starting to tackle the long-term causes, from industrial disputes to fragmentation. In the interim, will she meet me to discuss how we can push Thameslink to do more to make sure we finally make these delays and cancellations a thing of the past?
Louise Haigh
I am grateful for those comments. Govia Thameslink had an improvement of 3% in its cancellations on last year, but it is still falling behind on punctuality. I am happy to meet my hon. Friend to discuss what more we can do.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
I welcome the Secretary of State’s update on how the UK Government are following in the Scottish Government’s footsteps by nationalising train operating companies, but Labour cannot claim to be nationalising the railways while leaving the trains in private hands. Even with the passage of her Bill, profits will continue to flow out of our railways to rolling stock companies, some based in tax havens, rather than be reinvested in services and infrastructure, and consequently in performance. Will the Secretary of State set out when she plans to bring forward proposals to nationalise the rolling stock companies and bring the railways back into public hands in their entirety?
Louise Haigh
One of the purposes of this reform was to save the taxpayer money, and bringing operators into public ownership as their contracts expire means there will be no compensation. We will also be saving the money currently leaking out of the system through dividends and management fees. It would not be fiscally prudent in the current environment to spend billions of pounds on nationalising the rolling stock, so we will continue the current arrangement whereby private finance is leveraged into rolling stock companies.
Peter Swallow (Bracknell) (Lab)
My constituents are reliant on a train line between Reading and Waterloo that has seen no improvements to frequency or journey times since the 1970s, so they will warmly welcome the steps the Secretary of State has outlined today to launch a consultation setting out plans for unification across the railway. Does she agree that a modern railway system is an essential step in getting our economy growing?
Louise Haigh
I absolutely agree. For too long, passengers have not been able to rely on the railways, and it has driven people off them. We see in the latest Transport Focus data that people are gradually starting to feel more confident in using the railways, but we have a long way to go to turn the tide on the last 14 years of failure.
Sarah Dyke (Glastonbury and Somerton) (LD)
Improved rail performance is of course welcome, but my constituents in Somerton and Langport are not served by the railway at all. A family in Curry Rivel recently wrote to me; they are over half an hour away from the nearest train station, leaving them isolated from the train line. Will the Minister outline any plans she has to connect my constituents in rural areas to the railway?
Louise Haigh
We will be setting out a long-term infrastructure strategy in spring next year, working with the Ministry of Housing, Communities and Local Government and colleagues across Government to ensure that we are unlocking the transport infrastructure that will be of benefit and allow us to meet our housing targets but also improve rural connectivity. My Department is also reforming how we do appraisals to ensure we maximise our investment in transport infrastructure for economic growth and to tackle socioeconomic inequality.
Mr Mark Sewards (Leeds South West and Morley) (Lab)
I welcome the Secretary of State’s decisive action to end industrial action, get the railways moving again and unlock the barriers to economic growth that we absolutely need to sweep away to get this country growing again. It is particularly welcome to hear about the green shoots of recovery and the improvements in LNER’s performance. However, passengers at Morley train station tell me that the services are still unreliable, so can the Secretary of State update the House on what she will do to improve the reliability of the train services running through Leeds South West and Morley and the rest of the UK?
Louise Haigh
LNER’s reliability has improved in the past year, but I am not naive and do not think we are there yet; these are only the green shoots of recovery. The real improvements from these reforms will come when we can truly integrate track and train. LNER and the east coast are a perfect example of where the previous system was failing. Billions of pounds were spent on upgrading the east coast main line, but with absolutely no improvement for passengers. By integrating track and train, we can ensure that those upgrades to the east coast main line are fully realised for passengers and that the timetable and service from LNER are improved.
Lisa Smart (Hazel Grove) (LD)
My constituents have to rely on two of the most unreliable train operating companies: Northern and TransPennine Express. Too many of them are having to drive to get to work on time or get a taxi to get back in time for after-school club. When does the Secretary of State think my constituents will have the confidence to go back to using the train, rather than relying on an app on their phone?
Louise Haigh
The hon. Lady is absolutely right. Northern and TransPennine Express serve my constituency as well, and some of the most deprived parts of the north of England. Performance has not been good enough. TransPennine in particular has seen insignificant improvements since it was brought into public ownership, but neither operator is where it needs to be. We are working closely with them as a priority through the operator of last resort, not only to drive efficiencies, but crucially to drive performance. I was struck when I met Network Rail and some of the managing directors of the worst-performing operating companies that they made it clear that the previous levels of performance had simply been tolerated and accepted as normal across the industry. They are under no doubt that under this Government, that level of performance will no longer be tolerated.
Josh Fenton-Glynn (Calder Valley) (Lab)
My constituents in Calder Valley are also sick of the performance of Northern Rail. In July, the Department for Transport issued a breach of notice to Northern Rail, because of its underperformance. Northern Rail’s chief operating officer said that performance was “not good enough”. Will my right hon. Friend confirm that she will prioritise getting Northern Rail back on track?
Louise Haigh
We can hear from the House how much of an impact the levels of service on Northern Rail are having. Andy Burnham texts me every Monday about the performance on Northern trains, so I can assure my hon. Friend that it is a priority.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Earlier this year, Avanti West Coast services on the north Wales main line had on-the-day cancellations of more than 20%. Its timetable is yet to return to pre-covid standards, and there were no direct connections with London on Saturday. Given that the Avanti West Coast contract runs to 2026, what is the Secretary of State doing to ensure a reliable mainline service for the people of north Wales?
Louise Haigh
My views on Avanti’s performance are well known, I think. The right hon. Lady is absolutely right that it has not been acceptable. Shockingly, the way that national rail contracts were written under the previous Government means that Avanti has not defaulted. It is on a remedial plan to drive improvements, and we have seen a small increase in punctuality, but it still has a long way to go. We are watching over Avanti like a hawk to make sure that if it does default, it can be immediately brought into public ownership.
Josh MacAlister (Whitehaven and Workington) (Lab)
I extend my thanks to the Secretary of State and the team for the early action they have taken to improve the reliability of the network. My constituents struggle with two lines. One is the Cumbrian coast line, on which I ask the Secretary of State for any update on the ongoing conductors’ dispute. That is adding to a lack of reliability in the system for those in Whitehaven and Workington and elsewhere. I spend too much time—far too much time—on Avanti West Coast services, which gives me the opportunity to speak to constituents who cannot use the wi-fi, because it is highly unreliable. It is a big issue for productivity, so will the Secretary of State raise that with Avanti when she meets its representatives?
Louise Haigh
Wi-fi is one of the examples of passenger experience that we are clear needs to be delivered through Great British Railways. I take East Midlands Railway, and the wi-fi is even worse on that line. I would be happy to raise that issue with Avanti. We are in the process of attempting to facilitate an agreement with Northern on the conductor issue that my hon. Friend mentions in the north-west, which has the most egregious example of working terms and conditions being outside of a normal working week.
Max Wilkinson (Cheltenham) (LD)
I join the chorus of those talking about GWR’s shocking Sunday service. Its timetable is a work of fiction akin to “Chuggington”, which I often watch with my daughter. Were that the only problem that my constituents faced, we might be able to look past it. However, the lack of carriages on trains home on a weekday is a huge problem—my hon. Friend the Member for Tewkesbury (Cameron Thomas) recently used some choice language about it, which I urge hon. Members to look up online; I will not report it in the House. We often find that there are only half the carriages that we need to get home. I recently stood by the loo for 90 minutes until Stroud, which was an unpleasant experience shared by many others on the train. What will the Secretary of State do to reassure me that GBR will solve that problem?
Louise Haigh
Again, the current fragmentation of the network means that we have dozens of different types of rolling stock across the network, all procured by different operators at different times, which are not interoperable between operators and cannot be moved around the network precisely when there are issues such as those that the hon. Gentleman described. With the establishment of Great British Railways and a long-term rolling stock strategy, we can procure fewer types of trains and start to move them around. I will take away the specific issue of short-form trains on Great Western Railway and write to him about what action can be taken.
Madam Deputy Speaker (Ms Nusrat Ghani)
Richard Quigley, can you confirm that you were here at the beginning of the Secretary of State’s statement?
Andrew George (St Ives) (LD)
I welcome the Secretary of State’s statement, and particularly the sentiment about putting passengers first and getting a grip. Those who are served by Great Western, which runs to south Wales as well as down the main line to Penzance in my constituency—Great Western has already been heavily criticised this afternoon—will be aware that we are getting none of the benefits of HS2 but a lot of the disruption as a result of the work at Old Oak Common. Will the Secretary of State meet those Members of Parliament who are worried about the prospect of six years of sometimes severe disruption to their services to see whether we can minimise the impact?
Louise Haigh
I am conscious of the disruption that will be experienced by passengers coming from the south-west. We are putting in place plans so that trains can come into Euston rather than Paddington, but it is undeniable that there will be substantial disruption during the Old Oak Common works. I or the Rail Minister will be happy to meet colleagues who are affected.
Mr Quigley
Thank you, Madam Deputy Speaker; I truly am grateful. I was going to say that my train was late, but that would not actually be true. [Laughter.]
Speaking of my right hon. Friend being a heroine, finding a solution to the Isle of Wight ferries issue would result in our erecting a bronze statue on the seafront in Cowes. Does she agree that the Conservatives’ failed experiment with rail privatisation has caused passengers misery and cost millions? What will she do to make things better?
Louise Haigh
I am grateful to you, Madam Deputy Speaker, for allowing my hon. Friend to ask a question. I thought he would mention the ferries as well—he also texts me often about the ferries. I am grateful for his point. The new model will deliver not only better services for passengers but a far better settlement for taxpayers, who have been ripped off under the previous model for far too long.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State very much for her statement. She has been clear that transparency for passengers will be achieved by displaying performance data. How do the Government intend to ensure that, as well as knowing whether their local line is not doing well, passengers know that their taxes are being used not simply to pay rail staff higher wages, but to get trains to reach their destinations in a time-effective and cost-effective way?
Louise Haigh
The purpose of displaying performance data at stations is to give passengers certainty and transparency about the state of the railways, but Great British Railways will also be far more accountable than under the current system. At the moment, to hold the railways to account, there is a complicated mix of responsibility between Network Rail, the train operating companies and the Department for Transport. Great British Railways will provide a single point of access to the railways for politicians and for communities, and we will be able to ensure that the organisation is single-mindedly delivering for passengers.
Rural Affairs
(1 week, 3 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Environment, Food and Rural Affairs (Steve Reed)
I beg to move,
That this House has considered rural affairs.
I am delighted that the House has this opportunity to discuss the impact of the Budget on rural communities. Let me begin by addressing what the Budget means for farming in the round. We can all agree that food security is national security, which is why we have secured the biggest budget in our country’s history for sustainable food production and nature’s recovery. It commits £5 billion to the agricultural budget over the next two years. We are continuing all the environmental land management schemes, and investing £1.8 billion into them from 2025-26, which gives farmers the stability they need and lays the foundations for sustainable food production, to protect farmers and the environment for years to come.
Sir Desmond Swayne (New Forest West) (Con)
What estimate has the right hon. Gentleman made of the impact on capital investment, which will be reduced as farmers consider the inheritance tax implications of those investments and adjust their plans accordingly?
Steve Reed
The changes have been signed off by the Office for Budget Responsibility and the full impact assessment will be available when the Finance Bill is published, before they come into force in 2026.
Dr Andrew Murrison (South West Wiltshire) (Con)
Does the Secretary of State understand that a farmer coming towards the end of his career is hardly likely to invest either in improving his land or in the hundreds of thousands of pounds that a piece of agricultural plant costs these days, knowing that there will be a surcharge when, sadly, he deceases?
Steve Reed
The vast majority of farmers will be unaffected by the changes, so that point will not apply.
We are also rapidly releasing £60 million to support farmers whose farms have been devastated by severe flooding. That is £10 million more than the previous Government were offering and, unlike their fantasy figures, we have shown where the money to be paid out will come from. Flooding is just one of the many challenges that farmers have faced over the past year.
Simon Hoare
The Secretary of State has painted the most rosy picture. Why does he think that no one in the farming community can see it or share it?
Steve Reed
I have not had time to paint much of a rosy picture yet, because I have only just started and I am taking quite a lot of interventions, but I hope I can allay the concerns of some farmers in the comments that I hope to make during my speech.
Sir Roger Gale
The right hon. Gentleman referred to the amount of money being made available for flooding. The devastation caused by flooding pales into insignificance compared with the damage that will be done by inheritance tax. This weekend a farmer in my constituency has cancelled the building of a new barn because of it. Park home owners in my area are in despair as a result of what the Budget is doing to them. Does the right hon. Gentleman not understand that?
Steve Reed
The vast majority of farmers will not be affected by the changes to inheritance tax, and I implore the right hon. Gentleman not to underplay the damage caused by flooding. Many farms were absolutely devastated last year, and it will be immensely welcome that we have released £60 million to help farmers to deal with that problem, as well as setting up a flood resilience taskforce to ensure far better co-ordination between the centre and the agencies on the ground, to protect farmers from the devastation of flooding in years to come.
Steve Reed
I said that I had taken my last intervention, but since it is the hon. Gentleman I am happy to give way.
Jim Shannon
I have been inundated with messages from farmers back home. I am a member of the Ulster Farmers’ Union, so I understand the issues clearly. The National Farmers Union here on the mainland has the same point of view. Every one of my neighbours will be impacted, and the Ulster Farmers’ Union estimates that almost every farmer in Northern Ireland will be impacted by the inheritance tax changes. Is the Secretary of State prepared to meet Ulster Farmers’ Union representatives to discuss this matter and understand much better—I say that respectfully—the issue of inheritance tax and what it means to family farms in Northern Ireland? It will destroy them.
Steve Reed
It is very important that we all listen to farmers and farmers’ representatives. Either I, or one of my ministerial colleagues, will make sure that we meet the representatives the hon. Gentleman mentions. I hope that I can allay some of those concerns if I am able to continue my speech, in which I will directly address the issues to which he referred.
As I was saying, flooding is just one of the many challenges that farmers have faced over the last past year. In recent weeks I have met farmers who have been hit by bluetongue in their herds, and I am sorry to say that we have the first recorded case of avian influenza this autumn. Biosecurity threats are real and their impacts even more so, which is why we are investing over £200 million to protect the nation from potential disease outbreaks, including by fixing the defences at our world-leading Weybridge facility that the Conservatives left to fall into disrepair.
Matt Rodda (Reading Central) (Lab)
I commend the Secretary of State’s broad approach. In my constituency there is a serious issue with precious flood plains being speculatively bought by developers, which is causing a huge amount of concern to local residents. It is also an issue in terms of the potential threat to wildlife habitats and of the impact on flooding. Will the Secretary of State consider meeting me and local residents to discuss this important matter?
Steve Reed
My hon. Friend is a great champion for his community. I am of course more than happy to meet him and people from his community to discuss those important issues.
The measures in the Budget will enable us to build a stronger, more sustainable future for British agriculture and put in place our new deal for farmers, which includes making the supply chain fairer so that producers are no longer forced to sell their food below the price of production; speeding up planning decisions to help farmers to diversify into new forms of income; seeking a new veterinary agreement—
Harriet Cross (Gordon and Buchan) (Con)
Will the Secretary of State give way?
Steve Reed
If the hon. Lady will forgive me, I want to make a little progress.
The new deal for farmers includes seeking a new veterinary agreement with the EU to tear down the export barriers that the previous Government erected in the first place; backing British produce by using the Government’s purchasing power to buy British; and protecting our farmers from ever again being undercut by low welfare and low standards in trade deals like the disastrous one the previous Government signed with Australia and New Zealand.
The House is aware that the Government inherited a catastrophic £22 billion black hole in the nation’s finances, meaning we have had to take tough decisions on tax, welfare and spending to protect the payslips of working people. This has required reforms to agricultural property relief. I recognise that many farmers are feeling anxious about the changes; I urge them not to believe every alarming claim or headline and I reassure them that the Government are listening to them. We are committed to ensuring the future of family farms. The vast majority of farmers will not be affected at all by the changes. Let us look at the detail.
Steve Reed
If the hon. Gentleman will give me a little time, it is important that I make these points.
Currently, 73% of agricultural property relief claims are less than £1 million. An individual farm owner can pass on up to £1.5 million and a couple can pass on up to £3 million between them to a direct descendant, free of inheritance tax. If a couple who own a farm want to pass it on to a younger relative and one partner predeceases the other, each of them has a £1 million APR threshold that they can pass on. Add those together and that is £2 million, plus the £1 million that a couple with a property can pass on to their children. For most people, that is an effective threshold of up to £3 million to pass on without incurring inheritance tax. Any liability beyond that will be charged at only half the standard inheritance tax rate and payment can be phased over 10 years to make it more affordable. Farmers will be able to pass down their family farm to future generations, just as they always have done.
Harriet Cross
Will the Secretary of State tell us where he obtained those figures?
Steve Reed
They are from the Treasury and His Majesty’s Revenue and Customs.
Under the previous system, 40% of the value of agricultural property relief went to just 7% of claimants. That is not fair and it is not sustainable. Our reforms will put a stop to wealthy individuals buying up agricultural land to avoid inheritance tax and, in the process of doing that, pricing younger farmers out of buying land for themselves and for their families. As a Farmers Weekly correspondent pointed out,
“prices have been artificially inflated by non-agricultural buyers purchasing land for inheritance tax purposes”,
thereby making it hard for young farmers to set up a family farm. That is correct.
The reforms will protect family farms by closing the loopholes, but they will also help to provide funding for the public services on which families in rural and farming communities rely just as much as anyone else. When Opposition Members say that they would go back to the unfair old system, they also need to tell us which part of the new NHS investment they would cut to pay for it. Like everyone else, farmers and rural communities need a better NHS, affordable housing, good local schools and reliable public transport.
The last Government’s economic failure left Britain with a flatlining economy, broken public services and the worst decade for wage growth since the great depression of the 1930s. Poor public transport meant that people could not get to work, the GP or the hospital when they needed to. Home ownership was out of reach for too many in rural areas. Too few new homes were built, and even fewer that were genuinely affordable. Digital connectivity in rural areas lags behind connectivity in urban areas.
We have to kick-start the economy to build the public services that rural communities need, and to help with that we have secured the biggest budget for sustainable farming and nature in our country’s history. It will help to change farming practices so that we can clean up our rivers, lakes and seas, which the last Government left in such a filthy, polluted state.
Ben Lake (Ceredigion Preseli) (PC)
The Secretary of State mentioned the new set-up for the funding of agriculture and fisheries across the UK. He may be aware of the concern expressed by the Farmers’ Union of Wales, which fears that processing the extra funds through the Barnett formula—as opposed to the previous arrangement, which was a ringfenced addition for the devolved Governments—might bring about a severe reduction in agricultural funding in Wales. Will the Secretary of State please give some reassurance that that is not the case?
Steve Reed
As I have said, the consequentials will work in the way in which they always work. Devolved Administrations have some discretion as to how they will spend the money that is made available to them, but of course I, along with my right hon. Friend the Secretary of State for Northern Ireland, am more than happy to engage with, for instance, the Northern Ireland Department of Agriculture, Environment and Rural Affairs to discuss those points.
The huge investment we have secured in the sustainable farming budget will also help us to move to a zero-waste economy, as we end the throwaway society and reuse materials rather than sending them to landfill.
Steve Reed
No. The hon. Gentleman has already had his chance to ask a question.
The investment will help us to boost food production as we move to models of farming that are not only more environmentally sustainable but more financially sustainable, and it will help nature to recover—here, in what has become one of the most nature-depleted countries on earth, with nearly half our bird species and a quarter of our mammal species now at risk of extinction.
Our plans to upgrade our crumbling water infrastructure will help to bring in tens of billions of pounds of private investment, and will create tens of thousands of well-paid jobs in rural communities throughout the country. We will reform the planning system to build the affordable homes that our rural communities so desperately need, while also protecting our green spaces and precious natural environments. We are investing £2.4 billion over the next two years in the flood defences that the last Government left in such an unacceptable state of decay and disrepair.
Layla Moran (Oxford West and Abingdon) (LD)
I am extremely grateful to the Secretary of State for giving way on the issue of flooding. Anyone would welcome more money, which is desperately needed, but will he comment on the flooding formula? Many inland communities flood, but the Environment Agency continues to say that there is nothing it can do, because the flooding formula says it is not worth doing anything. Frequent flooding of smaller communities matters, too. Is the Department looking at that?
Steve Reed
We are looking at that, and we will be able to make proposals in due course. I know that the hon. Lady will be interested in taking part in a conversation about them when we do.
I am talking about the changes we are making more widely for rural communities. We will open new specialist colleges and reform the apprenticeships levy to help agricultural businesses and farms to upskill their workforce, and we will recruit 8,500 more mental health professionals across the NHS, with a mental health hub in every community to tackle the scourge of mental ill health in our farming and rural communities.
John Glen (Salisbury) (Con)
I welcome what the right hon. Gentleman is saying about mental health, but may I take him back to what he said about the Environment Agency? There is concern about the arbitration over whether Natural England or the Environment Agency has authority. South of Salisbury, in the Avon valley, there is a massive issue. The Environment Agency has done a great deal of work, but there is always a concern that Natural England will come in and overrule it. The arbitration over who is sovereign in such circumstances is a massive issue across the country, and I would be grateful if he could turn his attention to it.
Steve Reed
I am grateful to the right hon. Gentleman for raising that point. I have appointed Dan Corry to lead a review of regulation across the Department for Environment, Food and Rural Affairs, precisely so that we can iron out such anomalies.
I am keen to ensure that we crack down on antisocial behaviour, fly-tipping and GPS theft through the first ever cross-Government rural crime strategy, and we will improve public transport by allowing authorities to take back control of their buses to meet the needs of their communities.
Greg Smith (Mid Buckinghamshire) (Con)
The Secretary of State mentions rural crime, and I do not underestimate the scale of the challenge. In the last Parliament, with Labour’s support, my private Member’s Bill got Royal Assent. It just needs a statutory instrument to be laid before the House to bring in the definition of “forensic marking”, which the police say will be a big power for them in combating rural crime. Will he talk to the Home Secretary to ensure that my Act starts to help him to deliver his rural crime strategy?
Steve Reed
I will convey the hon. Gentleman’s views to my right hon. Friend the Home Secretary.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Will the right hon. Gentleman give way?
Steve Reed
If the right hon. Lady will forgive me, I will conclude my speech, because I have taken an awful lot of time and Members will want to have their say.
Rural communities are at the heart of this Government’s No. 1 mission: to grow the economy. Everyone, regardless of where they grow up, should have the same opportunities to succeed in life. We have had to take tough decisions to fix the broken foundations of our economy, but they are part of a Budget that will restore economic stability and begin a decade of national renewal for everyone, everywhere. I welcome this opportunity to set out the facts and figures, and to show why this Budget offers a better future for our rural and farming communities, as we fix the foundations and rebuild Britain.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Victoria Atkins (Louth and Horncastle) (Con)
I thank the right hon. Gentleman for holding this important debate, and for welcoming me to my new role. From the arable fields outside my front door to the cattle and horticulture that stretch from the fens, the wolds and the marshes to the coast, my constituency feeds the country. I am delighted and determined to bring some of my county’s common sense and love of the countryside to this important portfolio. On Armistice Day, I pay tribute to the fallen, and particularly to the farmers who stayed behind to feed the nation in wars gone by.
This is a critical time for our rural way of life. After years of unforgiving weather, rising commodity prices and more crop and livestock diseases, our farmers now face a new threat: a city-dwelling, socialist Government who do not understand or care for the rural way of life. The evidence is there in Labour’s first Budget, for which it had 14 years to prepare. [Interruption.] The Back Bencher who is waving his arms around may want to listen to this. In this Budget of broken promises, the Chancellor laid careful plans to break the farming sector, the wider rural economy and our food security. Farmers look after 70% of the UK’s land. They are the keystone of our rural communities. When they struggle, our rural economy is weakened and our food security is put at risk.
Today, as the consequences of this Budget are becoming clearer, I will focus solely on the rural economy, but I make this promise to the Secretary of State: in the future, I will be pressing him and his Government on rural infrastructure, flooding, crime, healthcare, broadband and mobile signals, the solar and wind industries and other matters that affect our countryside, because the impact of this Budget and the choices Labour has made will be felt for years after his expensive wellies have worn out.
I am going to focus on three broken promises by Labour; I am going to make it simple for them. The first broken promise for farming families is the removal of the tax relief that has meant families can pass on their farms to the next generation: agricultural property relief and business property relief. These are not loopholes, as they were described by the city-dwelling Chancellor, but careful tax policy planning developed over many years to prevent family farms and businesses from being split up and sold off. Of course we support efforts to root out abuse of the tax system, but the way in which the Chancellor has designed this policy means that it is tenant farmers and farmers in the middle who will struggle, not the very wealthiest.
This morning, I asked farmers on social media to send me details of how the policy will affect them and their businesses, and it makes for anguished reading. Farmers are furious, anxious and even distressed about the changes. They feel that the Government are coming after them and their families’ livelihoods, when all that they and their ancestors have done is work hard, follow the rules and feed us. I have been inundated with messages about tenant farmers, whom the Government seem to have forgotten. A Welsh landowner has contacted me to say that this change in policy will mean that he must tell six multigenerational farming families on his land that he will have to sell their farms to pay Labour’s family farm tax. As he put it,
“they will lose their homes, businesses and their children’s futures”.
In winding up the debate, can the Minister please explain what those six tenant families are to do when their farms are sold?
An example of how the measure will affect landowning families is provided by a family who have worked their 500-acre farm for four generations. The farm is owned by the mother, who is in her 70s, and her two sons, who are in their late 40s and early 50s, their father having died a few years ago. They make an annual income of around £45,000. When the mother dies, the sons will face an inheritance tax bill of at least £870,000. There is no way in which they can pay that bill without selling their farm. Could the Minister advise the House how that family are to pay Labour’s tax bill without selling their farm?
Richard Tice (Boston and Skegness) (Reform)
The right hon. Lady has obviously had lots of letters and emails. Has she had a single one from any farmer who thinks this is a good idea? I have not had any from my constituency of Boston and Skegness.
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
We have—plenty!
Victoria Atkins
You couldn’t make it up, could you? This is what is so worrying. This is why, at the beginning, I talked about a Labour Government who do not understand and do not care, and it is exactly this attitude from the Government Front Bench that farmers and their families are seeing. In answer to the hon. Member for Boston and Skegness (Richard Tice), I say as a former Treasury Minister that if there is evidence of abuse, of course the Treasury and the Chancellor must go after that, but given the way the Government have designed this policy, it is going to go after the hard-working families that look after our farms in our great county.
John Glen
My right hon. Friend and I have been Treasury colleagues. Officials often put forward this reform in the run-up to fiscal events, and she, like me, has resisted them. Will she reflect on the fact that significant landowners will have sophisticated tax planning regimes in place, that a large number of very small hobby farmers will be excluded, and that those who will be hit are modest family farmers? Even when those family farmers need to raise a relatively modest amount over 10 years, the impact of securing that funding is beyond them, given the margins they get from farming. Will my right hon. Friend reflect on the fact that this is, without doubt, a Treasury hit-and-run? The Secretary of State flatters himself to think he has secured the overall budget, but he has left farmers in a far worse state. [Interruption.]
Victoria Atkins
My right hon. Friend makes an important point about our experience as Treasury Ministers. Labour Back Benchers are shouting “Give way!” because they do not like hearing the truth. They made this choice; we chose not to go down this route.
There are many ways in which we can support our family farmers, and I have had the pleasure of having a cup of tea with many of them around their kitchen table after they have shown me their farm. Labour Front Benchers lack such experience, because their constituencies are all situated in the city.
Dame Harriett Baldwin (West Worcestershire) (Con)
Will my right hon. Friend give way?
Victoria Atkins
I promise that I will give way in a moment.
As the hon. Member for Boston and Skegness and my right hon. Friend the Member for Salisbury (John Glen) have both said, the sense of betrayal is palpable. As a fifth-generation farmer put it to me this morning,
“Would you want to work somewhere that you knew over your lifetime was going to be taken away bit by bit?”
Another has urged us to
“fight this vindictive, illogical and ideologically driven tax”.
Just before I began my speech, in response to the Secretary of State’s speech, I received this message from another farmer:
“So long as mum dies before March 2026, we’re okay”.
Yet the farming Minister and the Secretary of State seem to think that these worries are exaggerated. Indeed, the farming Minister got a ripe old reaction when he said words to that effect at today’s poultry conference.
When we warned in June that a Labour Government would do this, the Secretary of State said that such warnings were “desperate nonsense” and accused us of lying. This followed the assurances he gave in December that Labour would not change this policy. So that is a broken promise. He is doing the exact opposite of what he said. How can rural communities trust him in the future?
The Secretary of State has given some helpful advice to farmers, however. He has told them that they will have to
“learn to do more with less”.
Labour has not said the same to train drivers, resident doctors or their other union friends. Indeed, pensioners and family businesses will be the ones paying for these public sector pay rises.
Liz Saville Roberts
Will the right hon. Lady join me in asking the Secretary of State, who did not allow me to intervene, whether the confirmation that agricultural funding for Wales is to be Barnettised means that the allocation will drop from 9.4% to 5.6%? According to the Farmers Union of Wales, that is a drop of £146 million and more. This will also affect Scotland and Northern Ireland, so we need clarity on this issue for Welsh farmers.
Victoria Atkins
I completely agree with right hon. Lady. If the Secretary of State would like to intervene on me, he can answer her intervention. Answer came there none.
Simon Hoare
My right hon. Friend is a very clever former Treasury Minister and I am not, so perhaps she can help me to reconcile these two statements. In essence, and in true Harold Macmillan phraseology, the Secretary of State told us that farmers have never had it so good, yet his advice is that they will have to learn how to do more with less. I cannot make those two things add up. Can my right hon. Friend?
Victoria Atkins
No. What is more, the NFU, the Tenant Farmers Association and the Country Land and Business Association cannot make them add up either.
Victoria Atkins
I will give way once more, and then I must make some progress.
Mark Garnier
The Secretary of State talked about the fact that the price of agricultural land is artificially high because of tax avoiders trying to avoid paying inheritance tax. The implication of the proposed measures would be that the price of agricultural land will fall. That may sound attractive to people who are trying to come into the market, but has my right hon. Friend considered the number of farmers who have mortgages against their land? They could find themselves in negative equity as a result of the pushing down of the price of agricultural land.
Victoria Atkins
Very much so, and I thank my hon. Friends the Members for Wyre Forest (Mark Garnier) and for North Dorset (Simon Hoare) for their accurate and insightful interventions. Not only do some farmers have mortgages, but we know tenant farmers worry that their farms will be sold off, so that the landowners can enter into what some call a “greenwashing” agreement with corporates, in order to plant trees and gain access to green funds. One should not make the mistake of assuming that this ill-thought-through policy will lead to cheaper land prices: the maths on that is almost as bad as the Chancellor’s cockeyed accounting with her economic inheritance.
Let me tackle the ideology of this policy, reiterated by the Secretary of State during this debate, which is matched by Labour’s incompetence. First, the Chancellor herself does not seem to know the threshold at which her policy kicks in and whether spouses can transfer their allowances. Indeed, the Secretary of State does not seem to know that either. The Chancellor has said that the allowances can be transferred, yet Treasury documents supporting her Budget say that they cannot. In his winding-up speech, will the Minister clarify whether the Treasury’s documents are wrong or the Chancellor is wrong?
Secondly, will the Minister explain why this Government have targeted only British-owned farms and businesses with this tax hike? Companies operating here but owned overseas, private equity-owned businesses and public companies listed on stock markets will not have to pay Labour’s tax; it is just British families.
Thirdly, the Chancellor—and, indeed, just now, the Secretary of State—gave assurances that only a quarter of farms will be affected, but that is not backed up by the data from the Secretary of State’s own Department. DEFRA figures show that, in fact, these changes will affect two thirds of farms—some 66%. Will the Minister explain that discrepancy and what he has done personally to confirm those figures, so that he ensures he gives only accurate information to the House?
Several hon. Members rose—
Dr Luke Evans (Hinckley and Bosworth) (Con)
Another point we need to consider is the impact on food security if farmers decide to hand back their farms or have their farms broken up, as my right hon. Friend suggests. Does she have any thoughts or has she seen any evidence about the possible impact on food security? I have not seen any such evidence, which is a concern in itself.
Victoria Atkins
It most certainly is a concern, and I thank my hon. Friend for raising that. He represents a very rural constituency and knows only too well the concerns his constituents are facing. It is a good point, which I will develop later in my speech.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
On that point, will my right hon. Friend give way?
Victoria Atkins
I will give way to my right hon. Friend the Member for New Forest East (Sir Julian Lewis), and then I will make some progress.
Sir Julian Lewis (New Forest East) (Con)
My right hon. Friend is very kind, and she is making a masterly exposition of how to deconstruct this case. Did she notice, exactly a week ago, when we had an urgent question on the subject, the Minister for Food Security and Rural Affairs was asked how food security could be valued if the result of the Budget measures would be that farmland would be split up and sold off, probably for development. His answer said, in part:
“Of course there are trade-offs. There are a range of pressures on our land, in respect of housing, food, energy and so many other things.”—[Official Report, 4 November 2024; Vol. 756, c. 37.]
So he seemed to be accepting that land will be sold off and it will be built upon.
Victoria Atkins
Of course, the Government’s permissions for solar and wind industrial units on prime agricultural land will only add to those pressures as well.
Several hon. Members rose—
Victoria Atkins
I will make some progress. The immediate impact of the changes, as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) said in his intervention on the Secretary of State, is that farmers are already stopping capital investments in machinery, systems and buildings for fear that any improvements to their farms will send them over the cliff edge into this tax trap. So for a Government that claim to want to grow the economy, their choices are achieving the exact opposite. This family farm tax is a broken promise that will break family farms.
I move now to the second broken promise: the accelerated reduction in delinked payments. From next year, those vital payments will be substantially less than farms were promised. They cannot have foreseen that when they made their business plans. A tenant farmer has told me that he does not know how he is going to pay his rent next year, because the drop is worth more than £20,000. Can the Minister explain how this farmer should do more with less?
The third broken promise is the hike in national insurance for employers, of course. As the OBR has said, an increase in employer NICS will be passed “entirely” on to working people. I know that Labour does not actually know who it means by “working people” but the Conservatives are clear that it definitely includes farmers, their staff and the small businesses that support them, day in, day out.
Louise Jones (North East Derbyshire) (Lab)
The shadow Secretary of State says that she opposes the changes. Will she commit to reversing them, and which public services would she cut—for example, which NHS services?
Victoria Atkins
The hon. Lady is new to her place. As Financial Secretary to the Treasury I used to collect taxes for the United Kingdom and as the Secretary of State for Health and Social Care I used to spend pretty much all of them, so I know that the £500 million that the Government have score-carded this increase as achieving by the end of the score-card period will buy a fraction of what the NHS needs on a daily basis, let alone annually. If you believe the Whips’ handouts, the difficulty is that they sometimes get you into trouble.
For that matter, the phrase “working people” also includes our rural publicans. Labour Members are very proud of their Chancellor taking a penny off a pint. Yet any rural publican will tell you that will not even touch the sides alongside the NICs tax hike. Sadly, Labour’s jobs tax will see higher prices, fewer staff and more pub closures.
The jobs tax is also hurting our frontline services. GP surgeries, care homes, hospices, pharmacies and dental practices will all see their costs rise, and some will close. That hurts in a city centre, but it is devastating in communities who live with the impacts of rural sparsity, where it is more expensive to deliver services.
Josh MacAlister (Whitehaven and Workington) (Lab)
I appreciate that the right hon. Lady has referenced the NHS. I get lots of letters, emails and messages from farmers who have been completely let down by the state of the NHS as it was left by her as Secretary of State for Health and Social Care. Given that she has a new role, has she had any time to reflect on where she went wrong?
Victoria Atkins
I know the hon. Gentleman’s part of the world very well and I am sure—I can sense that he will be a conscientious local MP, mindful of his small majority—that he will badger the Health Secretary and ask him why he has not delivered the Conservatives’ dental recovery plan, which this autumn would have seen dental vans in rural and coastal areas, because as the Secretary of State I wanted to ensure that those areas had dentistry services, and golden hellos for new dentists setting up in rural and coastal areas. We were also introducing additional dental training places. We can all see the need in our rural areas, but the jobs tax and the family farm tax are not the answer.
This Government love raising taxes, so they are also raising taxes on fertiliser, on double-cab pickups and on business asset disposal relief, while risking food security by permitting solar and wind industrial plants to be built on prime agricultural land. The great shame is that none of this is necessary. This Chancellor’s cockeyed accounting is not believed by farmers, the public or even the OBR.
In government, we provided the largest ever programme of grants to farmers and brought the farming budget to its highest ever level. We provided more than £5 billion for flood protection, and established a new national rural crime unit. But we also understood that farmers and rural communities need dynamic support, and that is why we committed to raising the farming budget by £1 billion over this Parliament—a move this Labour Government have failed to replicate. Their freeze in the farming budget with no guarantee of a forthcoming increase means they have chosen to offer farmers and rural communities a real-terms cut. That all adds up to a direct risk to food security, because if our farmers do not thrive, domestic food production suffers, and that means more imports and higher prices. This is the “don’t bother” Budget from the “don’t care” Government.
This is the Labour Government’s choice and they should own it. They have turned their backs on rural communities and we will not forget. We will not forget that this Government are happy to plough straight over anyone who is not a trade unionist. We will not forget the huge bills put by this Chancellor on to working people, pensioners, farmers, pub landlords, business owners, and students.
I repeat the pledge by the Leader of the Opposition—the Conservatives will reverse the cruel family farm tax. To all farmers, farming families and rural communities out there, I say that we Conservatives stand with you, we have your back and we will work night and day to hold this useless Labour Government to account.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Josh Newbury to make his maiden speech.
Josh Newbury (Cannock Chase) (Lab)
Thank you, Madam Deputy Speaker. It is an honour to make my maiden speech as the Member of Parliament for Cannock Chase, my home. Having listened to many maiden speeches from all parts of the House, I have to say that I am honoured to be part of an incredibly talented intake—not that I am at all biased.
I also have the privilege of following some outstanding predecessors who are fondly remembered by my constituents. The best known is the late, great Jennie Lee who represented the former Cannock constituency for 25 years and also served as Minister for the Arts, playing a key role in the foundation of the Open University. Jennie was recently cited by the Chancellor as one of her political heroes and a contender to replace Nigel Lawson’s portrait in her office. Alongside her husband, the equally incomparable Aneurin Bevan, Jennie is commemorated across the constituency, including Jennie Lee Way in Rugeley and the Bevan Lee estate in Cannock.
I could not speak about past Members for Cannock Chase without paying tribute to my Labour predecessor, Dr Tony Wright, who served as MP for Cannock and Burntwood and later Cannock Chase from 1992 until 2010. Tony was the epitome of a dedicated constituency MP. Constituents regularly speak warmly of Tony and he won votes from across the political spectrum. If I can be half the MP Tony was, I will be able to look back on my time in this House with pride.
I would also like to pay tribute to my immediate predecessor, Dame Amanda Milling, who served our constituency for nine years. Amanda is praised by both supporters and detractors alike for her efficient approach to casework, which I know would be the envy of many MPs’ offices. Amanda served as a Government Whip for many years—not an easy job—and as Minister for Asia and the Middle East. I understand that Amanda also chaired the group of female Conservative MPs and was a passionate advocate of programmes that encourage women to stand for election. I may not have often agreed with Amanda politically, but I have always found her to be fair-minded, kind and decent, so I genuinely wish her all the best for the future.
When people hear the words “Cannock Chase”, they naturally think of the stunning forest that is the constituency’s namesake. While making their first speeches, many new Members have claimed their constituency as the most beautiful in the land. However, I have to point out that my constituency is the only one in England that shares its name with an area of outstanding natural beauty—facts are facts! But the Chase is not just a place with serene walks and herds of fallow deer, although we have plenty of both. It is also a place of industry, sport and recreation. The Chase is still a working forest, managed by Forestry England, which produces around 19,000 tonnes of sustainable timber every year.
The Chase is arguably most famous as a national destination for mountain bikers. As someone who could barely stay upright on fresh tarmac, the conversations I have had about mountain biking have probably been the steepest learning curve I have been on since the general election. But I look forward to working with bikers and Forestry England to build on the legacy of the 2022 Commonwealth games and make sure that unauthorised trails do not spoil the natural beauty of the forest.
The Chase is a vibrant place with a huge range of activities, including the high ropes and free falls of Go Ape at Birches valley. I place on record an open invitation to the right hon. Member for Kingston and Surbiton (Ed Davey), who, four months on from the general election campaign, must be suffering from zipline withdrawal. The iron-age hill fort of Castle Ring and the Chase’s former status as a royal hunting forest attest to its rich 12,000-year history. More recently, soldiers were trained on the Chase, including J.R.R. Tolkien, who was stationed there in 1916, and who may have drawn from it inspiration for the great forests in his legendary books.
However, as my constituents would be keen to remind us all, there is much more to Cannock Chase than our forest. Our tight-knit communities are home to organisations that we are immensely proud of. Charities such as Cherishers, Help a Squaddie, Catherine Care and Newlife are the best of Cannock Chase, bursting with dedicated staff and volunteers who selflessly give their time. The construction, retail and education sectors are the biggest employers locally—unsurprisingly, given that our three main towns of Cannock, Hednesford and Rugeley enjoy a strategic position on A roads and on a busy railway line. Cannock has the headquarters of Finning, the world’s largest dealer of Caterpillar construction equipment, as well as the west midlands designer outlet village.
Nevertheless, my constituency is not just urban and industrial; it is also semi-rural, with around a third of our land being agricultural. Clustered around the villages of Slitting Mill, Prospect Village, Cannock Wood, Wimblebury, Norton Canes and Heath Hayes is a tapestry of farms. Many of these communities feel left behind—last in the queue for infrastructure and services that other areas take for granted. A lack of access to GPs and bus services is frequently raised by my constituents in rural areas. We are also home to many businesses in the food supply chain, from processors to distributors. Because of those constituency interests, as well as my passion for the sector, I am delighted to be getting stuck into my role on the Environment, Food and Rural Affairs Committee.
Interspersed between houses, factories and nature reserves are small remnants of the once dominant coalmining industry, some of which are conscientiously preserved as much loved reminders of our proud mining heritage. While we do not want to see a return to coalmining, our towns and villages long for the secure jobs, social fabric and sense of common identity that characterised coalfield communities for centuries. The sudden closure of Rugeley power station in 2016 signalled a final move away from coal. The now cleared site is soon to be renewed, with a new community of hundreds of homes, a school and a new park, which will alleviate flooding from the River Trent. Following the very welcome and long overdue return of the mineworkers’ pension scheme investment reserve to hundreds of families in my constituency, I look forward to working with the Government and others to bring investment and renewal to communities across Cannock Chase.
Deciding what to say in a maiden speech leads us to reflect on what brought us to this extraordinary place, and what we hope to achieve for the people who sent us here. For me personally, it is momentous to be standing here, because 20 years ago I was a painfully shy young boy in the corner of the playground with my head buried in a book, trying as hard as I could to be invisible to the bullies who tormented me for a sexuality that, at that age, I did not yet understand. Today, I stand here proudly as a Member of this House. If I achieve just one thing in my new job, I hope it is to show young people who are in the position that I was in that your bullies do not define you, nor do they limit what you go on to achieve. I also hope to make my mark in other ways. Alongside my incredible husband, I am an adoptive parent to a beautiful four-year-old daughter, and foster carer to an equally beautiful nine-week-old baby boy, so adoption, permanence and our care leavers are all passions of mine.
Having been a councillor in my constituency for over five years, I am and will always be a fierce advocate for local councils and the tangible difference that they make to our communities. Given that my constituency has the highest proportion of people who commute by car in the whole of England, I know that a priority must be to fix the potholes. I am delighted that the Government are committed to both devolution and decent roads. As a proud member of the Co-operative party, I am always keen to promote democratic ownership. Communities in rural and coalfield areas know more than most the value of clubbing together and giving everyone a stake in the places and services that they rely on.
It is safe to say that I have lots on my to-do list, which is hardly groundbreaking for an MP, but I must finish by thanking the people who have enabled me to serve my home of Cannock Chase in this House. If it takes a village to raise a child, it takes a whole town to win an election campaign. I thank the Cannock Chase Labour party and all the volunteers who contributed to our record-breaking result. I thank my incredible family, many of whom are in the Gallery. They have helped me to overcome so much in my life, and they have put up with a lot; I am sure that many Members’ families can relate to that. The final thanks go, of course, to the people of Cannock Chase for giving me the opportunity to fight for our towns and villages. I will go on as I have started, repaying that trust with action and hard work for as long as they keep me here.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Tim Farron (Westmorland and Lonsdale) (LD)
It is traditional to say nice things about somebody who has just given a maiden speech, but that was a genuinely outstanding maiden speech. I congratulate the hon. Member for Cannock Chase (Josh Newbury) on the grace that he showed to his predecessor, and his clear and obvious expertise on, and passion for, his constituency. I will pass on the offer to my right hon. Friend the Member for Kingston and Surbiton (Ed Davey), who I am sure will jump at the chance to go on a zipwire anywhere, but especially in the hon. Member’s patch. I am sure that my right hon. Friend’s diary secretary will be delighted with the commitment that I have just made on his behalf.
The hon. Member for Cannock Chase claimed to have the most beautiful constituency in the country. We will let that pass for the moment. I represent Westmorland and Lonsdale, which covers the Lake district and the Yorkshire dales—a vast area of the United Kingdom that is utterly beautiful. We are now the second largest constituency in England. I know that it pales into insignificance besides some of my highland colleagues’, but all the same, is it a place that I am very proud to represent.
I am grateful to the Secretary of State for leading this really important debate. I welcome the new shadow Secretary of State, the right hon. Member for Louth and Horncastle (Victoria Atkins), to her position. I was thrilled and excited by the awesome picture painted of life in rural communities before 4 July, but just to bring us all back down to earth, I will remind us of what life was really like. Over the last five years, livestock farmers in my constituency and elsewhere have seen a 41% drop in their income. Look at our rural communities, and the evaporation of the long-term private rented sector, replaced by Airbnbs—unregulated, unintervened on, and unprevented. Second home ownership is gobbling up our villages and killing off rural communities. It is no surprise that at the last general election, the Rural Services Network calculated that if rural England was a separate region, it would be the poorest in England.
The Secretary of State will seek to be less disastrous for rural communities than the Tories who went before him. That is not a very high bar to clear, but looking at the Budget, I am concerned that he may not find that as easy as he thought. Let me say a thing or two about the Budget, in particular APR, BPR and the changes to inheritance tax. Some 440 farmers in my constituency will be affected by the APR and inheritance tax change. It is important to remember that very large numbers of people live on significantly less than the minimum wage, yet have a property that, on paper, is worth enough for them to be clobbered by the change.
While 440 farmers will be directly affected, hundreds of tenants will be indirectly affected, because when a landlord has to rearrange their business, perhaps to try to avoid paying inheritance tax, it will be tenants who end up losing out, however the landlord restructures their estate. I was pleased to hear the Minister for Food Security and Rural Affairs confirm at the Hexham northern farming conference last week that the Government will bring in a tenant farming commissioner. I congratulate and thank them for doing that, but the position will not be up and running before the policy has been introduced. Tenants will be evicted from their land. In our communities, we will see lakeland clearances as a result.
The policy has been sold as one that attacks the wealthy. No—the wealthy will find ways around it, just as we are finding with business property relief. I cite the case of the owner of a family-run, very famous, wonderful holiday park in the central lakes in my constituency. He is a father in his 90s. The business is not worth millions in terms of cash flow or profits, but to pay the death duties, the family will have to sell out to another big corporate. Big corporates and big equity houses will buy up farming and non-agricultural family businesses. When it comes to farming, land will pass into non-agricultural use, and the house will be turned into yet another second home. That will be devastating for not just family farms but rural communities as a whole.
Sarah Gibson (Chippenham) (LD)
Family farms are a key part of the fabric of our countryside, as farmers in my rural constituency tell me every day. They have spent all weekend trying to get my attention just to tell me that. What really worries me about the changes to inheritance tax in the Budget is that they will directly and disproportionately affect small family farms. Does my hon. Friend agree that that will have a devastating effect on small farms, and on our food security?
Tim Farron
I think it will. Many farmers earn less than the minimum wage, and although they own property worth an awful lot of money, it is worth nothing to them, really, because it is their business. As a consequence of the changes, someone will own that farm, but it will no longer be a family; it will be some huge estate, or a private equity firm. The Government must listen on that issue.
I will turn my thoughts to funding elements in the Budget. I have found a very rare creature: a Brexit benefit. Leaving the common agricultural policy, and moving towards environmental land management schemes—set up by the previous Government, adopted by this one, and supported in principle by the Liberal Democrats—was an opportunity to make things better for farmers and our countryside. However, the previous Government botched things completely by failing to fund the projects properly, and by taking away basic payments at a regular and dependable rate, and not replacing them quickly enough with a new payment under the environmental schemes. That has massively reduced our ability to feed ourselves. The agricultural policy of the last Conservative Government, which has, so far, been adopted by the current Government, is absolutely insane, in that it disincentivises the production of food. That is ridiculous, and I hope that the new Government look actively at putting it right.
The effect of the £350 million underspend by the previous Government was not felt in the pockets of the big landlords, who were able to get into the schemes relatively easily; it was smaller family farms that suffered, yet the Budget speeds up the rate at which we are getting rid of the basic payment, which is deeply troubling. A reduction of at least 76% in the basic payment for those still in the system will be devastating for their businesses. People do not know what to do next; they may end up backing out of environmental schemes and farming intensively in order to pay the rent and keep a roof over their family’s heads.
It is worth bearing in mind the impact that the measures will have on the mental health of farmers. Let us put ourselves in their position. A fifth or sixth-generation tenant farmer or owner-occupier might see that they could lose the family farm because of the Conservatives botching the system and the Labour Government’s cliff edge. Do not put people in that position. Give them time to move into new schemes, rather than kicking the legs of the old system from underneath them.
Let me say a word about trade deals before I talk about other important rural issues. The previous Government absolutely threw British farmers under the bus in the deals that they cut with New Zealand and Australia. We must of course be pragmatic about relationships with the incoming Administration in the United States, but in any deal with the US, I urge the Secretary of State not to do what the Conservatives did in their deals with Australia and New Zealand. Protect British farmers and protect our values, please.
Simon Hoare
The hon. Gentleman and I shared very similar concerns about the trade deals with Australia and New Zealand. We feared that imports would swamp the market, but fortunately that has not come to pass; it has all been swallowed up by an ever-voracious Chinese and south-east Asian market. New Zealand lamb producers have actually reduced the size of the flock per capita. What we worried about has not come to pass, and we should be grateful for that.
Tim Farron
Well, I think it has come to pass, to a degree, in the sense that we allow equal access to our markets to those producing animal products—meat and other food products—who have lower standards than British farmers. That is just not fair; it is not a level playing field. The American market is far bigger, and my great fear is that doing a similar deal with Donald Trump will do much more harm to British farmers. I hope that the Secretary of State will be mindful of that.
Let me move on to other issues that affect our rural communities. In a constituency such as mine, the average house price is 14 times the average household income. We have a 7,000 household-strong waiting list for social rented housing. I mentioned earlier the collapse of the long-term private rented sector into Airbnb, which has a huge consequent impact on lives. I can think of a particular couple—she was a teaching assistant; he was a chef—who were kicked out by the landlord, who wanted to go with Airbnb. As a result, they had to take their two kids out of school, give up their jobs and leave the area completely. There were hundreds and hundreds of such cases, and the previous Government did not intervene until it was far, far too late.
The impact of the housing crisis in rural communities across our country is not just deeply upsetting and devastating for families, but damaging to our workforce. Sixty-six per cent of lakes and dales hospitality and tourism businesses are operating below capacity because they cannot find enough staff. One in five care jobs in Cumbria is unfilled because of a lack of permanent workforce.
Another matter that the previous Government refused explicitly to tackle, and which I hope this Government will tackle, is the scourge of excessive second home ownership in Britain’s rural communities. People own those bolthole homes but barely live in them. The excessive number of second homes in our communities means that we lose our schools, our bus services and the very heart of those communities. Will the Secretary of State consider doing what the Liberal Democrats have proposed for years by making second home ownership a separate category of planning use, so that planners have the opportunity to protect their communities?
On health, so many of the issues that we face in rural communities relate to distance from care and people’s ability to get where they need to be in time. That also means that we have efficiency issues. A GP serving a huge acreage may not be very efficient with their relatively small list, but we desperately need them. Will the Government consider our proposal for a strategic small surgeries fund to keep vital GP surgeries open in rural communities?
We must also bear in mind that some of the longest and most unacceptable waiting times for cancer treatment are in rural communities. We very much welcome the £70 million for radiotherapy that was announced just before the Budget—much to Mr Speaker’s chagrin—but will the Secretary of State bear in mind that 3.5 million people in the country, most of them in rural communities, live in radiotherapy deserts? Half of us will have cancer at some point in our lives, and half of those people should receive radiotherapy treatment, yet barely a quarter of them do. One reason for that is that communities such as mine are just too far from that treatment. Will the Government ensure that some of that money goes towards providing satellite units in Kendal and other parts of rural Britain.
On public transport, it is right to say that the Government have made a poor decision in increasing the bus fare cap. That will have a huge impact on low-wage workers, particularly in rural parts of the country. Frankly, a £3 cap—or even a £2 cap—is a fat lot of good if there is no bus to use it on. I encourage the Secretary of State to devolve to local authorities the power to run their own bus services, and not to enforce local government reorganisation in order to achieve it—just give them those powers now.
I am coming to the end of my remarks, I promise. On broadband, the new Government—and the previous Government—have made good progress on Project Gigabit, and we ought to be grateful for that, but they must be aware that there will always be places that the project will not reach, including four in my constituency: Warcop, Hilton, Murton and Ormside. Those places are in deferred scope and, currently, are likely to get no service whatsoever. Will the Government consider de-scoping those places so that they can access vouchers? That would allow B4RN, our wonderful local not-for-profit broadband company, to step in and do the job.
You will be delighted to hear, Madam Deputy Speaker, that this is my final point. It is worth pointing out that under the Conservatives, 45% of water bill payers’ money went into the pockets of shareholders in dividends, into bonuses or into debt financing. Meanwhile, half a million instances of sewage dumping in our lakes and rivers happened each year. We welcome some of the Government’s proposals to clean that up, but without radical reform of the industry—which they are not proposing—that problem will not be solved in a long-term way.
In conclusion, our rural communities have been taken for granted and deeply damaged by a Conservative Government; our memories in rural Britain are very long, and they will not be excused that failure. We also see a Labour Government whose early start is not promising for our rural communities. As such, we in the Liberal Democrats have made a deliberate choice to be the voice of rural communities. We will take up that mantle with humility and passion, because a Britain that cannot feed itself is a Britain that will fail.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Chris Kane to make his maiden speech.
Chris Kane (Stirling and Strathallan) (Lab)
It is a great honour to be called to make my first contribution in this place as the Member of Parliament for the new constituency of Stirling and Strathallan. My constituency is the geographic heart of Scotland, and what a beautiful part of the world I am lucky enough to represent! At just under 2,500 sq km, it is predominantly a rural constituency—from its farming villages, including Drymen, Buchlyvie, Callander and Killin, to its former coalmining villages of Bannockburn, Fallin, Plean and Cowie; from the bonnie banks of Loch Lomond to the mountains of the Trossachs and the valleys carved by the rivers Forth, Endrick, Teith and Allan. It has the city of Stirling, with its majestic castle defending a royal burgh that became a royal city in 2002, and the city of Dunblane, with its magnificent medieval cathedral.
Politically, I follow in the footsteps of a daunting list of constituency representation that includes one Prime Minister, the father of a Prime Minister, two Secretaries of State for Scotland, a Secretary of State for War, a Father of the House of Commons and a Leader of the House of Lords. In my lifetime, we have had Harry Ewing, the godfather of devolution; Michael Forsyth, who brought the Stone of Destiny back to Scotland; and Dame Anne McGuire, who as Minister for disabled people signed the first human rights charter of the 21st century on behalf of the United Kingdom at the United Nations. Steven Paterson and Stephen Kerr bring us to my predecessor, Alyn Smith. Alyn represented Stirling in the previous Parliament, but prior to that, he represented Scotland with distinction as a Member of the European Parliament. He cares deeply for Scotland and has public service at his heart. I wish him well for the future and thank him for his service.
The coalfields of central Scotland transformed the landscape of the southern end of my constituency over the past 150 years. My great-grandfather, William Kane, was a miner, and while working at the coalface in 1914, a large rock dislodged from the ceiling and crushed him. William died from his injuries. His son, my grandfather Frank, was 12 years old, and had to leave school to earn money—not to take the family out of poverty, but to keep them alive. Everything that troubles me about that story has been improved by the Labour party and the trade union movement, with their relentless focus on improving workplace conditions and workers’ rights over the past 100 years.
“We feel that something should be done. We have the idea that one of the functions of the Government of this country is to see to it that there should be equality, equity, and fairplay between the parties, that the weak should be protected from any outrage by the strong…It is the business of the Government to see to it that there should be equity and fairplay between all conditions of people in the State.”—[Official Report, 13 December 1922; Vol. 159, c. 3011.]
Those are not my words, but those of my grandfather Frank’s uncle, Hugh Murnin, who was also a miner. They were spoken by Hugh in this place, in his maiden speech, after he became the MP for Stirling in 1922. Reading all of Mr Murnin’s speech, I was struck by how much has changed from his description of work, and how much has stayed the same. There is still much to do to delivery dignity and fair play, which is why I am proud that this Government are raising the national living wage and, through the Employment Rights Bill, will update the UK’s outdated employment laws and turn the page on an economy blighted by insecurity, poor productivity and low pay.
I should say that 12-year-old Frank, my grandfather, became a grocer’s apprentice. He developed an entrepreneurial spark that took off when the BBC began broadcasting in Scotland in the 1920s. He opened Bannockburn’s Radio Music Store to supply radio sets and constantly recharge the large lead-acid batteries on which they depended. That business prospered under my parents, Bill and Diane, and my brother Michael runs the business today—shop local when you can.
Along with coal, the rivers and lochs of my constituency bring with them nutrients that are vital for farming. The flat floodplain of the Forth is 16 miles long and 4 miles wide, and is filled with farms that today produce everything from beef to dairy and from sheep to pumpkins. For many years, the River Forth was Europe’s premier oyster fishery. Over 30 million oysters were harvested each year in the early 19th century, but overfishing caused a collapse and the Forth oyster was declared extinct in 1957. Issues such as overfishing and sustainability are studied in great depth at the University of Stirling’s international centre for aquaculture, the largest of its kind in the world. It is leading the way in research to tackle the global problems of food security, hunger and sustainability through the world’s rivers and seas. It was also a researcher from the institute of aquaculture who discovered in 2014 that the Forth oyster was still alive, with two of them growing in the river.
When the railway arrived in my constituency in 1848, it brought with it an entrepreneurial spirit that saw Scotland’s first oil refinery open in Riverside in Stirling. Until the Forth bridge opened in 1890, the bridges at Stirling carried most of Scotland’s goods to and from the highlands. Scotland’s first heavier-than-air flight took place in Stirling when the Barnwell brothers built and flew an aircraft in the shadow of Stirling castle. That entrepreneurial spirit lives on in the likes of Highland Spring, a fantastic family business in Blackford that neighbours Gleneagles, one of the world’s premier hotels and golf courses. In Stirling, a £20 million investment has recently been announced to create a film and TV studio that will be the largest in Scotland. Stirling was the first gigabit internet city in the United Kingdom, and one of the first in the world to digitally map its city to create an augmented reality smartphone experience.
We are a growing base for life sciences, manufacturing and, of course, tourism. My constituency offers some of the best outdoor activities in the country, from salmon fishing to hillwalking, with lots of family-friendly activities along the way. If history and heritage are your thing, we have castles, monuments, battlegrounds and the only working church other than Westminster Abbey to have hosted a coronation. For those who like sport, Stirling was showcased to the world in 2023 with the time trials of the Union Cycliste Internationale’s cycling world championships. Scotland’s national swimming academy is at Stirling University and has produced Olympic medallists including Duncan Scott and Robbie Renwick. The UK’s national curling academy is also in Stirling, and I cannot mention sport without referencing Judy, Jamie and Andy Murray, whose success, resilience and mindset have forever linked tennis with the city of Dunblane.
Stirling and Strathallan is not in the heart of Scotland: it is the heart of Scotland. Much of the modern sense of Scottish cultural identity originated in my constituency, from the battles of Wallace and Bruce at Stirling bridge and Bannockburn over 700 years ago to the reinvention of tartan at the mills of William Wilson—also in Bannockburn—in the 1800s. A much more subtle sense of my constituency is found here in this place and in the UK identity, because it was a Stirling resident, a weel-kent local face called King James VI, who united the kingdoms of England and Scotland in 1603. I have walked about this place wondering which of our traditions have their origins in the traditions of the court of King James at Stirling castle.
Stirling is celebrating its 900th anniversary this year—900 years since King David granted a small settlement on the River Forth burgh status. Stirling and Strathallan has gone on to give much to Scotland, the United Kingdom and the world over the past 900 years, and there is much more to come. Stirling and Strathallan is proud of its past and ambitious for its future, and I am hugely honoured and privileged to represent my home here in this place.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
It is a privilege to follow the maiden speech of the new hon. Member for Stirling and Strathallan (Chris Kane). I am sure he will make a significant contribution to this place, and as a fellow Scot I wish him well.
I am lucky to represent the Scottish Borders, the place I call home. We have wonderful towns in the borders, but it is one of the most rural constituencies in the whole United Kingdom. There is a strong sense of community spirit among local people, but there is also a deep and growing concern that the Governments in Edinburgh and London do not get what is important to our communities. There is a widening disconnect between people and politicians, and a growing feeling that the needs and concerns of rural areas are not important to Scotland’s two Governments.
For 17 years, rural areas in Scotland have been overlooked, and even ignored, by the SNP Government, who do not understand what is important to our communities—an SNP Government who are distracted and focused on their own selfish and often divisive obsessions. They spend time on fringe issues, such as gender reform, that do not matter to the everyday lives of people in the borders. With a new Government in London, local people are now feeling the same way about Labour. Labour clearly does not value rural areas and does not care about farmers or listen to our communities. The Labour Government are bad news for the borders and for rural areas across Scotland and the United Kingdom.
Let us look at what the Labour Government are already doing to rural communities. In their first Budget they changed inheritance tax, and business and agricultural property relief, despite warnings of the impact on rural areas. Their family farm tax will rip apart rural businesses and prevent farmers from passing on the family farm to the next generation. It is cruel, bitter and divisive. It is also the opposite of what Labour said it would do—another broken promise from the Labour Government.
Let us listen to what Labour said before the election. The Secretary of State said in December 2023 that the Labour party had no plans to change inheritance tax, including agricultural property relief, so it is shameful that he now claims to be proud of Labour’s family farm tax. He was not the only one to make that pledge. The Prime Minister, the Chancellor, the Secretary of State for Scotland and the Scottish Labour leader, Anas Sarwar, repeatedly promised not to raise taxes on working people, but that is exactly what they have done.
I have news for Labour: farmers are working people. In fact, they are some of the hardest-working people of any industry. They get up before dawn and put in a hard shift every single day of the week, 365 days of the year. Labour should be ashamed of raising tax on farmers and preventing them from passing on the family farm. This shameful betrayal will not be forgotten by rural areas or in my borders constituency.
Let me share with the Labour party what local farmers are saying, because it is clearly not listening. I recently spoke to Colin and Jill McGregor of McGregor Farms near Coldstream, who said:
“The autumn Budget that Labour broadcast last week will affect every family farming business across the country. We have been digesting the details over the last couple of days and can see a substantial financial impact on our farming business. The Government seems to have no idea of the costs involved in agriculture. The tax that would have to be paid on death will cripple many family farms, with a huge proportion having to sell land to pay the tax and breaking up family businesses that have been working the land for many generations.”
Labour does not seem to care about the damage it is doing to farming.
Farming is not just a job but a way of life. We cannot overlook the immense contribution that our farmers and food producers make towards the rural economy and protecting our natural environment. They supply supermarkets and local shops, provide for housing in our towns and villages, invest in infrastructure, create jobs, employ workers, and much more. It is crucial that the Government take the right steps and measures to protect the industry and ensure its longevity for many years to come.
Labour and the SNP must provide certainty and stability to our farmers. If they do not, farmers and landowners will no longer invest or provide those important services. We should not forget: no farmers means no food. Labour’s family farm tax will not just break up family farms, but limit food production, damage our food security and drive up the cost of our weekly food shop in supermarkets. Labour must drop the tax and keep its word to farmers.
But that is not all: Labour must start listening to rural areas. As it stands, Labour’s plans will do great damage to local transport plans. Labour has announced plans to drop the dualling of the A1 road, which is a vital transport link for my constituency in the Scottish Borders and for cross-border connections between Scotland and the rest of the UK, and it has halted progress on the borders railway, which is crucial for commuters and anyone looking to get around in the borders. How is the borders economy supposed to grow, and how are businesses supposed to create jobs, when Labour is cutting investment in our communities?
I will always stand up for rural areas, especially those in the Scottish Borders. It would be nice if, just once, the Labour party did the same.
Madam Deputy Speaker (Caroline Nokes)
I call David Taylor to make his maiden speech.
David Taylor (Hemel Hempstead) (Lab)
It gives me enormous pride to be stood before you, Madam Deputy Speaker, and to make my maiden speech as Hemel Hempstead’s MP. I pay tribute to my hon. Friends the Members for Cannock Chase (Josh Newbury) and for Stirling and Strathallan (Chris Kane). I know Stirling well through my involvement in the Make Poverty History campaign; it is a very beautiful place.
I am grateful to make my maiden speech in the presence of the Secretary of State, who was generous with his time in my constituency during the election. I am humble enough to accept, however, that the primary reason for his presence was usually the fact that his mother resides in Hemel Hempstead and is a member of the local party.
In this debate about rural affairs, I want to start by paying tribute to the beautiful countryside that surrounds our town, and to the villages that are part of the constituency following the changes to the boundaries at the last election. From St Lawrence’s church in Bovingdon, where I was this morning to mark Armistice Day, to Chipperfield cricket club and the Green Dragon pub in Flaunden, we are blessed with many picture postcard scenes—and my dog, Albert, is particularly fond of chasing squirrels on Chipperfield common.
Turning to Hemel itself, the old town is so picturesque that one local council official jokingly referred to it as Hemelwood, such is its popularity as a filming location for local TV and movies. We were once home to the site of a major Roman villa on the River Gade, which supposedly had the biggest Roman bath outside Bath itself.
When Hemel town council was amalgamated into a new district council, exactly 50 years ago this year, the then Labour leader of the council, Gordon Gaddes, who is still a stalwart in our community even though he is now in his 90s, chose an old Latin name for the council—Dacorum, which means “of the Dacians”, referencing a period in Saxon times when Danish law applied due to the presence of the Vikings. We also have a long-standing connection to Henry VIII, who in 1539 granted the town its market charter. Because of him, the mighty Hemel Hempstead Town FC are nicknamed the Tudors.
Like many others, my family’s connections to the area come from the creation of the new town after the second world war. This new town was one of Labour’s finest achievements, providing families with decent housing, good-quality factory jobs, education and healthcare. From Chaulden where my dad grew up to Highfield where my mum did, and Adeyfield where my nan lives now, council housing surrounded a square with amenities such as shops, a community centre, a place of worship, a GP surgery and schools. I therefore welcome our new Government’s commitment to build genuinely affordable housing and new council homes, while also ensuring that the right infrastructure accompanies them. As we seek to build new towns around the UK, I would be happy to show Ministers the virtues of our ingenious, and often misunderstood, magic roundabout.
I pay tribute to my predecessor, Sir Mike Penning. It was not just our community that he served with loyalty, but this nation: Sir Mike was a distinguished Grenadier Guardsman in the British Army and subsequently served as a firefighter in Essex. In his maiden speech he said that when he left this House he wanted to be known as a good constituency MP. He certainly was, doggedly taking up his constituents’ individual cases when they needed him.
I also pay tribute to our two previous Labour MPs: Tony McWalter, who was kind enough to take me under his wing when I was a member of the UK Youth Parliament, and Lord Corbett. Sadly, I never had the opportunity to meet Robin, but I know from my friendship with his widow, Lady Val, that he was a wonderful, warm and kind man who served his constituents with compassion.
That leads me to the points that I will prioritise as I serve the people of Hemel Hempstead. First, I will strive to improve local healthcare, including by pushing for a new community hospital. In line with this Government’s commitment to neighbourhood-based care, and enjoying the support of the local NHS trust, the local council and my predecessor Sir Mike, I will push hard for the project to advance in the most ambitious way possible, as well as ensuring that access to GPs and dentists improves.
I will make sure that children in Hemel Hempstead, particularly those with special educational needs and disabilities, get the best possible education. The SEND situation, not only in Hertfordshire but in Dacorum itself, is particularly bad; the issue came up repeatedly when I was talking to voters as a candidate, and it is at the top of my postbag now as an MP. At one of my most recent surgeries one parent, Natasha, told me that her son Alfie had been diagnosed with autism aged five, yet he has been repeatedly refused an education, health and care plan and has been waiting for a specialist appointment for almost two years. Sadly, her story is one that Members of this House will know all too well. I am glad the issue is an area of priority for our new Government, and I will continue to work on it on a cross-party basis as a member of the all-party parliamentary group on SEND.
I will also prioritise combating crime. Recent stats show that Hemel was the one of the worst towns in Hertfordshire for antisocial behaviour—indeed, it was the worst major town—while vehicle crime is at 105% of the national crime rate. I have seen that at first hand when I have had the opportunity to go out with local bobbies on the beat. I will work hard to make our community safer, whether by getting more police officers in our town or by working to reopen the front desk at Hemel police station.
I know that the cost of living crisis is hurting people locally. Food bank use has gone up 1,000% in the past 10 years in my constituency. I applaud the work that local charities such as DENS, Community Action Dacorum and Hemel Hempstead Community Fridge are doing to help. I am doing everything I can to stand alongside them, but I also pledge to push for better decisions to be made here in Westminster to ensure that food banks do not need to exist at all.
In concluding his maiden speech, Sir Mike paid tribute to the person who brought him into politics, the late Sir Teddy Taylor—no relation; it is a common name—and it is only fitting that I do the same. After taking part in the UK Youth Parliament, I thought long and hard about which great cause I wanted to focus my time and energy on. I got involved with the Make Poverty History campaign; I still have the wristband around my wrist. I attended a rally exactly 20 years ago outside the Labour conference, where I heard the then Chancellor Gordon Brown speak in thunderous terms of our duty to help those less fortunate than ourselves. A few years later, I had the enormous privilege of working for him, with my newly elected hon. Friend the Member for Midlothian (Kirsty McNeill). Many within these walls and beyond will recognise his—and her—unrelenting dedication and drive to improve the lives of others, which inspires me to this day.
Finally, I add my name to those who have paid tribute to Jo Cox in their maiden speech. With the Labour Campaign for International Development, and now as a member of the International Development Committee, I remain committed to taking forward her legacy, particularly on the responsibility to protect civilians, which is so urgent everywhere from Ukraine to Syria to Sudan.
As Gordon said on the eve of the poll back in July, we have a choice in the UK and around the world: to succumb to pessimism or to embrace hopefulness and remember that, in Jo’s words,
“we are far more united and have far more in common than that which divides us.”—[Official Report, 3 June 2015; Vol. 596, c. 675.]
I will do my utmost, as long as I have the honour of representing the people of Hemel Hempstead, to push for a more hopeful future in our community, our country and our world.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. Members will be conscious that lots of speakers wish to contribute this evening. After the next speaker there will be a six-minute limit, which may need to be reduced in due course.
Damian Hinds (East Hampshire) (Con)
What a privilege and a pleasure it is to have been here this evening for three outstanding maiden speeches. It is a great honour to follow the hon. Member for Hemel Hempstead (David Taylor). As it happens, I learned to swim at Dacorum leisure centre, but I never knew what “Dacorum” meant until tonight, so I am grateful to him for that. It was great to hear about the developing film industry in Hemel Hempstead, which used to be famous for the old Kodak building. The hon. Member for Cannock Chase (Josh Newbury) says that Cannock Chase is more than a forest; the hon. Member for Hemel Hempstead has certainly demonstrated that Hemel Hempstead is much more than an extremely complicated roundabout. All three hon. Members will be great contributors to this House of Commons and assets to our democracy. It was a pleasure to hear from them.
Rural Britain is different. The rural economy is different, quality-of-life issues are different, the profile of crime is different—almost everything is different. In some ways it is better—we have somewhat better air quality, and we spend less time sitting in traffic—but there are also many challenges. The sheer distances involved affect so many things, from people’s ability to access regular specialist healthcare treatment to their ability to get the right T-levels placement for their career. That, in turn, has an impact on health inequalities and social mobility. The costs of provision mean that many of our constituents are off mains drainage, and many more again are off the grid. That has implications for their costs and, indeed, for decarbonisation.
On connectivity, things have improved a great deal, but many Members of this House will have had, or heard about, the experience of having to go to the end of the lane to receive a text message verification code that has already expired by the time they get back. Thankfully, such things continue to improve, but there is still a big gap between our rural and urban areas.
This is a broad topic. We could debate any of the issues that I mentioned, but to avoid being repetitious of other Members, I will restrict myself to three disparate topics. The first relates to connectivity, not for broadband or mobile but for an older technology that often gets overlooked: the phone. Rural areas have a particular angle on the upcoming roll-out of the voice over internet protocol, which will replace the public switched telephone network. Another thing to add to the list of differences in rural areas is the weather, which means that electricity lines get knocked over more often. We still have power cuts in rural areas, with a frequency that people in cities might find hard to believe. Sometimes they last for a few hours, but we had one in East Hampshire in the past few years that lasted for more than three days.
The proposal to get rid of traditional telephones, which are a lifeline in such cases, and replace them with internet telephony that relies on a one-hour power back-up was never going to work in rural areas. I am pleased that there has now been a pause, and I am also pleased that some operators, including Vodafone, which I spoke to the other day, are looking into a much better power back-up. We need to see more on that, but in the meantime we need to ensure that consumers who are changing system are made aware of the position.
My second topic relates to housing and affordability. It is quite a niche topic nationally, but it is definitely not niche in my constituency, where we have an area that is partly in a national park and partly outside it. The housing targets are set for the whole district, but there are severe restrictions on what can happen inside the national park, so there is a great deal of pressure on development and therefore on services just outside it, in places such as Alton, Four Marks and the southern parishes of East Hampshire. It is also an issue inside the national park, because there is already an affordability discrepancy between inside and outside. Over time, as there is disproportionate development outside, that discrepancy will grow. I hope the Minister will discuss this anomaly with his colleagues in the Ministry of Housing, Communities and Local Government and that it can be fixed in the national planning policy framework rethink.
The situation is exacerbated by the massively higher housing targets now coming for rural areas, with the change in the formula meaning much higher targets for areas such as mine but with targets reducing for parts of London, where clearly there is a major, and in most measures a greater, housing affordability issue. I ask Ministers to look again at how the affordability ratio and the overall formula work and seek to ensure that the new housing that gets built, not just the existing stock, is truly accessible and affordable to local people, not just creating very large numbers of new five-bedroom executive homes which will be just as out of reach as those already there.
My final point, which I know all Members will make tonight, is about the importance of farming. Nobody here needs to be told about the importance of farming; it is not quite the same thing as rural affairs but there is such a heavy overlap, and we rely on farmers for so much—for land stewardship, biodiversity, and managing the attractiveness of the countryside for the visitor economy. When we get snowed in in Hampshire, we even rely on the farmers to clear the roads.
Most of all we must never forget that we rely on these men and women for our food. Land yield really matters; it matters to them as agricultural businesses, but it also matters to us. The one asset we cannot increase in size is the total amount of land that we have in the country. It is in our national interest to support the farming sector to be able to get the most production possible out of the land. I urge the Government, genuinely, to think again about how they support this sector with the farming budget, with having a formal target for food security, and of course with rethinking their terrible move on inheritance tax.
There have always been different types of farms—large and small, owner-occupied and tenanted—but family farms have always been at the heart of our agricultural sector. They are businesses, but in one sense they are unlike other businesses. Their biggest asset is not something they have bought and is not something they intend to sell, so in that sense they are more like custodians of an asset than owners.
Sam Rushworth (Bishop Auckland) (Lab)
Will the right hon. Gentleman give way?
Damian Hinds
I must ask the hon. Gentleman to forgive me, as I need to finish in less than one minute.
The agricultural property relief and business property relief changes will cut right into this asset. I have a constituency example, a 50-acre farm with an estimated farm value of £5.5 million, but the profit from it is only £19,000 per year. In the event of the demise of the parents, the liability could be £900,000, and there is no way with a return on total capital of 0.35% that they can do anything other than sell it. That matters not just to that family but to all of us. First, there is the concern that larger businesses will come along and buy up these family farms, and they are not necessarily buying them to plant crops or rear livestock; they may use them for renewable energy projects or carbon credit use, and that will mean less food production. Secondly, being aware that a tax is coming upon death, the current generation farming the land will be disincentivised from investing in the farm, knowing the return effectively will be lower. For those two reasons, it does not just matter to those families; it matters to every single one of us in this Chamber and every single one of us in this country, and I ask the Minister to please think again.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
I refer to my entry in the Register of Members’ Financial Interests.
Can Members imagine what it is like for someone to not be able to see, hearing water flooding into their home, not knowing where it is coming from, fearing how deep it might get, with no idea where the next escape route might be in the house? Can they imagine being a child who has previously become homeless due to flooding and lost their most treasured possessions, for whom just hearing a raindrop outside triggers their post-traumatic stress disorder and nightmares? Can they imagine being a farmer whose entire crop is lost to the impact of flooding? Can they imagine being a carer for a child on dialysis, knowing that when it rains they could soon be dealing with pumping out contaminated water from their own home while their child is having treatment?
For many, these situations are not unimaginable; it is their reality. That is not a surprise when flooding is the most recorded natural disaster on this planet. In 2023, 176 flood disasters were recorded across the world, a similar number to the year before, both of which are significantly higher than the average of 86 recorded in the 1990s.
One third of our planet is prone to flooding, and over five million people here in the UK live or work in flood-risk areas. Flooding is also a huge economic problem, as we have heard today. According to work by the Risky Cities project, Arup and other partners, the single biggest shock or stress that can affect the economy of 60% of the Rockefeller Foundation 100 resilient cities across the world is flooding. However, it is not just too much water; we are increasingly seeing the impact of too little water, or drought, and too dirty water, or pollution, impacting our rural and urban communities.
Water knows no boundaries, whether geographical, political or topographical. That is particularly challenging in countries such as ours where we have tried to make sense of the natural world and environment by creating frameworks and therefore putting boundaries in place. Water is complex. In many parts of the country, we could walk a kilometre alongside a watercourse and anywhere along that stretch someone might be impacted by flooding. The same water can pass along a river managed by the Environment Agency, into a culverted area managed by the local authority, through a farmer’s field with riparian ownership, back to the EA, into an internal drainage board-maintained ditch, through a water company pumping station, back to a sustainable urban drainage pond managed by the local authority, and so on. In that short stretch between here and Westminster bridge, we could have several hand-offs and handovers of that ownership of an asset by half a dozen authorities.
To be frank, if we ask any of my residents who I visited recently in Westwoodside in Axholme, a rural area, or the River Idle Flood Action Group in Bawtry, they will tell us that they do not care who owns the water, they just want that water out of their homes, out of their gardens, and out of their business premises. In fact, they do not want it even to get to the stage where it comes in in the first place.
The same water management principle applies to cleanliness, whether water is impacted from diffuse sources like the run-off from land, combined sewer overflows, trade waste, septic tanks or misconnections. The ammonia, E. coli, enterococci, nitrates and metals that impact our ditches, dykes, rivers and oceans come from many sources owned by many individuals and organisations. We all have a massive part to play in cleaning up watercourses, and the fact remains that we need to manage water across the whole catchment; that requires system thinking and it requires our rural communities.
A catchment approach is imperative in managing water across the whole water cycle and in leadership, both role model and visionary. Role model leadership involves acting now. We have seen how this Government have focused and taken swift action through the Water (Special Measures) Bill, which will start to tackle part of the challenge, setting up the flood taskforce, providing £60 million in the Budget for flood-related work with the agricultural community, and the biggest agricultural budget in history for sustainable farming.
Visionary leadership involves looking at long-term planning for resilience to flooding through adaptation and mitigation. It is the kind of vision that considers innovation through sustainable urban drainage and nature-based solutions, working with the land to create flood adaptation while improving soil effectiveness, reducing carbon and finding new commercial opportunities. I have seen examples that deliver a combination of these things, like farmers in Yorkshire planting pop-up rainforests. That visionary leadership should also consider education, new skills, behaviour change towards partnering and close working across all agencies. It is because of all the above that I welcome the Government’s action regarding the independent water commission, which will be the largest review of the sector since privatisation.
Nobody knows the land better than those who manage it, so I urge the Minister to continue to work closely with our landowners. Nobody is more passionate about the environment than our younger generations, so I urge the Minister to continue to work well with our Education Department around Skills England and the new opportunities for our rural areas. Nobody has more passion locally than our communities, who want to see improvements on their doorsteps. So may I finally urge our Minister to consider how to best work and co-create with our community groups—
Madam Deputy Speaker (Caroline Nokes)
Order. I call the Chair of the Select Committee.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I remind the House of my entry in the Register of Members’ Financial Interests. I congratulate all those who delivered their maiden speech tonight, and I look forward to hearing more from them in the years to come. I welcome this debate, which is exceptionally timely and important, and the fact that it is in Government time. I say gently to those on the Treasury Bench that if this is the start of a process of engagement with rural communities, that is welcome, but there has to be a process; this debate alone will not be enough.
The truth is that in the countryside, there is a genuine crisis of confidence in communities’ futures, and in the future of farming. That is felt deeply in my constituency. I spent time on Saturday afternoon talking to four farmers in Orkney. Those young men had made a genuine commitment to the industry and are now at a loss. I really did not know what I could say to give them comfort or optimism. The language they used was interesting. One of them continually described the changes as “cruel”. It is worth reflecting on why he did that. It was not hyperbole. Here was somebody who had given his family and his community a commitment that he would farm for the rest of his days, and suddenly it felt as though he had been cut off at the knees.
The Minister will doubtless tell us the number of estates that will, or will not be, affected. Those figures will need rather more robust scrutiny than they have had thus far. However, it is not all about figures; it is also about the psychology and the commitment. These people are hurting, and if there is to be any chance of the Government turning things around, there will have to be a rather more substantial and prolonged programme of engagement. Farming is at the heart of the countryside community. This is not just about the money that goes to farmers; that money then goes to seed merchants, feed merchants, hauliers, marts, vets, contractors, and the one-man businesses that go around farms paring feet, scanning for pregnancy and the rest of it. It is right that the most significant feature of the Budget for the community was inheritance tax, but there was an awful lot more in it that caused me concern.
Mr Richard Holden (Basildon and Billericay) (Con)
The right hon. Gentleman mentions the consequences for the broader community and businesses of extra taxes on the agricultural sector. Those are felt in my constituency of Basildon and Billericay, where we have the big New Holland tractor factory. This weekend, constituents were already coming to me worried about how the changes will impact their jobs. It is not just rural Britain that is affected. Does he acknowledge that there is a knock-on effect across the entire economy?
Mr Carmichael
I fear that there absolutely is that impact. That is why I gently caution those who frame the issue as a debate between urban and rural communities to think a bit more carefully. There is a strong case to be made for explaining to people in towns why people in the countryside matter to them, their future and the economy, rather than setting this up as a contest between the two.
Beyond inheritance tax, other issues in the Budget caused me concern, including the return of changes to the treatment of double cab pick-ups, and the effect of the carbon border adjustment mechanism on fertilisers. We all know what happened to food prices the last time we saw a spike in fertiliser prices. That was not caused by the imposition of a tax, but it does not matter what causes it; the effect will still be felt by families. There are also the measures on furnished holiday lets. Farmers have for decades been encouraged by successive Governments to diversify their business. Many have gone into furnished holiday lets for extra income, but they now find that they are being clobbered again. They are having the rug pulled out from underneath them.
The inheritance tax changes have generated the greatest concern. I hear talk of scaremongering, but there has to be better respect than that for those concerned about the changes. I suspect that a lot of the figures that we hear have been affected by inter-vivos transfers between the generations. That is the most obvious way that inheritance tax can be dealt with by an estate or a family, but it leaves families open to difficult conversations and to the law of unintended consequences. Nobody knows what is around the corner, especially in farming, which, as we know, is one of the most dangerous occupations out there.
I have sympathy with the Government wanting to close fairly well reported and documented loopholes, but to do that at the expense of family farms is unjustifiable. The root of the problem, and the issue on which the Minister needs to engage with the Treasury, is that the threshold has been set far too low. When the Budget changes were announced, I went to estate agency websites in Orkney and Shetland, and I found two farms currently on sale in Orkney, both on one of the outer isles—further away, where we would expect land prices to be slightly lower—and both were being sold by the same family. One was for £2 million and the other was for £2.2 million. If those are the prices on an outer isle of Orkney, I can only assume that one would add a significant margin in Aberdeenshire, and a larger margin in Fife and the Borders. By the time we get to the home counties, goodness only knows what the price would be.
The concerns of agricultural and rural communities are genuine and well founded, and they need to be addressed. There is a serious debate to be had here, and I very much hope to be part of it. The Minister is well intentioned and diligent, but he needs to listen more to the people affected by his decisions—and, I am afraid, to listen less to the Treasury.
Julia Buckley (Shrewsbury) (Lab)
I thank the Secretary of State for setting out, earlier today, the support that our Government have put in place for rural areas, and particularly longer-term planned policies that will bring much-needed sustainability to rural communities such as mine in Shrewsbury. There are more than 350 farms in the beautiful villages to the west and south of Shrewsbury town, where there are stunning views over the Shrewsbury hills; it is an area of outstanding natural beauty and a well-known hiking spot. Locally, as nationally, farmers and the wider rural community have been concerned for several years, because despite all the noise from Opposition Members, the previous Conservative Government left our farmers to struggle. In fact, they presided over a deterioration in the profitability of British farming that decimated most of our smallest farms. They have been squeezed out of business due to ever higher overheads, low supermarket prices and creeping land values.
Where was the support from the previous Conservative Government? Where was the post-Brexit funding? Where was the post-Brexit trading deal that was to have protected animal exports? Where was the support with customs red tape? Instead, there were the SFI and ELM schemes, which were rushed, complicated and too short-termist to be of any real use. It is no surprise that there has been an underspend of £227 million on those schemes in the past two years, as farmers could not respond quickly enough to the complex schemes, and the schemes did not match their need for longer-term planning. That underspend is criminal when we consider that one in 10 dairy farmers has gone under in the past two years.
All across the industry, farmers are telling us the same thing: British farming is no longer profitable. This weekend, like many Members, I was out visiting my local farms in Arscott and Yockleton, just outside Shrewsbury. I met fourth and fifth-generation farmers. Yes, they did have questions for me about the threshold for agricultural land, and I was able to sit with them and explain that the threshold for couples is £3 million. More importantly still, for true family farms—those that we wish to protect—where at least two generations are working side by side in partnership, they can share not just the workload but their assets by planning their financial future. That is manageable. What is not manageable is those farmers’ overriding concern about the ever-declining profits in food production in our country. That is their No. 1 concern, and ours.
On every farm that I visit—I am sure that it is the same at every farm that hon. Members visit, whether arable or livestock—what comes up is the way that low product values, coupled with higher overheads, threaten not just farmers but all the supply chains that hold together the fabric of our rural communities, to whom we owe so much. I was therefore pleased to be able to remind farmers in my area that our Budget announcement —not much press coverage was given to it—delivered the greatest agricultural investment in our country’s history: £5 billion over two years. By the way, the fact that the commitment is over two years is welcomed by our farmers, who can finally plan, with security and stability, more than one season ahead. Given the awful conditions that they have endured over the last few years, that immediate injection of funding and certainty is very welcome. Let us not forget that it was the main ask of the National Farmers Union in the weeks and months leading up to our Budget; we have delivered on its No. 1 request.
However, what most pleased farmers—they were surprised to hear it—was our long-term plan in the new deal for farmers, through which we will protect farmers from being undercut, through trade deals, by those low welfare standards. We will also sign the all-important new veterinary agreement with the EU to cut red tape at our borders and get British food exports moving again.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Will the hon. Lady give way?
Julia Buckley
I am sorry, but I need to rush.
Labour’s flagship policy, of which we are all so truly proud, is that we will underpin British farming with long-term sustainable contracts, by directing public procurement towards British suppliers. We will use the Government’s purchasing power to back British produce; 50% of food bought in every hospital, army base and prison will be locally sourced or certified to high economic standards. These are catering contracts that the Government are already funding. Now, thanks to our Labour Government, all that investment will benefit our local farmers directly, and for the long term. Every farmer I have spoken to is delighted to hear that we have understood that the problem is the long-term profitability of farming, and that the Government are prepared to put their money where their mouth is to protect British farmers.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
It is a pleasure to take part in the debate. I congratulate all hon. Members who have made their maiden speech today; they have all been genuinely fascinating and worth listening to.
I want to touch on the flooding issues that really cause concern in rural areas. Even in towns such as Tadcaster, which has the River Wharfe running through it, flooding is caused not just by water from the river, but by run-off in the town. The town depends on serviceable drainage, which can often get blocked, and drainage flaps. We are trying to get flood defences built, and are moving forward with money put in place by the last Conservative Government. Tadcaster’s flood alleviation scheme is crucial to the economic regeneration of the town, because people in such towns cannot have faith in the local economy if they are flooded all the time.
I say with this with great disappointment. I have had several meetings on these issues with the Environment Agency, Yorkshire Water and Councillor Kirsty Poskitt—she is an independent councillor, but we are working well together—and Yorkshire Water promised us that the flap valve in Tadcaster that drains the water from the high street would be serviced once a month. That was a lie, and it has now said that it will do so every six months. That is not good enough. We are trying to do what we can for our communities, but we see the people in charge—the people whose responsibility this is—lie to our faces. We will have further meetings about that, because communities need certainty, and so do businesses.
There are also issues when housing developments are built in places with existing flood concerns. When we really get out into the countryside, communities can be cut off completely. They are struggling to cope with the watercourses as they are now, and we know that the weather and climate are changing—there is more water.
I have had had several meetings in one village, Bishop Monkton, since I became the Member of Parliament. I have spoken to local people, the parish council, local councillor Nick Brown and the flood groups. Again, promises were made, but we are not getting anywhere. Bishop Monkton has been let down by Yorkshire Water and the EA for too long. There is a new planning application for 60 new homes, and they say that the water system can cope with it. It cannot—that is blatantly obvious.
When these big developments go in, Yorkshire Water and the Environment Agency should make them do water alleviation work through soakaways and slowing the flow, rather than just saying, “Well, according to our models, it can cope.” Sewage flows down the street in that small, picturesque, beautiful Yorkshire village in my constituency, yet it is claimed that there is nothing wrong.
The hon. Member for Doncaster East and the Isle of Axholme (Lee Pitcher), who is a sound man, being a West Ham fan, said that nobody knows land better than those who manage it. He is absolutely right. That is why we should be concerned about this inheritance tax raid on farming, which will get rid of tenant farmers—those who have worked the land for generations and understand best the watercourses and what happens there. In the villages where I talk to people, who knows better than anybody else the hydrology of the land? It is the farmers and the people who live there. If all that goes to corporates who have no contact with the local communities, we will lose the knowledge and memory of the people who have worked that land for centuries.
Sir Gavin Williamson
I am not sure whether my right hon. Friend will have found this in his constituency, but in Staffordshire many farmers feel utterly betrayed. They listened when the Labour party said it would not punish them through inheritance tax changes, yet that is what it is doing. There is a real sense of being let down and betrayed by the Labour party.
Sir Alec Shelbrooke
I am most grateful to my right hon. Friend. We know what our rural communities are like, and I am sure we all enjoy a pint, but when I go to the pub at the moment I hear farmers in despair saying, “We were told this wouldn’t happen.” As much as the small family farms, it is the tenant farms who are under real threat.
For all the statistics that are pumped out by the Treasury saying this and that, it very much sounded from the Secretary of State’s opening remarks that there is a small cabal at the top of No. 10 making all the decisions and that everybody else has to go out and sell them. We have all read that book, and we know where it comes from. I have to say to the Labour party that “Animal Farm” is not an agricultural playbook. That is what is going on: it is, “We will tell you how to run your farms. We will tell you where to get the money from. If you can’t do it, it is your failure. The state knows best how to run it.” Everything we have heard from Labour Front-Bench Members dismisses everything that has come from the NFU and thousands of farmers around the country.
I find it hard to believe that anybody has had nothing but positive letters and positive emails in their inbox saying, “Oh, it’s fine. We’re very happy about it. Everything you’re doing is great for the community. It’s all right. We believe you. It was written in big white letters on the barn door that everything will be fine.” That will probably change later on and Labour will say, “No, that’s what it always said.” We have read that book, and the Labour party needs to start listening to the people who till and farm our land.
It is not good enough to say, “You will be protected,” because they know that they will not be. That brings me back to the beginning. If we lose the people who understand the countryside and the hydrology, when in towns such as Tadcaster and rural villages such as Bishop Monkton and many more around my constituency we see housing going up on the land that has to be sold off to pay the inheritance tax bill, the flooding will become greater and greater. Ultimately, that will lead to a far higher cost to the country than the small amount of punitive tax that Labour claims will save the NHS.
Ben Goldsborough (South Norfolk) (Lab)
I would like to address four issues in the short time that I have. The first is water security. We have heard a lot about flooding today, but as my hon. Friend the Minister will know, in Norfolk we have the opposite issue—water shortages are more of an issue for us. I will also speak about controlled environment agriculture—a new development phase that we can turbocharge in this country—as well as the horticultural sector, which is vital for us, and the Animal and Plant Health Agency.
In Norfolk, as in the Minister’s constituency in Cambridgeshire, we need to look at water security in a lot more detail. When speaking with farmers last Thursday, one of the issues that came up was the building of reservoirs on agricultural land. Unfortunately, the Environment Agency and other planning authorities are proving to be more of a barrier than a supporter of this construction, which means that our farmers have to tap into more drinking water, which is more expensive and drives up prices for them. The floods Minister, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy), who is not in her place, has been working closely with me, and I look forward to working with her to push forward new policies that ensure that reservoirs can be built on agricultural land to develop water security.
It is important to talk about new innovations in agriculture. All too often, we think of the more traditional methods—the herbicide era and the pesticide era—but we are going into a new era of vertical farming and controlled environment agriculture. I believe that these are vital not only because we can get higher yields from less land, but because they are better for the environment and help us meet our climate change targets. However, there is an issue in the current legislation on biodiversity net gain, and I would appreciate it if the ministerial team would consider it. Because these are closed structures, in their essence they are not net gain providers of biodiversity.
At the same time, these structures decrease land use because they can increase production on a smaller site. They also use fewer damaging pollutants that leach into the area because they are, by their nature, closed systems. They reduce carbon emissions because they are able to precisely grow and engineer the plants that we need. To follow a bit of a theme, they have a smaller water footprint—going back to my first issue of what is important for Norfolk, we need proper use management of our water system. It would be great if my hon. Friend the Minister would look into BNG requirements on controlled environment agriculture to make sure that we can grow this industry, tackle our climate emission targets and be at the forefront of this sector around the world.
Next up, horticulture is important for my constituency of South Norfolk. I have Viking Nurseries, which I will visit in couple of weeks’ time. Hon. Members’ teams may have noticed that I sponsored the Horticultural Trades Association in Parliament, which gave out 153 house plants. I hope that we brightened up the Houses of Parliament and all offices across the estate. It was a fantastic event, and it was important to raise awareness that horticulture should not be overshadowed by agriculture. Both are aspects of our economy.
The House of Lords report on horticulture recently showed that the sector supports 674,000 jobs and contributes about £28 billion to UK GDP and about £6 billion in taxation. It is not something to be sniffed at. We also need to bear in mind that our country was the forerunner in horticulture, and we have lost that crown over the years to the Dutch. There is no reason why we should not regain that crown, and we should be pushing for that as a new Government.
The other issue that I would like to concentrate on is biosecurity and the APHA. As was mentioned by my right hon. Friend the Secretary of State, bluetongue was sadly first found in Haddiscoe in my constituency. The outbreak spread across the eastern coast, and we are living with the consequences. There are extremely sad situations when people take animals to market and lower prices are being charged for no reason, even though they are being moved within the market control area. That is an issue that we see with our biosecurity. This week we have also seen the first measured case of the new variant of avian influenza coming to our shores, which should worry us greatly.
From speaking to the APHA, it concerns me that it is fighting on so many fronts. Sugar beet has a longer growing season, so there are aphids for longer because they are not killed off by the frost, and we therefore have more yellow leaf. We have bluetongue and avian influenza and over the seas we have African swine fever as well. These are great risks to UK biosecurity. I greatly welcome what was announced in the Budget—more than £200 million for investment into biosecurity—but we must work closely with the Home Office to make sure that our border security officers are fully trained in this area to recognise the issues coming to our shores and protect our farmers, agriculture and horticulture, which provide so much to South Norfolk and to the United Kingdom.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
This debate has been about APR, but I will talk about flood risk. Suffolk is, by its nature, a county at high risk of flooding. Large parts of my constituency are covered by rivers: we have the Rivers Deben, Orwell and Alde. We have tributaries that filter across low-lying land and clay soil, which apparently is not particularly permeable—I learned that during the general election campaign. That means that whenever there is heavy rainfall, streams and rivers become overburdened very quickly, creating bogs, waterlogged fields and eventually flooding across our fields. The water has nowhere to go. Roads are overwhelmed, as are irrigation and sewerage systems, and whole villages can find themselves under a foot or two of water after one night.
One year ago, Storm Babet did exactly that. We experienced an incredibly wet October. One month’s rainfall fell between 11 and 13 October, then 80 mm in the 24-hour period of 18 October. People were stranded in villages and cars were stuck on driveways. People living in Wickham Market, Needham Market, Framsden and Charsfield were forced out of their homes. Some are not yet back in. People were traumatised, exhausted and facing financial oblivion after insurance companies used small print to stop paying out on the damage caused by the flooding.
We do not want to see that again, but the reality is that our climate is getting more volatile and the risk of flooding is as high as ever. We must take preparedness seriously, which is why Suffolk county council, the Environment Agency and community groups have undertaken to clear rivers, improve water flow through pipes and guttering, dig trenches and develop overflow areas in case of higher than average rainfall. I am more critical than many people of Suffolk county council and the Environment Agency for dragging their feet at times. I am working with residents of Earl Soham who are trying to get the highways agency to clear pipes and drainage. Suffolk county council is just not reacting quickly enough to that.
I recognise that the funding is not there when it should be. The funding from the centre is not adequate, and responsibility over who should take control of the situation is confusing, which is why I support the private Member’s Bill by my hon. Friend Member for Mid Norfolk (George Freeman) to sort this out.
I want to talk about something else that I believe is a real reason that flood risk has increased, and to remind the House that we have the option of reducing it in future. One of the reasons that flooding has worsened in recent years is the development of vast numbers of housing units in areas of high flood risk. Each development not only puts more homeowners at risk of flooding, but compounds that by increasing the risk of surface water run-off.
I know deep down that the decision to reform APR and increase the inheritance tax liability for small farms is fundamentally about releasing land in rural areas so that developers can build more houses on it. There is no justification whatsoever for it from an economic point of view. There is no way the Government will raise enough money to support public services, as various Members have said today. The only viable reason that I can understand for the Government introducing APR on small farm holdings is because they want to release land for development. If we continue to concrete over fertile farmland, of any soil type, we will increase that risk.
Sam Rushworth
The Daily Telegraph, which I know is the paper of choice for more respectable Conservative Members, reported last year that wealthy investors are “hoovering up” agricultural land to avoid inheritance tax, a situation that it said meant more land was falling into the hands of private and institutional investors.
Patrick Spencer
Let me take a moment—Members throughout the House have an opportunity to watch—to address that exact case. The Labour party wants to tackle big landowners like James Dyson and the Grosvenor Group; I have two points. First, take for a moment the incredible work done by Dyson Farming on food technology, which is increasing the productivity of our land and the standard of food production on his farms. Think of what the Grosvenor Group has done in the moorlands and peatlands of the north-west—it is a protector of our environment and has supported our natural environment and increased the ecosystem.
Secondly, do the Government think for a moment that either of those two people are going to go to bed worried about the IHT change? No, they are not. They will dodge it, much like many of the well-heeled business people always do with taxes. The people who will bear the brunt of the Labour party’s tax policies are small farms—family farms—that do not have a huge amount of capital. When we try to tax and demand liquidity from an illiquid source, we force people to fire sale their capital. It will not work. We have to understand the economics.
The risks are real. In Needham Market, Hopkins Homes built the St George estate at the base of a hill in an old disused quarry close to sea level, and right next to an area considered at high risk of flooding.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Will the hon. Gentleman give way?
Patrick Spencer
I will not, because I do not have long.
In Framlingham, developments either side of Station road have increased the risk of surface flow in an area that is, again, at high risk of flooding. All these places were hugely impacted by Storm Babet, and I believe the impact was made exponentially worse by huge housing developments cluttering our countryside. Between 2001 and 2021, Framlingham’s population increased by 1,200, which is nearly 50%. The population in Debenham increased by 16%. Great Blakenham has more than doubled in size. If we continue to use the Suffolk countryside to solve our housing crisis, the consequences will be disastrous.
Josh MacAlister (Whitehaven and Workington) (Lab)
I am delighted to have the chance to speak in this important debate about rural affairs. I will focus my remarks on farming. West Cumbria is home to hundreds of farmers, primarily cattle and upland sheep farmers. Sheep are ubiquitous in Cumbria: for every Cumbrian, there are five sheep. Farmers are rightly very proud of our Herdies, Rough Fells and Swaledales, as evidence by the closely fought competitions at many local agricultural shows. I have kept the peace by managing to avoid taking part in any judging to date.
I want to make three straightforward points, the first of which is about the relationship between farming and nature recovery. I want us, as a Government, to back farmers—especially those in iconic landscapes like the western lakes—who are leading nature recovery not as an alternative to food security but as a prerequisite for it. Across 40 square miles of the upper Wasdale and Ennerdale fells and commons, farmers have banded together to form the West Lakeland community interest company. Will and Louise Rawlings, Richard Maxwell, Julius and Kirsten Manduell, Kevin and Yvonne Holliday and their daughter Vicky, Sue Lister and many others are working together in innovative ways to ensure the long-term stability of traditional, nature-friendly farming and land management.
My constituency is also home to the Wild Ennerdale partnership, one of the UK’s largest rewilding projects. The vision is to protect this remote valley, in partnership with farmers. It is a breathtaking place to visit, so please do not share that secret beyond these four walls. People such as Rachel Oakley, Gareth Browning, Richard and his Galloways, and all the volunteers and partner staff from the National Trust, Forestry England, United Utilities and Natural England have made it a reality. I want the Government to do more to empower such models of nature recovery in partnership with farmers.
The second point is about the phasing out of the basic payments system. Despite the incredibly difficult financial backdrop, I welcome the Government’s £5 billion commitment to support farmers over the next two years, including the largest amount ever for sustainable food production and nature protection. That contrasts sharply with the chaotic changes to payments and the growth of a highly bureaucratic system under the previous Government. I have heard the concerns from farmers about the phasing out of the delinked basic payment scheme. I want the Government to ensure that the future sustainable farming incentive and countryside stewardship rates mitigate the impact on farmers who had planned for delinked payments up to the end of 2028.
The third point is about the inheritance tax changes. Many farmers have expressed to me their anger about wealthy individuals buying up agricultural land to avoid paying inheritance tax, and how that is forcing up land prices so that young farmers can no longer afford it. The Government’s changes seek to address that and are likely to affect only a very small number of estates in my constituency. I know that Ministers actively engage with farmers, and Government Members are very proud that Labour now represents many of the UK’s rural communities. [Interruption.] I almost intervened on the shadow Secretary of State, who wanted to trade sizes of majorities. I held back from making a further intervention at that point, so I will ignore the hectoring. I ask Ministers to consider some form of transitional support for those who will pass down their farms in the coming seven years, and who may now be caught out by changes announced in the Budget.
Finally, I invite the Minister to come to west Cumbria and meet some of our brilliant farmers, as the Secretary of State has already done, to see at first hand the really important work they are doing and the important place they have in the fabric of our community.
Helen Morgan (North Shropshire) (LD)
I congratulate the hon. Members who made their maiden speeches earlier. I thought they were all excellent, although I obviously take issue with anyone who does not think that North Shropshire is the best place to be an MP. North Shropshire is very rural and is inhabited by some of the best people you will ever meet. I like to spend my Saturdays and Friday afternoons knocking on their doors and asking them what they think. What they think is that they were taken for granted by the previous Government for many, many years, but I fear they are concerned the new Government are about to repeat that trick. I strongly urge them not to.
Farming is the backbone of the economy in places like North Shropshire. Whether farming arable land or dairy herds, people have had an incredibly challenging time, not just because of the phasing out of the basic payment scheme and the botched transition to the sustainable farming incentive, but because farmers with breeding herds trying to export to Europe have been badly let down by the botched Brexit deal. There is no timetable on the horizon for a phytosanitary agreement to resolve that issue; I urge the Government to act at pace to resolve it for farmers who need to export abroad.
The changes to the inheritance tax threshold have been very badly communicated to farmers. According to the Government’s figures, 288 farms in North Shropshire will be affected. Many of the farmers have been in touch with me, and they are extremely concerned, because they need more support not higher tax. If those farmers are wrong, I think the Government need to accept that their communication with them needs to be a great deal better, because at present they are very concerned. I urge the Government not to adopt a high-handed tone but to listen to and engage with them.
Farmers are also concerned because of flooding. They have had an extremely challenging time, with 18 months of continuous wet weather. Many in my constituency who lost a whole field or a larger area last year are still unable to re-till following an appalling October, but in Shropshire we have not been eligible for either the farming recovery fund or the frequently flooded allowance, although many of my constituents are underwater, reliably, every single year. I therefore urge the Government, when they look at flood defence spending, to consider those who are being clobbered by the weather year in, year out but have so far been ineligible to receive the support that they need to recover.
I also urge the Government to think about how the sustainable farming incentive might be used to encourage farmers to hold water upstream. An hon. Member—I apologise for forgetting which one—mentioned reservoirs; I urge the Government to consider building that issue into their plans, so that water can be managed effectively for the farmers who have had such an appalling time over the last 18 months.
Healthcare is problematic in rural areas. Because ours are not big university hospitals, it is difficult to attract staff to come and work in them—they are not necessarily looking at a glittering career investigating all sorts of exciting conditions—which means our health services are much worse than those elsewhere in the country. When I was elected, the problem of ambulance waiting times was the top issue that people raised on the doorstep, and it remains awful. October was the third worst month on record for handover delays at West Midlands ambulance service. Last week one of my constituents had to wait 24 hours in pain on a plastic chair before being diagnosed with heart difficulties. Every month over 2,000 patients spend more than 12 hours in the A&E departments of Shrewsbury and Telford Hospital NHS Trust.
We must address the important issue of the recruitment and retention of health staff in rural areas. Obviously, the Budget has raised the question of how healthcare providers will handle the increased NICs. That is probably an issue for a separate debate, but I urge those in the Department for Environment, Food and Rural Affairs to liaise with their colleagues in the Department of Health and Social Care and discuss how we can get staff into rural areas and ensure that people have the same outcomes as those in the rest of the country, because at present they are being poorly served.
People need to have access to healthcare, as well as education and work opportunities, but transport is a huge problem, and that is killing off the high street. According to the jobcentre in Oswestry, the single biggest issue is the inability of workers to get back into work because public transport is so poor that they cannot access a place of work. Shropshire has lost 63% of its bus miles since 2015, while the national average is 19%. That will give Members some idea of how difficult it is for us. In the Budget, the Government did not mention public transport investment in rural areas. I strongly urge the Minister to address that with his colleagues and, in particular, to consider really good schemes such as the Oswestry-Gobowen railway line, and the desperate public transport desert that is Market Drayton.
I have very little time, so I will just say this. The Government must make sure that the shared rural network is delivered and is effective, but if it is not, they must ensure that people can roam between networks. Local councils must be fairly funded so that the cost of delivering services over a vast area is reflected in the funding settlements that they receive. When it comes to healthcare, transport and digital services, rural areas are struggling, and we must have—
Tim Roca (Macclesfield) (Lab)
Let me begin by paying tribute to our rural communities, on this Armistice Day, for their efforts in both the principal wars of the last century. We know that those wars shaped our rural communities. They asked a lot of the countryside, and indeed the farming that we see today was very much impacted and shaped by the events of the conflict at the beginning of the last century.
I thank the Government for holding this important debate on rural affairs. As we have heard, there is a rich seam of topics to discuss, including public transport, connectivity, the appalling state of rural NHS dentistry and the depletion of the wildlife in our countryside. Later this evening, the hon. Member for Chester South and Eddisbury (Aphra Brandreth) has an important Adjournment debate on mental health in rural areas, and I congratulate her on securing it.
I want to talk briefly about rural crime, because many of us will have constituents who have been affected by it. What I have found most shocking recently, in Macclesfield and in Cheshire as a whole, are the potential links to the war in Ukraine. Since 2022 there has been an increase in, particularly, the theft of GPS units from Cheshire’s farm vehicles by organised gangs from eastern Europe, and the resulting insurance claims for the units increased by 137% last year alone. Each one of those units costs a staggering £20,000. Farmers use them to guide tractors, combine harvesters and other machinery to improve accuracy. It is now feared that they are being stolen and reconfigured as hardware in guidance systems being used in war in the other side of the continent.
Cheshire’s police and crime commissioner has specifically drawn attention to the direct correlation between the vast increase in thefts and the start of the war in Ukraine. I commend the Government for instituting a cross-governmental rural crime strategy, but, along with other Members who spoke about this earlier, I call on them to do more to improve the security of essential farm equipment by working with manufacturers, because that is a practical measure that we can take. We need not only immobilisation technology but forensic marking on this gear, so that it can be tracked through the labyrinth of organised criminal gangs.
I hope, having drawn attention to this practical and salient issue, that we have a chance not only to stop the rural crime that is damaging our communities and costing them a great deal of money—I believe that more than £4 million was shelled out by National Farmers Union insurers last year—but to stop the illegal flow of systems fuelling a war in another part of our continent.
Simon Hoare (North Dorset) (Con)
Some 88% of my constituency is hill, wood or farmland. It is the “Vale of Little Dairies”, in Thomas Hardy’s phrase. It is a mosaic of farms, both family-owned and estate and many of them tenanted, punctuated by villages and market towns. I would willingly swap my inbox with that of the hon. Member for Shrewsbury (Julia Buckley)—who is no longer in the Chamber—because her constituency, like those of many Labour Members, seems to be full of farmers who are, with a spring in their step, welcoming the wonderful, halcyon field that the Government are offering them.
Let me make again a point that I made in an intervention earlier. I am still at a loss as to how farmers are supposed to be rejoicing, as we are told they are by so many Labour Members, with all this record investment and expenditure in rural areas, when they are being told by the Secretary of State that they must do more with less. You can have one or the other, Madam Deputy Speaker, but you cannot have both.
Many of my right hon. and hon. Friends have spoken very authoritatively about the taxation changes. I am fundamentally opposed to what the Government are trying to do because of the damage that it will cause, in the long term, in constituencies such as mine and many others—particularly, but not exclusively, in the south-west. It also concerns me that many Labour Members have been told that the money raised will give them an oncology centre in every constituency, and that other wonderful things are going to happen. In fact, this is just a round of drinks when it comes the amount of money that it will generate in taxation for what may be required by the health service or by education, so I say to the House, “Please do not fall for that old chestnut.”
The Minister and I worked very closely together on the Agriculture Act 2020 and on trade issues. Now is the opportunity—I have been very clear that we had opportunities over the last few years, but they were not delivered for a whole variety of reasons, including covid, Ukraine and other things that we all know about—to have some serious, grown-up thinking about rural-proofing policies, because, as others have mentioned, the delivery of public services in our rural areas is more expensive. Our populations are sparser, and our communities are further flung. As the hon. Member for North Shropshire (Helen Morgan) said, we do not have big teaching hospitals and so forth. The Home Office needs to give proper consideration to rural-proofing the funding formula for rural policing, and likewise with the fire service. We have the rural services delivery grant, and I hope that the Minister and his departmental colleagues are strongly making the case to both the Treasury and the Ministry of Housing, Communities and Local Government that the rural services delivery grant is vital for enabling rural local government to deliver the services that our communities are looking for.
In an earlier contribution to the debate, reference was made to the entirely urban-centric rubric of Environment Agency funding decisions when it comes to flooding. It effectively boils down to how many chimneys benefit from the investment. The larger the community—by definition, the more urban or metropolitan—the more likely they are to be successful in a bid, compared with a scheme that will benefit many hundreds of acres of prime farmland but possibly only 200 or 300 households. There needs to be rural-proofing.
Sir Alec Shelbrooke
My hon. Friend is hitting the nail on the head. In my speech, I mentioned that Tadcaster is unable to get rid of the surface water. That affects a few businesses, but the whole town is destroyed by those businesses not being able to reopen and having insurance problems, despite the fact that there are not enough houses under the Environment Agency’s plan. The point that the Environment Agency has to take notice of is, where does the economy build from?
Simon Hoare
My right hon. Friend is absolutely right. Then we can think about the impact on insurance premiums, which will close businesses and put householders out of the insurance market, with the exception of the scheme that the previous Government introduced. All these things have knock-on effects.
I think the Minister and his departmental colleagues have sympathy with the point I want to make. Across Government—it is not just his Department—the funding formula and the rubric that decides where these things go need to have a far more digital, contemporary account of the challenges in delivering services in our rural areas. It is an issue that I have banged on about in this place in the nearly 10 years that I have served my communities of North Dorset, and I will continue to talk about it because that is the right thing to do. I hope that there is sympathy for that argument on both sides of the House.
Many Members have referred to access to housing. A lot of my constituents have invested in rental properties and so on, but we all know that quite a lot of housing in rural areas is older. It could be in a conservation area, it could be listed or it could be thatched—it could be all of those things. People are trying to meet the EPC regulations for rental properties, which is putting huge, artificial and urban-centric pressure on the rural rental housing market.
The Prime Minister recently launched a very welcome initiative about skills. Again, I urge that a bespoke channel of work is carved out that looks at how we skill young people in rural areas. We suffer from a young person’s diaspora too often: the elderly retire to an area, and the young move away. Property prices go up, and people will only come back as and when they able to inherit something—that is, of course, on the presumption that the Treasury has not taken everything by that point and that the only thing they are able to inherit is a very small part of the family grave plot, although that might be taxed as well. I would urge a ruralisation of this area.
I will mention two other things, both of which begin with “d”. Hon. Members on both sides of the House have mentioned dentistry. There have been too many nascent plans for a revival and renaissance of dentistry over the years. For reasons that I cannot understand, none has come to fruition, save for the entirely skewed and bogus funding formula for dentists. All Governments wed themselves to doing something; I just hope that something will be done. The other issue is driving tests. It is very hard to get a driving test in rural areas, which deprives young people of access to work, and to colleges and learning.
In this debate on rural affairs, it is not just about the proposals for changing the way farmers are taxed. It is about the whole mosaic and rich tapestry of rural life, of which this Government currently find themselves the custodians. Historically, the Labour party has always been urban-centric, but it now has some rural seats. I hope that the Front Benchers listen to rural Members, hear the concerns that we, too, are hearing, and actually make some progress towards making life in our rural areas a little better.
Phil Brickell (Bolton West) (Lab)
I thank the Secretary of State for his remarks, and I particularly welcome his warm words on cleaning up our rivers, growing the rural economy and investing in flood defences. My constituents in Bolton West are extremely proud of our rivers, streams, waterways and lakes. They bring life to our countryside, and play a crucial role in preserving our biodiversity and fighting climate change—a danger all too real, given the increase in flooding and wildfires on the moors in my constituency. With that in mind, I wish to focus on access to our waterways and our countryside.
I am sure that colleagues will agree that I have the pleasure of representing the most beautiful constituency in the country, with Rivington, Winter Hill and the west Pennine moors all on our doorstep. That is why I am proud to say that the Labour party has a long history and proven track record of giving people freedom to enjoy our countryside, including through the National Parks Act and Access to the Countryside Act 1949. Indeed, the House will note that 2024 is the 75th anniversary of this seminal piece of legislation, and that Labour Governments also introduced the groundbreaking Countryside Act 1968 and the Countryside and Rights of Way Act 2000. However, more than 20 years after the CROW Act was passed, access to nature is under threat.
The benefits of access to both the countryside and our waterways are well documented. Physical inactivity is associated with one in six deaths in the UK; according to the “Outdoors For All” campaign, it is estimated to cost us £7.4 billion every year. Obesity costs the UK £58 billion, and poor mental health costs the UK between £53 billion and £56 billion. That is why I welcome the Government’s commitment to get 3.5 million more people active by 2030 through their “Get Active” strategy and, likewise, their commitment to give the public access to green and blue spaces within a 15-minute walk of home through the environmental improvement plan, which is highly commendable. Currently, however, 19.6 million people do not enjoy that privilege. I draw the Minister’s attention to the “Outdoors For All” campaign, which is run by a coalition of 51 organisations, ranging from the National Trust and sporting national governing bodies such as Paddle UK to the British Mountaineering Council and the Wildlife Trust. The campaign’s excellent manifesto calls for an extension of the public’s open access rights to the countryside and to water.
When it comes to recreation, the UK is truly a pioneer both in and on the water. Indeed, 7.5 million people were estimated to have gone paddling in 2023. Millions more row, sail and swim. However, access to our nation’s waterways is woefully inadequate compared with almost every nation in Europe and around the globe. The current policy of pursuing piecemeal voluntary access arrangements is plainly unworkable, because a river might cut through thousands of properties. How can one authority be expected to negotiate simultaneously with thousands of landowners and on behalf of the public? How can local arrangements provide the same clarity that our rights-of-way network grants walkers, given that arrangements may differ from river to river, boundary to boundary, and riverbank to riverbank? With more people than ever paddling and swimming for health and wellbeing, we have to reconsider our approach. The Secretary of State has repeatedly committed to expanding responsible access, and the Labour manifesto commits to nine new river walks. I would very much welcome more information on those in due course. It is high time for a White Paper on access to nature, including on our waterways. I hope that the Minister will consider that, and I would be happy to meet him or her to discuss it further.
I am aware of intensive lobbying by some landowners who see access to water or the countryside as an infringement on property rights. To those people I say: these spaces belong to all of us. A strong code of responsible access—such as the paddlers’ code, developed by Paddle UK and Natural England—would mitigate harm and disturbance to our precious environment. After all, look at all the work that recreational users, including paddlers, swimmers, rowers, anglers and sailors, have done to campaign for cleaner water, to clear plastic pollution, and to tackle invasive non-native species. In many cases, recreational users are the custodians of our nation’s waterways. Our ire should be directed at those responsible for the industrial-scale pollution in the water sector, and for the systemic run-off of chemicals into our waterways.
Dave Robertson (Lichfield) (Lab)
Does my hon. Friend—like many Members across the House, I am sure—support the idea of a bathing status award for water quality?
Phil Brickell
Yes, I think there is considerable merit to making sure that not only our inland waters but our coastal waters are accredited with viable bathing status.
That brings me to my second topic. For years, under the previous Conservative Government, water companies have been pumping sewage into our rivers and lakes with little fear of consequences. We live in a country where parents think twice about letting their children surf, swim or paddle, for fear of them contracting all manner of diseases, some of them life-threatening, and that is frankly unacceptable. Surfers against Sewage has done tremendous work in holding polluters to account, and I draw the Minister’s attention to its “End Sewage Pollution” manifesto.
Since 2019, under the Conservatives, untreated sewage has been discharged into our waters over 1 million times, and that requires real punishment for those who flout the rules. To that end, I very much welcome the Water (Special Measures) Bill, which I hope will introduce new penalties for water companies and block bonuses for water bosses, who have all too often turned a blind eye to the damage that their firms have done to our waterways. To conclude, I ask the Minister for three simple things on behalf of my constituents: clean up our water; give us access to it; and invest to tackle flooding.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
We will go down to a five-minute time limit after the next speaker. I call Graham Leadbitter.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
First, I commend the maiden speakers in the House today. There have been some excellent maiden speeches. I particularly liked the reference by the hon. Member for Cannock Chase (Josh Newbury) to Tolkien, of whom I am a big fan, but today we are talking less about the bounteousness of the Hobbit’s Shire and more about needing a wizard to figure out how the Budget is good for farmers.
Like many Members across the House representing rural areas, I have received significant correspondence from those on family farms, and from industry representatives such as the National Farmers Union of Scotland. The changes to inheritance tax and agricultural property relief have sent a wave of despair through the farming community, given the impact on family farms. Labour Members have referred to farmers having time to do financial planning, but significant sums of money will have to be put aside; if we were talking about pensions, we would say that people needed 10, 15 or 20 years to change their financial plans in that way.
The NFUS has given the example of a family farm worth £4 million. The vast majority of that value is tied up in farm buildings, machinery and livestock. A family member inheriting the farm could be liable for a £600,000 tax bill—a demand enforceable by His Majesty’s Revenue and Customs, with £60,000 due within six months. Let us be clear that for many people, the only way to cover that would be to sell off buildings, machinery or stock. That may inherently make the farm financially unviable and put the whole business at risk of failure.
A farm owner may choose to protect their family farm assets by selling off tenanted land, creating huge financial uncertainty for tenant farmers, and giving many cause to question whether it is worth continuing in farming. Food security is national security, but these measures are increasing uncertainty and insecurity for hard-working farming families—and in most farms, the whole family is working it together. A constituent wrote to me to say that APR is not a loophole, as has been suggested, but a targeted and necessary relief designed to support multi-generational businesses, food production and economic growth.
A second issue of real significance to my constituency is whisky tax. That might not immediately jump to mind when we think about rural affairs, but the vast majority of the 48 distilleries in my constituency are in rural areas. The supply chain for those whisky distilleries is in rural areas; these are rural jobs. If the increase in whisky tax reduces sales, that reduces investment. Those 48 distilleries range from big corporates such as Diageo through to small independents, and even a community-run distillery; I recently had the pleasure of being at its opening. The supply chain includes farmers producing grains—this is a double whammy for farmers in my constituency, as many of them produce grain for the distilleries—as well as mechanical engineers, process engineers, hauliers, maltsters, plumbers, joiners, gardeners, tour guides and those working in retail and hospitality. All those jobs are in rural areas, and they are a lifeline source of well-paid, good employment for many rural communities in Moray West, Nairn and Strathspey.
A third impact that I want to touch on is forestry. Here I can maybe throw the Minister a bone, having had a bit of a go about the first two issues. On forestry, I think we have a lot in common. We want to see more housing built; I am very supportive of that. I also support the need to see progress on sustainable aviation fuel. Both of those rely on significant investment in forestry. There is a serious issue about the availability of new wood beyond 2035, and if we are to achieve progress on sustainable aviation fuel and house building, that needs to be in the balance. Forestry needs to be in balance with the rest of our agricultural land needs. I urge the Minister to commit to a statement on the future of forestry beyond 2035, in order to support those two objectives, which, as I say, I believe we share.
Graeme Downie (Dunfermline and Dollar) (Lab)
I congratulate those who made their maiden speech this afternoon. My constituency of Dunfermline and Dollar has a significant rural area, particularly through west Fife and Clackmannanshire. While rural areas often face different challenges from urban areas, the concerns are often the same. They include access to health, education, transport and other public services, so while this debate is about rural affairs, we must always be careful to ensure that we tackle the different challenges faced in rural areas with thoughtful consideration and sensitivity, and without creating division with those who live in urban and suburban areas.
I begin by mentioning concerns that farmers in my community have raised about changes in the Budget to agricultural property relief. Along with five Scottish Labour colleagues and Conservatives and Liberal Democrats, I was recently able to meet NFU Scotland and have a constructive conversation on that and other issues. It was disappointing, however, that no one from the Scottish National party was able to attend. Constructive engagement, rather than the often misleading and divisive rhetoric we have seen from some Conservative Members, will always be appreciated by our farming communities. I am awaiting further information from NFUS, but I believe that it understands the intention of the policy that has been announced, and our eagerness to work with it and others to support Scottish farmers.
My constituency includes former coalmining villages such as High Valleyfield, Oakley and Blairhall. Their rurality, along with high levels of deprivation, presents unique challenges. Bus services are irregular and unreliable, making access to healthcare difficult. It can take more than an hour to get to Dunfermline by bus, a journey that takes just 15 minutes by car. Similarly, without a car it is next to impossible to access train or bus services to cities such as Edinburgh or Glasgow, while the lack of services after 6 pm in some areas means that park-and-ride options are not viable for those who want to commute by public transport.
Living in rural areas presents a further difficulty in accessing health services. Buses to either Forth Valley hospital near Falkirk or Victoria hospital in Kirkcaldy can take more than an hour, so getting to an appointment at a specific time without a car is difficult and very disruptive to day-to-day life. The community in High Valleyfield experienced this just over a year ago, when the breast screening van was withdrawn. People were then required to travel to Dunfermline, a journey of more than two hours each way. Sadly, I heard of women of all ages no longer making their appointments, and I do not think anyone in this House would want that. At a recent surgery in Dollar, I was told of the incredible challenges in accessing hospital transport services; the excessive bureaucracy and other barriers disadvantage people living in rural areas.
Although failing transport infrastructure causes challenges, digital infrastructure is similarly problematic and is not the panacea for accessibility that it is sometimes heralded as being. Rural areas suffer from delays in getting broadband infrastructure. Openreach was very excited to bring cabinet service to the village of Blairhall in my constituency. Everyone was looking forward to it, and it was completed—other than for seven houses on one street, where Openreach decided it was not commercially viable to introduce the service. The SNP’s R100 programme, already delayed and over budget, will eventually get to delivering this upgrade, but not until 2026 or 2027.
After the pandemic, increasing numbers of tourists have sought to take advantage of the beauty to be found in rural Scotland. Tourists increasingly visit Culross, a village in my constituency where movies and TV shows such as “Outlander” were filmed. As we approach Christmas, the House might be interested to know that much of the film “Christmas in Scotland” was filmed in this beautiful village. But, of course, this brings its own pressures, as thousands of visitors and hundreds of tour buses visit Culross each week. I am delighted that Fife council is working with the excellent and very active Culross community council on these issues, but we must balance the needs of visitors with the needs of, and impact on, the local community.
I could go on and on about the fantastic rural communities in my constituency, but I will end with my commitment to continuing to champion and advocate for the different needs, priorities and considerations of our rural communities throughout my time in this House.
Greg Smith (Mid Buckinghamshire) (Con)
There are many issues I could raise in such an important debate on rural affairs, but in their Budget a couple of weeks ago, the Labour Government introduced a new threat on such a scale that it simply must be the topic on which I open my remarks. As I said in last week’s Budget debate, the changes to agricultural property relief are a threat to family farms and rural communities across the country, including in Mid Buckinghamshire. I cannot believe that Mid Buckinghamshire farmers are so different from the farmers found in Labour-held constituencies, but many of the farmers who have contacted me are absolutely petrified about what the change means for the future of their farm. They tell me that they may even have to sell up to a third of their farm to meet their inheritance tax bill. There is no way to sugar-coat this: it will be the end of British family farming if these changes are allowed to go through.
When I gave my maiden speech on Second Reading of the Agriculture Bill in the last Parliament, the now Minister for Food Security and Rural Affairs, who was then a shadow Minister, kindly said in summing up that I was “every Cambridge leftie’s nightmare”, and I agree. I gently suggest that, if he does not talk to farmers, to the NFU and to the people who are petrified about what these changes will mean, he may well become the nightmare of every farmer in this country.
Sir John Hayes (South Holland and The Deepings) (Con)
It may be that I am being generous, but I think this is happening because Labour Members have a patchy understanding of the issue. It is easy for those who do not understand rural Britain or agriculture to assume that assets and income are the same thing, but my hon. Friend will know that many farmers with considerable paper wealth do not actually make that much money.
Greg Smith
My right hon. Friend is absolutely right that British farming does not operate on mega margins. Our farmers do not have tens of thousands, hundreds of thousands or millions of pounds in the bank. They operate on such tight margins that, even if we play devil’s advocate and accept the Government’s argument—which, for the record, I do not—most farmers in this position will struggle to pay a tax bill of hundreds of thousands of pounds over a 10-year period. The margins simply are not there. Of course, there are many things that we can and should do to increase the profitability of farming, but it is fanciful to pretend that a 10-year payback period would be anywhere near enough. It would symbolise the end of British farming.
Of course, that was not the only threat to British farming in the Budget. There was the attack on basic equipment such as pick-up trucks, whereby farmers face paying an extra £5,000 simply for having the audacity to want back seats for their children. Then there is the carbon tax, which will see the cost of fertiliser rise by between £50 and £75 a tonne, which will have a detrimental impact on either farmers’ margins or food prices, or potentially both. Across the country, either outcome would be devastating.
Other Members have spoken about rural crime, about which I too am incredibly frustrated. I intervened to ask the Secretary of State about this subject. After being lucky enough to come quite high in the 2022 private Member’s Bill ballot, I spent two and a half years promoting my Equipment Theft (Prevention) Act 2023, which requires immobilisers on quad bikes and high-standard forensic marking, including GPS units, on agricultural equipment. It requires the passage of a statutory instrument that the then Policing Minister and now shadow Home Secretary, my right hon. Friend the Member for Croydon South (Chris Philp), said was ready to go when the general election was called, but it was thwarted by the Dissolution of Parliament.
The Act was passed with the Labour party’s support. Labour Members did not howl it down or attack it on Second Reading, in Committee or on Third Reading in either House. It is not as if the Act is in any way controversial. We just need the statutory instrument to be passed to give the police the powers they need. Police officers like Superintendent Andy Huddleston, who is the National Police Chiefs’ Council lead on rural crime, say that these powers will make a huge difference.
I have raised this matter with the Home Secretary and the Leader of the House. I doubt that this simple SI would cause any controversy for any party or any Member of this House. Why can the Government not introduce the statutory instrument? I take their desire to tackle rural crime at face value, so why do they not get the ball rolling on passing this legislation? Every time I meet a police officer from Thames Valley Police or anywhere I go in the country, the first thing they ask is, “What is happening with your Act?” I cannot answer that question, because I just do not know the reason for the Government’s delay. I appeal to the Minister to work with his Home Office colleagues to find a way to get the Act functioning.
Finally, this Government’s approach to planning and energy is causing devastation across our rural communities. My constituency has been plagued by so many ground-mounted solar applications—the largest one is Rosefield in the Claydons. These projects take away agricultural land, take away the ability to produce food and in many cases displace farmers, including tenant farmers. And what for? It is an inefficient technology that requires thousands of acres of agricultural land, when other technologies, such as small modular reactors, which require the equivalent of just two football pitches, can produce far more energy. I urge the farming Minister or the Secretary of State for Environment, Food and Rural Affairs to go into battle with the Energy Secretary and the Deputy Prime Minister on these planning changes, so that we can have a sensible approach to our countryside and keep it for what it is best at: the production of food.
Ms Julie Minns (Carlisle) (Lab)
We have had an excellent and varied debate that perfectly illustrates the variety and colour of rural life in our country today. I want to concentrate on one aspect of rural life that blights the lives of people who live in rural north Cumbria, in my constituency, and across all of the UK: rural crime. I congratulate the hon. Member for Mid Buckinghamshire (Greg Smith) on his work on this issue. I will certainly support him in trying to ensure that that statutory instrument is brought forward.
Rural crime, be it sheep rustling, fly-tipping or the theft of vehicles or equipment, has exactly the same impact on the communities and individuals it affects: it has a huge financial repercussion on everyone whose livelihoods rely on livestock and machinery for the generation of their income. It leaves rural communities feeling vulnerable and fearful for their personal safety. However, despite that financial and personal cost, it is a fact that rural crime rose under the last Government.
NFU Mutual’s figures show that there was a 4.3% increase in crime in 2023, pushing the cost of rural crime to a shocking figure of over £52 million. In my own county of Cumbria, rural theft cost an estimated £815,000—a rise of 12% on the previous year. It is clear that criminal gangs have been able to take advantage of the holes left in rural frontline policing, as a direct result of cuts to rural police forces under the last Government, to target farmyards and fields across Britain.
Rural crime is no longer the preserve of the opportunist thief. Instead, we now see internationally organised criminal activity, with gangs that target high value farm machinery and GPS kits, knowing that they can be sold all over the world. That degree of serious organised crime demands a serious, organised response, and I am pleased that it is this Government that are delivering that response in the form of a cross-governmental rural crime strategy.
In Cumbria, our new Labour police, fire and crime commissioner is committed to building on the work of our dedicated rural crime team, which recently marked its first anniversary. During that year, the team recovered stolen property worth £820,000, cut quad bike thefts by 10% and made dozens of arrests. More importantly, that same team engaged directly with rural communities, making over 200 visits to victims of rural crime.
Sir John Hayes
If I can be helpful to the hon. Lady, the critical thing is to get the police funding formula reviewed. It disadvantages counties like Cumbria and Lincolnshire, and has done for years. No Government, Labour or Conservative, has dealt with that. Will she join me in writing to the Minister, and perhaps to the Treasury, to suggest that we do just that in order to prioritise rural areas like hers and mine?
Ms Minns
I thank the right hon. Member for his intervention. As we have heard, funding for rural communities affects not just crime and policing, but the availability of GPs, healthcare and dentistry. If anyone on the Conservative Benches would like to explain to my constituents why they have to go on a 100 mile round trip to register with an NHS dentist, I would happily take that intervention.
On the point about personalised engagement with rural communities, I draw the House’s attention to the dedication of one particular rural police officer in my constituency: PC Susan Holliday. I should declare that Susan and I have been friends for over 50 years, and she has spent 37 of those years as a special constable in Cumbria constabulary, clocking up over 5,000 hours in her own time in the last decade alone, and exhausting every possible long-service award available to her as a special constable and that she is entitled to. Herself a farmer, Susan was integral to the setting up of Cumbria constabulary’s farm watch scheme, and she is well known to the rural communities across the north of my constituency.
Sadly, the excellent work of officers like Susan was too often undermined by the cuts to frontline policing that we saw in 14 years of chaotic Conservative Government. Those 14 years saw the closure of rural police stations and the diversion of officers away from their rural beats to plug the gaps in policing in our towns and city centres. It is not before time that we finally have a Government that will back our frontline rural police officers with a rural crime strategy. That strategy will increase police patrols in rural areas, has tougher measures to clamp down on antisocial behaviour and has stronger laws to prevent farm theft, fly-tipping and drug dealing. I am delighted that this Government will deliver the rural crime strategy that communities like mine in north Cumbria so desperately need.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate. I live on our family farm and declare an interest as a member of the Ulster Farmers Union. As most Members are aware, I represent a rural constituency with a thriving agrifood sector. We grow it, we package it and we sell it. I dare say that most right hon. and hon. Members in this House will have sampled what Strangford has to offer. For instance, the potatoes grown in my constituency go all over Great Britain. I am pleased that those potatoes are a protected product; they were protected under EU law when we were in the EU, and they are protected now as well.
Lakeland Dairies supplies milk to London hotels and to aeroplanes. My neighbour’s farm supplies milk to that dairy, whose processing plant is a huge employer in my largest town, Newtownards. Willowbrook Foods and Mash Direct supply convenient prepacked goods to shops throughout the UK and further afield. Rich Sauces produces condiments that are shipped globally. All of those local business are doing our national business, and we are all the better for it. Sometimes it is better to promote those goods within the great United Kingdom of Great Britain and Northern Ireland together, so when the Minister sums up, will he give me some ideas about how that can be done? I know he is committed to that, but I am keen for Hansard to have it on the record.
The rural economy in Northern Ireland is our mainstay. Our focus in this place is not simply to allow it to survive, but to allow it to thrive further. All of those businesses have the potential to do more. Farming is the biggest industry in Northern Ireland, with 75% of land used for agriculture. There are some 25,000 farm businesses in Northern Ireland and some 48,000 jobs, which provide £1.7 billion of value added to the Northern Ireland economy, which is 3.5% of the total gross value added. With great respect to colleagues on the Conservative Benches and across the Chamber, the equivalent figure for the whole of the UK is 2%, so for us in Northern Ireland, what happens with agriculture is crucial and critical.
The gross output of agriculture in 2020 was £2.2 billon, while the gross output of food and drinks processing was £5.4 billion. The ripple effect is even greater, estimated at almost £5 billion when we account for the indirect contribution to a wide variety of sectors, including construction and hospitality.
My party will continue to ask for the remaining problems with the Northern Ireland protocol to be addressed. Again that is not the Minister’s direct responsibility, but I ask him to pass that on to the relevant Minister. The problems include the fact that because of state aid restrictions, businesses operating in primary agriculture and horticulture, fish processing, aquaculture and bio-based fuels are not eligible to apply for the agrifood investment initiative, which has been designed to support businesses in Northern Ireland who have additional shipping and transportation costs, and costs due to economy of scale, that make competition more difficult. I would really appreciate a response on that point. I like to be constructive and positive if I can in my comments. There are still businesses that cannot apply for the support due to the restrictions and that must be tackled. I look to the Minister to liaise with Cabinet colleagues to secure UK food security by securing agrifood in Northern Ireland.
The Minister knows that I respect him greatly, but I have to say that the Government have got the inheritance tax issue wrong. Shrinking farms by requiring them to sell 20% of the farm land to pay inheritance tax is not the way to promote food security or indeed to allow us to be self-sustaining. I repeat my calls for a rethink of this brutal tax reform, which actively harms not simply our farming community but anyone who buys British goods in the shop. Over the weekend a local estate agent told me—I am not making this up—that multiple farms have already requested a valuation to be carried out of the fields that they will not farm but keep to sell to pay the tax bills. There is already a knock-on effect.
The Secretary of State kindly made me an offer, and I will take him up on it. I have already contacted the Ulster Farmers’ Union to put the appointment in place. Northern Ireland leads the way in farming and the message is clear: release the chokehold and support us or our land will go for planning houses, and we will give up family farms treasured for centuries to pay the highway man. As one farmer said to me, “They aren’t coming for the family silver as we don’t have any. We only have the ability to grow food and they are taking that not from our family alone, but from every family in this United Kingdom.” That is wrong.
Mr Luke Charters (York Outer) (Lab)
I will never get tired of saying how proud I am to represent rural communities in York Outer, especially when it comes to food production. From carrots to chicken, or parsnips to pigs, if there is a perfect place in the country to see your dinner go from farm to fork, look no further than York.
Now then, on the topic of Yorkshire folk, we are a hard-working bunch. I am a prime example, trying to squeeze my Yorkshire dialect into Hansard. In all seriousness, there are few harder workers than our farmers, famed for hard graft, which is why I have been spending so much time engaging with them across York Outer. I have been to several farms in my constituency, and I have met my local NFU, but I know that supporting rural communities means focusing on the longer term, not just the here and now. That is why I will focus my comments on flooding, biosecurity and mental health—three vital cross-party issues that we can tackle together.
It is well known that we suffer from flooding in York, with two rivers—the Foss and the Ouse—in our city. When they overflow, they devastate communities and crops. The use of agricultural land is a hot topic in the House, but in York persistent flooding is a big driver of the loss of land. I will depart from party politics for a second, because I know that my predecessors in York from all parties have done a good job locally on flooding, and I intend to do the same. That is why I have already had some positive chats with the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy).
Our Government are doing good work on flooding. I welcome the £60 million that the Secretary of State rapidly released for communities last month, and the investment of more than £2.4 billion over two years in flood resilience. The issue with flooding in the past is that we have needed a quicker release of funds, and I hope that will be a priority for the Government.
The biggest issue for me nationally is biosecurity. This week, I will visit the Animal and Plant Health Agency in my capacity as chair of the all-party parliamentary group for food security. Whether it is the new H5N5 variant of avian influenza—which is incredibly contagious —the recent outbreak of bluetongue or African swine fever, these are all real risks that our farmers tell me they are worrying about. That matters to me too, not least with recent avian influenza cases reported in Yorkshire.
I had a wonderful bacon sarnie at Wilson’s farm. From the butter to the bap to the bacon, it was all locally produced, and that sent me an important message. The Government must buy local when it comes to procurement. School dinners must be local. We must promote British farming, including in this place where we could purchase more British farming products.
We also need to do more to end farmwashing. Some of the farmers in my patch were telling me about quite deceptive food packaging, with red, white and blue, and tractor logos that narrowly get through advertising regulations, only for customers to turn the back of the packet and see that the product came from a farm in Spain, Ireland or elsewhere. We have to sort that.
I congratulate the hon. Member for Chester South and Eddisbury (Aphra Brandreth) on securing tonight’s Adjournment debate on farmers’ mental health. When considering the future of the NHS, it is so important that we not only fix the waiting lists and implement the reforms needed but always think of our cherished rural communities. Food security is national security, and mental health is just as important as physical health. That is why I am always willing, as all of us in this place are, to talk to farmers about what they are going through.
Rural communities voted for change earlier this year. That is why there are many Labour MPs who are hard-working advocates for their rural communities—as passionate as I am. Thankfully, the Government have had a strong start. These topics have a big impact on my constituents. My hon. Friend the Member for Whitehaven and Workington (Josh MacAlister) invited the Minister for Food Security and Rural Affairs to Cumbria; I invite him to stop at York along the way to discuss some of these hugely important topics. I will always be a champion for our rural communities, and I will work cross-party on many of the issues that I have mentioned.
Blake Stephenson (Mid Bedfordshire) (Con)
Rural communities form the backbone of our country. They grow the food that feeds British families, they are the custodians of our beautiful countryside, and they are home to fantastic village pubs such as the Knife & Cleaver in Houghton Conquest, the Crown in Shillington and the Anchor in Aspley Guise—a shameless plug for three of my fantastic pubs. We all know that fantastic British pubs are the heart of our villages, but I am concerned that they will now struggle to stand still, never mind invest and give youngsters the opportunity of their first job, given the Government’s choice to tax jobs and working people. Pubs across my constituency have told me of their concerns, and I told them that I would raise them today on the Floor of the House.
The problems that we face in rural communities are a world away from those faced by hon. Friends in urban areas. We suffer from similar crimes to urban areas, with particular problems around fly-tipping, wildlife crime and rural theft. Members throughout the House have spoken about those issues at length. I urge the Government to ensure that rural communities are not overlooked in favour of urban areas when they allocate police funding. That is certainly a concern of my constituents, who see police resources soaked up by the high demand in neighbouring large towns.
In parts of my constituency, the benefits of working from home are limited by poor-quality broadband, which limits the growth prospects of some of our brilliant local entrepreneurs and family businesses. Project Gigabit must be delivered at pace, and I will support any measures and efforts to do that.
Bus services are often infrequent and unreliable, and unfortunately under this Government they are getting more expensive. Inequalities extend beyond transport; access to healthcare is challenging, particularly if people cannot or do not drive. I am keen to ensure that my communities have better access to local healthcare, which is an ambition of the Government. We need to do more in this Parliament to ensure that primary care reaches into our villages and hamlets, and that no one is left without the healthcare they need because of where they live.
As the Government consider their plans to build the communities of the future, I hope they will learn from our villages. Decades—centuries, even—of sympathetic development have created communities: places that people want to live and spend time in. We must ensure that the legacy we leave for future generations includes sustainable and beautiful homes, with the right services and good access to the countryside.
Sir John Hayes
Such is my hon. Friend’s insight that he has drawn together two fundamental issues. Over-development in rural areas places immense pressure on infrastructure such as healthcare provision, as he described. Does he agree that development should be incremental, so that no community changes beyond recognition, or can no longer be served by the kind of public services that are critical to wellbeing?
Blake Stephenson
I entirely agree. A lot is said about sustainable development in planning rules. I know from my community that lots of people feel quite aggrieved by large new developments being built on the edge of villages, fundamentally changing their character. There is more work to do to ensure that our villages grow slowly and sustainably, alongside infrastructure. Lessons should be learned from the many decades of mistakes.
That brings me to another point. We must ensure that our villages are not overwhelmed by suburban dormitories. I am afraid that even though they are rural, some of my communities have been turned into dormitories by house building. People sleep there but head elsewhere to work, so they do not contribute to our local communities as they would have done in the past.
Often, at the heart of our rural communities is a group of unsung people—although they have been much mentioned today—who look after our countryside, employ local people and ensure that every single person in this country has food on their table. They are, of course, our farmers. British farmers might not always seek the spotlight—although sometimes they have shows on Amazon Prime—but without them we would be a much poorer country and our rural communities would be significantly worse off.
We should do all we can to support British farmers and nurture the next generation of them, but instead the Government are regrettably levying a spiteful family farm tax on them. I met farmers in Mid Bedfordshire recently. It is clear that the attack on family farms will force many families to sell up to developers or big international farming corporations, ripping the soul out of our rural communities. For the long-term sustainability of rural communities up and down the country, I urge the Government to reconsider the damaging family farm tax.
Madam Deputy Speaker (Judith Cummins)
Before I call the next speaker, I inform the House that I am now imposing a four-minute time limit.
Chris Hinchliff (North East Hertfordshire) (Lab)
I thank the Government for so guilelessly bringing forward such a broad debate allowing those of us with rural constituencies to make wide-ranging demands on behalf of the towns and villages that we represent. I look forward to further inundating Ministers’ in-trays with legions of letters about agriculture in Anstey, school buildings in Baldock and potholes in Furneux Pelham. However, before I am accused of being excessively parochial, I will address the wider systemic issues that undermine rural life in this country.
Fundamentally, the problem facing towns and villages such as those across North East Hertfordshire is that for decades almost every aspect of national life has been increasingly geared towards putting profit maximisation before the needs of our communities. Nowhere is that more evident than in our housing sector. Rural areas must deal again and again with totally unsustainable speculative developments dominated by houses designed to maximise profit, on a scale completely unrelated to local needs for organic growth.
At the same time, house prices have continued to rise—almost always far beyond the reach of those who have grown up locally—rural homelessness has risen by 40% and local facilities have declined. In one of my local towns, Buntingford, hundreds of new houses have been built, yet it has lost its youth centre, the bank, the community swimming pool, a GP surgery, a daycare centre and the local waste disposal site—those facilities are all gone. The volume of new housing is putting such strain on the infrastructure that residents are repeatedly flooded by raw sewage. I am afraid it is of little consolation that the big developers, which the Tories allowed to force through applications on appeal, have been enjoying supernormal profits as a result.
The systemic failures are not unique to rural housing. Our public transport system is next to non-existent in many villages—cutting off young adults from opportunities for work and education, and stranding older residents in loneliness and isolation—because the only bus services that ran under the Tories were those that made profits for shareholders. We expect farmers to steward our land for future generations, but they have—between the monopsonistic power of the major supermarkets and the pressure of global commodity markets—been pushed into the absurd position whereby it is increasingly impossible to make a fair living out of feeding the nation. All that points to economic policy that has consistently failed to recognise the intrinsic value that my constituents place on the rurality of their communities. For too long, economic orthodoxy that is obsessed with agglomeration and utilitarian accounting has proven incapable of recognising the social value of investing in less densely populated areas.
To conclude, given the vast change in political representation of rural areas at the recent election, the Government clearly have a unique opportunity and obligation to deliver systemic change that creates a future in which our towns, villages and hamlets thrive as communities in their own right. Ministers have made an important start with policies to refocus house building on delivering new social homes, by paving the way for re-regulation of bus services, by delivering the largest ever budget for sustainable food production, and with a clear commitment to community energy. Today, I urge them to press on further as swiftly as possible by restoring services to our towns and villages and retaining their rurality; by recognising at last that, depleted as it is, the natural capital of our countryside is the better part of the wealth of our nation; and by redirecting investment, leaning into the growth of distributed technologies and remote working, and delivering a new revolution in cottage industries to once again spread economic opportunities across places such as those I represent.
Bradley Thomas (Bromsgrove) (Con)
My constituency and its neighbouring villages are defined by their green space and rurality, providing a sharp contrast to the urban west midlands next door. Our villages are home to rural enterprises and to farmers, and it is our farmers who are the lifeblood of our rural communities. Their role cannot be overstated: not only do they provide us with food security, but they contribute significantly to our local economy, and it is critical that we support them. Every single one of us relies on farmers three times a day. They are the guardians of our countryside, often working in isolated or harsh conditions, physically and in a competitive marketplace. I am delighted to be participating in the NFU’s MP fellowship scheme to better understand the pressures that farmers face.
The Prime Minister and the Secretary of State promised to protect farmers. They promised not to change inheritance rules, but then in the autumn Budget, among many other broken promises, Labour broke its pledge to farmers. It reduced reliefs and imposed inheritance tax rates on farmland, which will devastate family farms and pose a serious risk to domestic food security and food prices in our country. Not only do those changes hurt the agriculture sector and our economy, but they hurt individual farming families, with at least 249 farms affected across my constituency. I want the House to be aware of the specific concerns of two of my constituents. One wrote to me:
“This specifically targeted decision will eventually destroy family farms. It’s a mentally and physically hard industry to be in but for most has been passed on from previous generations and do it for the love. As an industry we feel we are no longer needed”.
The most impactful email I have received from a constituent came in late last night.
Sir John Hayes
Just before my hon. Friend comes to that impactful email, may I say that he makes a fundamentally important point about food security? Food security is vital to national economic resilience, as we have seen from the covid pandemic, the war in Ukraine and so on. Food security means maximising the productivity of land, so does my hon. Friend agree that another threat that farmers and rural communities face is the invasion of large-scale solar developments and other industrialisation of the countryside, which is taking productive farmland out of the business of producing food and thereby guaranteeing food security?
Bradley Thomas
I wholeheartedly agree with my right hon. Friend. As he rightly points out, we are at risk of large-scale industrial energy production installations becoming the new cash crop, displacing valuable agricultural land across our constituencies.
I want the House to be aware of a comment from a constituent who wrote to me last night:
“I have never written a personal email to an MP before but feel so strongly about the recent changes announced in the budget that I couldn’t let them go. Although on paper we might appear ‘rich’ the reality is we only make enough money each year to support…2 families and don’t have ‘millions’ in the bank. We pay our taxes like every other working person does. Every spare penny we get we invest in the farm to make it better for the next generation but after the budget announcements last week feel that that was a waste of time. I am beginning to think that the best option for my family would to be to sell up and move abroad to a country that appreciates its farmers and food.”
That is devastating, and I want the Government to reflect on those words very carefully.
I recall the Prime Minister’s words in his first speech in Downing Street, where he said that he wanted the Government to “tread more lightly” on our lives. Sadly, the Government are doing anything but; they are ruthlessly bearing down on every facet of British society in the most ideological fashion. I call on them to scrap the family farm tax and instead support British farmers. I also call on the Government to reverse the changes to tax on pick-up trucks, which are the workhorses of the countryside and of tradesmen and women across the country.
Although much of the debate has focused on farms, it is important to highlight that there is more to the rural economy than just our farmers. The countryside makes up more than 90% of the UK’s land. It is home to millions of people in our country and it contributes more than £270 billion per annum to our economy, from farming and horticulture to stewardship of the land and countryside sports. For our rural economy to thrive there needs to be sufficient infrastructure to attract people and businesses to those areas, including further investment in rural connectivity and mobile coverage.
Finally, our rural economy cannot exist if our rural areas are developed over. New housing developments cannot come at the expense of our green belt. Some 89% of land in my constituency is formally designated as green belt, but the target being imposed by the Government will directly result in thousands more homes being built on high-quality green-belt land in my constituency, which will undermine food security and our rural identity.
We must stand up for our rural communities and for farmers, and we must protect our countryside. I will always defend farms, the rural economy and our rural areas during my time in the House.
Sam Carling (North West Cambridgeshire) (Lab)
Some 81% of the land in the area that I represent is agricultural, meaning that North West Cambridgeshire, like much of the east of England, contributes a great deal to our country’s food security. As the Government have repeatedly and rightly said, food security is national security, and I am proud that my constituents play a huge role in that.
Farmers suffered under the last Government. Just before the general election, farmer confidence was at its lowest level since records began, but this Government are taking positive steps to reverse that trend. The farming budget for 2025-26 will be £2.4 billion, which is the biggest budget ever directed at sustainable food production, and will be vital for farmers across the country and in my constituency.
For those affected by flooding last year, I welcome the immediate £60 million made available from the farming recovery fund, which is a big increase compared with the figure under the last Government. I was also glad to hear the Secretary of State clarify earlier that the “vast majority” of farmers will not be affected by the change to agricultural property relief, and his assurances that the Government will protect family farms by preventing people coming from outside and buying farmland over the heads of local people to evade taxes.
One of the most pressing and significant issues that farmers have raised with me is the income of food producers. The dynamic between buyers and producers needs reform, with many producers reporting that they take under 1% of profit after retailers and intermediaries have taken their cut. With more than 95% of our food sold through just 10 retailers, many feel that some supermarkets are not giving them a fair deal. I strongly encourage the Government to look at that issue.
I also welcome the Secretary of State’s earlier comments about ensuring that trade deals do not undermine our farmers. For too long, we have allowed imports of food, both plant and animal products, that has been produced to lower standards than we expect of our farmers. That undermines them and tilts the playing field towards imported food because it prevents them competing on price. We must take action on that.
I now turn to rural crime. Many of our country’s rural towns have significant problems with crime, with a lower police presence following cuts under the last Conservative Government and an under-resourced justice system that has not been able to cope. My constituency has several rural towns and villages, including Ramsey, which has faced a string of robberies and knife-related incidents in recent years. Although the offenders in many of those incidents have been arrested and charged—I thank Cambridgeshire police for that—we must resource our police to restore their ability to work on prevention, not just to respond to crises.
The Government stood on a clear pledge to combat crime in our towns by bringing back neighbourhood and community policing with thousands of additional officers. Rural towns such as Ramsey must get their fair share of that, and I know that the Government are hearing that message.
Transport is also a significant issue, with limited public transport options in Ramsey and other towns. People living in rural areas often have fewer options for services, including education, employment and health services, and those who rely on public transport, which can be limited and inconvenient, are at a double disadvantage. Timetabling decisions based on commercial factors mean that children who live in rural areas in my constituency struggle to get to school, particularly in the village of Wittering.
Ben Obese-Jecty
Buses in Cambridgeshire are controlled by the combined authority and its Labour Mayor. Will the hon. Member, whose constituency neighbours mine, put pressure on Mayor Johnson to ensure that all our rural communities are included in the bus franchising and that we get the services that are desperately needed? As the hon. Member has pointed out, the Mayor is failing in that respect so far.
Sam Carling
I thank the hon. Member for his intervention. He claims that bus services are under the control of the combined authority, but the problem is that we do not have franchising yet. We are working on that and, in case any of my constituents are listening, the consultation is still open but will close on 20 November, so please fill it in—I just wanted to get that plug in.
In the lead-up to franchising, which will hopefully come through, the combined authority is already working to subsidise essential services and working with commercial companies to tackle the issues. I am confident in the work that we are doing. I am proud that the Government’s better buses Bill will deliver the opportunity for franchising to more local authorities. I urge the Government to keep making progress on making franchising easier, alongside their progress on nationalising our rail infrastructure, which we heard more about earlier.
Broadband connectivity must be another priority. Internet and mobile phone coverage has improved, but the service for people living in rural areas still has a long way to go. As of January, 47% of rural premises had access to gigabit-capable broadband, compared with 84% of premises in urban areas. That has serious implications for productivity, making it harder for people to work from home who would otherwise do so, for example. More widely, it has an impact on the ability to stay in contact with friends and loved ones who may be further afield.
I thank all hon. Members across the House for raising so many points today. I look forward to the Minister’s response.
Steff Aquarone (North Norfolk) (LD)
I and residents and visitors alike love North Norfolk. However, we have to be honest about the challenges that rural areas like mine face, and about the changes and support that we need to tackle them.
Ten days ago, I had the pleasure of chairing a public meeting in the village of Hickling about the flooding issues facing the area. We brought together key stakeholders from no fewer than nine agencies to discuss with villages how we can prevent the cycle of flooding that has plagued the area for years on end. I was delighted to hear those agencies’ clear desire to work together in a more joined-up way, but they were all resolved on the need for longer-term planning. Giving budgets only one year at a time is not good enough for forward planning, let alone for investing in partnerships, strategies and skills.
The same goes for coastal erosion. We are part of the fastest-eroding coastline in north-west Europe. That erosion has a very real human impact: sadly, Bryony is soon to join the list of Happisburgh residents who have been forced to leave their forever home as the coastline erodes. She is passionate about making sure that more residents do not find themselves in the heartbreaking situation of losing the home they love to the North sea. Local campaign groups and councils are doing what they can to mitigate the effects, but they cannot keep to-ing and fro-ing between project funding. We need a joined-up strategy along the entire coastline to protect our beautiful environment, our heritage and our way of life, not just the highest possible number of chimney pots.
Buses in our villages and market towns are the only way many people can make it to work, education, medical appointments or shops and meet their friends and family. We need to radically rethink the delivery of public transport in rural areas like mine and create a network that really works for the communities it serves. I welcome the Government’s steps forward on bus franchising measures, but Norfolk needs greater powers to deliver change. I really hope that as the Government return to the drawing board—not their fault—on a devolution deal for our area, they will reflect on how giving greater powers to our community to design and deliver services could unlock Norfolk’s potential.
I must mention the deep concern across North Norfolk about the family farm tax included in the Budget. The Secretary of State made a good impression on farmers in Norfolk. “He gets it,” they said, and I think he does, so this must be really hard and uncomfortable for him and his team. Farmers have been the backbone of North Norfolk for generations—everybody knows a farming family or is in one—but they are really worried about their future. Others are worried about the impact on our area. I fear that the Government are just not in tune with what is happening to family farms in small areas like mine. They must tune into the realities. I am proud to speak up for farmers and farming today, and I will keep doing it at every opportunity. I love living in my rural area, and it is a pleasure to raise my children there, but we cannot accept half measures on the challenges we face. We need a better rural deal from Government, and dedicated, long-term strategies to protect our rural and coastal places.
Joe Morris (Hexham) (Lab)
Given the time limit, I cannot deliver the magnum opus I wrote on the train on the way down here, but having been told in a call with Northumberland county council that one of the school catchment areas in my constituency is larger than the area surrounded by the M25, I think I can speak on rural affairs with authority.
It has been said to me in my constituency when I have been out and about that we pay more and get less in our communities. We go to smaller shops, so we have to buy things that are less efficiently priced; and our communities are used to being forgotten. They are used to being under-invested in, and to seeing their younger people leave due to the inability to find an appropriate job and home. One of the real tragedies of the last 14 years has been the Conservative party’s failure to appreciate that, and to invest in those communities. I gently invite Conservative Members to reflect on the reason why I stand here as the first ever Labour MP for Hexham, and why so many of my party colleagues represent rural constituencies. It is not just because it was a change election; it is because the Conservatives fell out of sync with what rural communities wanted and needed.
I am very proud to be out there working with and meeting local civic organisations, such as the Clean Tyne campaign led by Dr Stephen Westgarth, or Sustainable Haltwhistle. I have also sat at the kitchen table with my farmers to talk about the issues with the sustainable farming incentive, and payment schemes that do not really work for upland farmers. I invite the Secretary of State or the Minister responsible for farming to come and meet upland farmers in my constituency, who have really positive stories about the work they want to do, but who have been disadvantaged and had their hands tied by the legacy we have inherited.
I would like briefly to plug my Westminster Hall debate on school transport in Northumberland tomorrow. Although I will be speaking about school transport in that county, I would very much welcome participants from across the country, as I know that getting to school and accessing a great state education is fundamental for everyone.
Finally, I would like to touch on the health of the rivers. The north-east is one of the most iconic parts of the UK. We have Hadrian’s wall and some of the most stunning countryside in the UK, and we are a region defined by our rivers, including the Tyne, Tweed, Coquet, Wansbeck and Aln. One of the many reasons why I was sent to this place was the state of the River Tyne; it was seen by my community as an “open sewer”, to quote one person I spoke to on the doorstep, and there was an absolute lack of faith in the previous Government to get it cleaned up. The north-east would not be in the minds of so many people across the world if it was not for our rivers, and I absolutely welcome the steps this Government are already taking to clean them up. I know it will not be a quick process, but I look forward to working with them.
I want to touch on a few speeches by Opposition Members that were very constructive. They talked about rural-proofing policy, which is incredibly important. Rural policy should not just come up when the DEFRA team is sat on the Front Bench; it needs to be at the heart of every single thing this Government do to get our schools working, our economy moving, and our energy policy right.
Jayne Kirkham
In my constituency of Truro and Falmouth, housing is a major issue, as it is in many rural communities. Does my hon. Friend agree that we must take action on housing? We should, in particular, consider the impact of second homes in our rural communities.
Joe Morris
I absolutely agree. When I go to places like Bellingham, where I have a constituency surgery coming up soon, I am often told about the impact of second homes on the community. It contributes to a decline in a sense of place and in opportunities, and of course it crowds out younger people from getting on to the housing ladder. I agree that we urgently need to look at that, and I hope that the Government will consider it strongly.
Briefly, in the time I have left, I will celebrate the rural crime strategy. Members from all parts of the House have spoken about it a lot. During the election campaign, I spoke to a farmer who had someone try to nick her quad bike. She confronted him and had to wait 30 minutes for a police officer to arrive. She said that was a speedy response, and she was quite pleased with it. That just shows the level to which rural crime fighting sank under the previous Government.
Robin Swann (South Antrim) (UUP)
As a past president of the Young Farmers’ Clubs of Ulster and a former director of Rural Support, which is a mental health charity supporting farmers and farm families across Northern Ireland, I have worked on cases where farm families have been through foot and mouth, swine flu, avian influenza and TB. I have seen the impact. They have had to deal with complete herds being removed. However, I have never encountered so many farmers in Northern Ireland being as low as they are this minute, due to the farm family inheritance tax put on them by this Government in this place. They are so angry about what is happening.
The Secretary of State talked about not listening to the fury, or the alarming headlines, but a third of farms in Northern Ireland will be affected. Some 75% of our local dairy sector farms will be affected. Those on the Government Front Bench say, “No, they will not”, but that is the assessment of the Agriculture Minister in the devolved Assembly in Northern Ireland.
Robin Swann
It is also the assessment of the Ulster Farmers Union. I encourage the Government Front Benchers to engage with the devolved Administrations, because if our Agriculture Minister in Northern Ireland is causing alarm and raising headlines that are not accurate, it is up to this Government to correct that. That is the impact, and the feedback that I am receiving from farms, farm families and our Agriculture Minister in the devolved Assembly in Northern Ireland.
I spoke to a friend over the weekend who is a bit younger than me, with a young family. He is now concerned about shackling his family farm to his children. He has been progressive, and has taken up every financial opportunity to progress the family farm and make sure that it is fit for purpose. He now says that if he has to pay 10 years of inheritance tax, that is 10 years in which he will not be investing in his farm, and its productivity. The average income in Northern Ireland is £27,345, and these measures are making our family farms unsustainable.
I think the hon. Member for Ceredigion Preseli (Ben Lake) mentioned devolved farming payments now becoming a Barnett consequential for Northern Ireland. I would love clarity from Treasury or DEFRA Ministers on who asked for that, because it was not Northern Ireland. It sounds as if it was not Wales, so why was that change made to how agricultural support goes to our devolved Administrations? On whose advice and guidance was that change made? What engagement did the Treasury or the Government have with the devolved institutions prior to making it? There are other issues on matters that are not devolved, but those were the two main ones I wanted to speak about.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Members will have observed that we have more Members standing than is possible to fit into the time we have. I propose an immediate three-minute time limit. Please be mindful that we may not get everybody in, even with that time limit.
John Slinger (Rugby) (Lab)
An excellent climate adaptation world café event was held in Rugby town hall on Saturday, organised by my colleague Councillor Alison Livesey, officers and others. It was attended by the public, community groups and indeed the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East (Mary Creagh). I am grateful to her for that. At the event, local councillors told me details of the unprecedented floods last winter in the villages of Wolston and Brandon, on the road near Bretford, and in surrounding areas. Significant damage was done to homes and property, and the Royal Oak pub in Brandon closed 11 times. I have met the owner, Khara Schrijvers, and seen the new flood barriers at the pub, which will hopefully ensure the dryness that pubs like in future. The people of these villages came together and showed the very best of community spirit and human nature as they helped one another. Earlier this year, the Wolston and Brandon flood action group was formed, partly in response to the lack of preparedness.
I know that this Government are doing much more than the previous Government; there is £2.4 billion extra over two years for flood defences and other innovations. When the heavens opened again this September, Ministers worked hard to co-ordinate and empower the various agencies, councils, emergency services and, ultimately, local communities. It is vital that the voices of local communities be heard. Parish councils are an important conduit for that. Listening locally is not only morally right, but the intelligent approach, because the intelligence garnered is more likely to be right and helpful in preventing future flooding. I am sure that my hon. Friend the Minister can reassure my constituents that the new Labour Government place flood resilience and climate adaptation and mitigation high up our list of priorities, and place rural villages and communities at the heart of all we do in this and other areas of policy.
Sarah Dyke (Glastonbury and Somerton) (LD)
Yesterday, I spoke to Ian, who has a beef enterprise and grows cider apples on his farm in Glastonbury. Now 74, he has worked his entire life to buy back his family’s 100-acre farm. He has finally done it, but the Government’s changes to the APR will soon tear it apart again, undoing his life’s work and leaving the farm unviable.
Sadly, Ian is not alone. During the debate, I read an email from a farmer in Charlton Musgrove who says that her family are shell-shocked by Labour’s attack on family farms. The farming sector has experienced one shock after the other in recent years, from Brexit to energy prices, the war in Ukraine, rising feed prices, the Conservatives’ terrible trade deals and mismanagement of the economy, and the botched transition from the basic payment scheme to the environmental land management schemes. Farming is in crisis, and here we are yet again with a misguided policy that hits the future sustainability of family-run farms.
We cannot allow this to continue as a sterile policy debate about optimal tax rates and allowances. This is about people’s lives, food security and the future of our countryside and the natural environment. It will not be wealthy landowners who suffer under the Government’s new family farm tax; it will be farming families barely able to make a living and, sadly, those who are left behind when a farmer dies unexpectedly, and who do not have access to clever accountants or special consultants. Not only will they have to deal with the emotional trauma of losing a parent or a partner; they may be at risk of losing the farm—their home.
The Government must abolish this family farm tax or, at the very least, raise the threshold to limit its impact on those who should not have to and cannot afford to bear the brunt. The Government must look closely at loopholes that allow wealthy landowners who are not farmers to use land as an inheritance tax loophole.
Agriculture is the most dangerous in industry in Britain. When we talk about farmers, many will assume that we are talking about males, but many women work in agriculture, and they are 10% more likely to suffer with depression and 15% more likely to suffer with anxiety. Women make up 55% of the farming workforce in England and Wales, so there is an urgent need for targeted interventions, particularly at key points in their lives, when they are most vulnerable to mental ill health, such as during extreme weather or disease outbreaks.
This family farm tax is another example of gender stereotypes and outdated assumptions about modern farming. Modern family farms are not always run by traditional families, so many will not be able to take advantage of the extra relief. The Government’s claim that 75% of farms will be unaffected relies on the assumption that every farmer is married and will benefit from twice the basic allowance.
John Cooper (Dumfries and Galloway) (Con)
Late in 1745, Dumfries was menaced by the Young Pretender, Bonnie Prince Charlie, who demanded cash and shoes as he retreated north. Today, Dumfries and Galloway is threatened by the great pretenders, the Cabinet, who also want cash. Apparently, they are sorted for shoes and Croydon wellies, though.
At the weekend, I attended the Dumfries and Galloway life awards, a tremendous celebration of the people of south-west Scotland. They are self-starters and hard workers, and just as well, for they face not only indifference from the Scottish Government but active harm from this Government. I spoke with one award winner, Kerr, whose expansion plans for his food business face a pause as he weighs the impact of increased employer national insurance contributions. I spoke with a farmer whose best hope of avoiding the Chancellor’s predatory death taxes is for his parents to live a further seven years—they are both aged over 80.
Rural Dumfries and Galloway does not want special treatment; it wants its fair share. It wants an acknowledgement that its way of life—with an emphasis on aspiration—is not wrong, though it does pose particular challenges. It wants an Agriculture Secretary who does not devolve and forget, but who sees some of Britain’s most productive grassland as a jewel in the crown and a vital part of UK food security. It wants a Government who appreciate that if someone in a town or city has £10 in their pocket, they will be able to do something with it, whereas in remote and rural Britain, that tenner probably will not get them to the farm road end.
Rural Britain is a greenhouse, bringing forth a rich harvest of food to our tables, but it could be more. It could be a powerhouse if the urban-obsessed party on the Government Benches stops treating it merely as a larder to be plundered. Bonnie Prince Charlie took those stolen shoes and trudged off to defeat. Perhaps Dumfries can seek reparations via the supine Foreign Secretary. Regardless, this Prime Minister and his Cabinet are limping towards their own electoral Culloden.
Ann Davies (Caerfyrddin) (PC)
Agriculture and farming play a very important part in Welsh society, not just economically but culturally and socially. Farming families are custodians of the landscape and language in Wales, with a high proportion of them living and working in the Welsh-speaking heartlands. Agriculture is devolved, but trade deals are not, and neither are taxation and food security. Agriculture is integral to the Welsh economy, employing around 58,000 people. As the climate crisis leads to more food insecurity, supporting our farmers will be key to our future food security.
Despite the importance of farming and agriculture in Wales, this Labour Government have sought to undermine our farmers with the changes announced in the recent Budget. An effective 20% tax rate on assets over £1 million may seem reasonable on paper, but as we know, most farmers are asset rich and cash poor and would be unable to pay this tax. As I mentioned last week, the average wage for an upland farmer in Wales is £18,600.
About 30% of land in Wales is under some form of tenancy or let, with the majority being short term—of only a few years—under a farm business tenancy agreement. What is the Secretary of State doing to protect tenant farmers in Wales, who will be at the sharp end of this tax? The news regarding the changes in inheritance tax will be devastating to farmers, and the Government’s communication of it to the sector has been abysmal.
The election of Donald Trump in the USA has reopened speculation of a US-UK trade deal. The trade deal agreements we have had with Australia and New Zealand have undermined Welsh farmers with cheap imports, and we must not allow that to happen again. All Parliaments of the UK, including in Wales, should have a deciding say on any terms of a trade deal with America, particularly those that affect Welsh farmers. For example, the previous UK Government consulted to make the country of origin clearer on food labelling, so that customers could more easily buy British produce and support local farmers. Will the Secretary of State say what progress the new Government are making in that area, and will he consider going further by ensuring that “Welsh” and not just “British” labelling is included to help customers who wish to support Welsh farmers when they are shopping?
Ben Obese-Jecty (Huntingdon) (Con)
As an MP in a largely rural Cambridgeshire constituency, the potential impact of the changes to both agricultural and business property relief stand to have a devastating effect on the livelihoods of our family farms. I struggle to believe that newly minted rural Labour MPs, or indeed Cambridge’s own farming Minister, are experiencing full-throated support for this policy. We are yet to see Government Members take a stance against this policy on behalf of their constituents. They must be receiving the same angry and worried emails that we are, yet the few who actually come to the Chamber to speak in these debates genuflect before the Government’s anti-farming policy, while hundreds of others hide themselves away.
From my local perspective, I can only assume that farmers across the constituency boundary in Labour North West Cambridgeshire simply will not be impacted. Except they will be: there are 203 farm holdings, with a further 306 in Huntingdon and 688 across Huntingdonshire. Guy is an arable farmer in Warboys, right on the constituency boundary with North West Cambridgeshire. His is a 600-acre arable farm producing wheat, barley, beans and sugar beet. Under the Government’s changes to APR and BPR, if Guy were to pass away before passing the farm to his children, the whole business would face a 20% tax bill, equal to £1.2 million, or £120,000 a year over 10 years. That is the entire surplus generated by the farm before any wages are drawn. The only way to fund such a bill would be to sell the land—over 20% of the farm. Once that land is gone, it is gone.
As the Prime Minister himself stated at the 2023 NFU conference:
“losing a farm is not like losing any other business—it can’t come back”.
That land will end up being sold through necessity to developers for houses or for solar farms, both of which, conveniently, are political priorities for this Government. Farming clearly is not.
Next week, thousands of farmers will be here in Westminster lobbying us, their representatives in this House, to tell us of the impact this policy will have on their livelihoods. The fact that the NFU has been forced into taking these steps—after unproductive discussions with the Secretary of State, whom many will feel they can no longer trust after his pledge that the Government had no plans to make changes to APR turned out to be a falsehood—is a damning indictment of Labour’s commitment to farmers. The Prime Minister claimed that this Labour Government:
“seeks a new relationship with the countryside and farming communities…A relationship based on respect and on genuine partnership.”
Whether it be in Huntingdon, Cambridgeshire or any of our rural heartlands, the Prime Minister is not delivering on that promise. The Prime Minister’s “new relationship” has quickly soured into a toxic one.
I hope that Labour MPs will be brave enough not only to face their constituents when they come to Westminster next week, but to lobby the Chancellor and the Secretary of State to ensure that our family farms are not taxed out of existence.
Sir Ashley Fox (Bridgwater) (Con)
I am proud to represent the Bridgwater constituency, which has both urban and rural communities. It is plain to see that those living in the countryside do not enjoy the same quality of service as those living in town.
One of the greatest differences is in broadband and mobile signals. In today’s economy, access to fast, reliable internet is essential for any business, whether to receive orders or to complete VAT returns. When I questioned the Minister last month about funding for the shared rural network, he confirmed that the new Government will continue the plans of the Conservative Administration to extend access to rural communities. Since then, we have had disappointing news. Connecting Devon and Somerset, along with its partner Airband, is scaling back plans to provide fibre optic broadband to rural areas in my constituency and in others in Somerset. I have requested a meeting with the Minister on this matter, as it is of critical importance. If we are to ensure the prosperity of rural areas, investment in rural broadband and 5G must be a national priority.
Another issue that disproportionately affects our rural communities is flooding, which particularly affects our farmers. When farms flood, as they often do in Somerset, the damage to crops, infrastructure and livestock can be devastating. The Government need to improve how statutory bodies work together. Joining up their efforts would help us to predict floods better and prevent agencies from being overwhelmed when multiple flooding events occur. The Government should take a more proactive role in supporting farmers with better flood prevention measures, and ensure that compensation, when provided, is fair, accessible and timely.
The challenges of food security require us to invest in local agriculture and ensure that our farmers are thriving in an environment that values sustainable, reliable food production. The Government’s increase in inheritance tax for farmers will harm food production in our country. It is a poorly conceived attack on family farms, many of which are high in value—land, buildings and machinery—but produce a low return. Families who work hard to feed the nation should not be taxed out of existence by the Chancellor, but Labour’s family farm tax will make it impossible for many farmers to pass on their land to their children.
If I had had enough time, I would have addressed rural bus services—or the lack thereof—rural housing, especially for young families, and the provision of small rural schools. However, I will end by saying that with better policies for food security and farming, Britain can have a strong and vibrant countryside.
Harriet Cross (Gordon and Buchan) (Con)
In my constituency and across the country, family farmers are the custodians of our countryside. For generations, they have contributed to our nation’s food security and land stewardship, provided employment, supported local supply chains, and brought rural communities together. The changes to agricultural property relief—this family farm tax—is the wrong tax aimed at the wrong targets. As we have heard many times, farms, while asset rich, are cash poor. Most farmers do not have hundreds of thousands of pounds of cash available to pay an inheritance tax bill, so they will have to sell the very assets that they use to farm to raise capital.
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
indicated dissent.
Harriet Cross
The Minister shakes his head, and he has been shaking his head throughout the debate. The issue is this: the Government are not listening to farmers the length and breadth of the country. They are not listening to the National Farmers Union, and they are not listening to the CLA. People who speak for the farming community, people who represent the farming community, are not being listened to, and that is why they are in this position. It does not matter, it seems, how much we say to the Minister, or how much we say what our constituents are saying. The Government are not listening, and they are not willing to listen.
Last Friday, I met members of NFU Scotland’s north-east region. Perhaps the Minister will not listen to this either, but they told me about some matters that they had been concerned about. One was a farmer whose father, aged 90, still owns the land and still farms it. He said to me, “I will have to sell. I thought I had a lifetime of farming ahead of me, but now it turns out that I only have what is left of my father's lifetime.” He did not sound angry; he just sounded broken. Another put it like this: “It is just a waste. Do they”—the Government—“not understand the resource that we have invested into family farms for generations—the skills, health and safety, teaching about husbandry and agronomy? We invest so much more than just money into farms, and this will all be lost. It is just such a waste.”
In their manifesto the Government said that
“food security is national security.”
They reiterated that last week, adding:
“The Government’s commitment to supporting farmers and rural communities is unwavering.”—[Official Report, 4 November 2024; Vol. 756, c. 23.]
However, in the few months since the election, the Government have done nothing to justify those claims. Granting solar farms on prime land, taxing fertiliser, removing the ringfence from the agricultural budgets for Scotland, Wales and Northern Ireland, and making changes to inheritance tax will impact family farms for generations. The Government have missed a key point: it is not words that impress or satisfy our farming communities; it is action, and so far this Government’s actions have let our farmers down.
Saqib Bhatti (Meriden and Solihull East) (Con)
On Armistice Day, I want to mention the vital role that our farmers played during the world wars to keep food on the table, as they continue to do. If I had more time, I would spend it championing the farmers in my own constituency, not least because it is the home of Berkswell cheese. I would welcome any Member who would like to try it, and they might also like to try some of the turkeys from Rod Adlington’s farm. However, I will focus on APR and BPR. I thought that the right hon. Member for Louth and Horncastle (Victoria Atkins), the shadow Secretary of State, did a wonderful job of deconstructing the Government’s arguments in that regard, despite Ministers’ desire to hide their heads in the sand.
We are seeing a travesty unfold in front of us. We are seeing the travesty of the Secretary of State saying that farmers need to do more with less, and the Government’s sheer brass neck in not listening, which was mentioned by my hon. Friend the Member for Gordon and Buchan (Harriet Cross). Our farmers are working people. They put food on our table and are responsible for our food security, but the Budget puts our family farms on notice. In my constituency and those across the country, family farms ensure that we have food on our tables. They do not do so at a profit, even if they have assets that they will now be taxed on.
I spent some time wondering why the policy was introduced, and it is clear that it is a cynical ploy to free up land so that the Deputy Prime Minister can concrete over our green belt and the Energy Secretary—[Interruption.] Labour Members can shout me down if they want—that is fine—but farmers are listening and can see the arrogance of those on the Government Benches. The Energy Secretary’s desire is to have pylons and solar panels peppered across our green belt. The Government broke their promises on NI, they broke their promises to pensioners, and now they are breaking their promises to our farmers.
Some clarity is needed, because the Chancellor has repeatedly said that the thresholds will be shared between spouses. That was contradicted by the Treasury, and the Secretary of State said something else at the Dispatch Box. Farmers need clarity, because how can they possibly plan if the Chancellor and the Secretary of State do not know their own policies and are contradicting each other?
The Government continue to say that the policy will not affect that many farmers, but DEFRA’s own analysis shows that it will affect 66% of them. The Secretary of State said he was using the Treasury’s figures. Why do two Departments’ figures contradict each other? We need clarity on that, because it is important. [Interruption.] Labour Members can shout me down, but it is really important for the livelihoods of so many people.
When it comes to undermining our food security and national security, the only winners are autocrats around the world who would like to see us weakened—autocrats like Vladimir Putin. That is exactly what the policy will lead to.
Richard Tice (Boston and Skegness) (Reform)
We all want growth, but growth requires investment. Investment requires confidence, but confidence among rural communities is collapsing, including in Boston and Skegness. Since the Budget, one farmer has cancelled a £1 million expansion plan for his strawberry-growing business. I know another farmer who has cancelled a £300,000 investment in equipment. Just yesterday, I heard from a hospitality entrepreneur in my constituency who has cancelled another investment in a new pub. It means less growth, fewer jobs and less incentive for young people to stay in our rural communities. That is the reality.
Confidence in the Environment Agency is also collapsing. Just yesterday afternoon, I was on the riverbank at Wainfleet and saw the consequences of failed management, the failure to dredge our rivers and the failure to protect our riverbanks. Again, it means that local farmers and entrepreneurs will not have the confidence to invest. Confidence is such a critical word, but confidence in this Government is collapsing in rural communities. It seems the Government want to blight our countryside, including in my constituency, with thousands of ugly pylons and thousands of acres of solar farms. That will not provide food security.
The Government are determined to set course on this ridiculous farm tax, but I urge them to have the humility to listen and to look at the results. If investment is down, jobs are down and family farms are down in one or two years’ time, they should accept that they were wrong and reverse it.
Sarah Bool (South Northamptonshire) (Con)
Over 52,000 hectares of the land in South Northamptonshire is agricultural—equivalent to more than 35,000 football pitches—so rural issues are at the heart of my constituency. I will focus on three matters: the death of the family farm, flooding and solar farms.
The Chancellor’s agricultural property relief reforms have caused huge distress among the farming community in South Northamptonshire. Last week, I joined fellow Opposition MPs to deliver a letter to Downing Street urging her to rethink this disastrous policy. However, we must not forget the other pernicious elements of the Budget. Increasing tax on fertilisers—the carbon tax—to meet net zero targets will force farmers to produce less food. We will therefore have to import it from a country that does not have such a tax, with all the resulting carbon impact. It is unbelievably counterintuitive. The Government will also now class double-cab pick-ups—the workhorse vehicle of the countryside—as company cars for tax purposes. This change could increase the tax burden on the working people of the countryside by 211%. I am staggered that Labour can say that food security is national security while introducing a smorgasbord of attacks on farmers.
Members may also be aware that in September parts of Northamptonshire and Bedfordshire suffered catastrophic flooding. The village of Grendon in my constituency was flooded in a matter of minutes at 9 o’clock on a Sunday evening, resulting in the entire downstairs floors of some properties being ruined, cars being destroyed and priceless memories being lost. Residents believe this may have occurred due to insufficient dredging of a nearby brook, such that when the heavy rainfall occurred upstream, the water built up like a dam that burst and wreaked havoc. Will the Secretary of State and the Minister commit to exploring how extensively the Environment Agency dredges small brooks, to prevent such catastrophes from recurring?
On solar farms, Easton Maudit in my constituency would be enveloped on three sides by the proposed 2,000-acre Green Hill solar farm, with once-beautiful English countryside reduced to grey sheets of plastic and glass. I am not against more renewable energy, but to have a solar farm on such a scale totally enveloping an idyllic rural village, while warehouses on the M1 sit without solar panels on their roofs, seems totally illogical to me and my constituents. Our rural towns and villages may be smaller in size and less visible than our urban cities, but their residents are just as important and we must protect them.
Dr Roz Savage (South Cotswolds) (LD)
The gravity of this situation was brought home to me by a letter that I received recently from a South Cotswolds constituent, a farmer near Sherston whose experience vividly illustrates the challenge our agricultural sector faces. He manages a 200-acre farm, a combination of owned and rented primarily arable land, with a small field of Brussels sprouts, where I spent a day helping with the harvest last Christmas. I am no farmer, but that day spent in the mud and drizzle gave me some inkling of just how hard our farmers work and how dedicated they are. Despite their best efforts, their financial reality is stark. Last year, with an above-average harvest and a favourable crop price, they made just £34,000 before even paying themselves anything. This year, with falling crop prices, they anticipate a loss.
The recent Budget proposals have cast a long shadow over our farming communities, adding to an already vulnerable situation. The changes to agricultural property relief threaten to force the sale of farms that have been in the same family for generations. That Brussels sprouts farmer faces a potential inheritance tax bill of nearly £239,000, a sum that could be paid only by selling off part of the farm that has been in his family for three generations.
The Liberal Democrats have long recognised that food security is national security. We understand that environmental stewardship and food production are not mutually exclusive, but mutually reinforcing goals. It is in line with this that I have introduced my private Member’s Bill, the Climate and Nature Bill, which would help to support farmers, to support nature and to support us. Our farmers are not just food producers: they are the guardians of our land, regenerating soil, restoring wildlife and enhancing biodiversity.
Many people think that the climate crisis is the cause of the nature crisis, but many believe—rightly, I think—that it is the loss of nature that is contributing to the climate crisis. The Royal Agricultural University in Cirencester, in the South Cotswolds, is now starting to pioneer the idea of zero dig, knowing that when we regenerate soil it sinks more carbon, mitigating climate change; it holds more water, mitigating flooding; and it yields more nutritious food, improving human health.
I call on the Secretary of State to heed the voices of our farmers. We need to work together to create a future in which British agriculture is strong, resilient and sustainable—a future where our farmers can produce the food we need while nurturing the land we love.
Robbie Moore (Keighley and Ilkley) (Con)
Rural communities are proud communities, and our farmers work tirelessly around the clock not only to put high-quality food on our plates but, through their businesses, to help to keep our rural economy going—as, indeed, do many other rural businesses, as Members on both sides of the House have recognised.
I congratulate the hon. Members for Cannock Chase (Josh Newbury), for Hemel Hempstead (David Taylor) and for Stirling and Strathallan (Chris Kane) on delivering their maiden speeches. I know Stirling and Strathallan very well, having been born in Stirling—I am a proper Unionist—which gave me my red hair. Each spoke proudly on behalf of their constituents, and I welcome them to this place.
We are just a few months into this Labour Government and, following a string of broken promises and damaging cuts, trust among our farming community is now at an all-time low. Why are this new Government, across every single Department, deciding to sideline the voice of our rural communities?
We have heard that the Secretary of State for Energy Security and Net Zero is ploughing ahead with his plans to replace productive agricultural land with solar panels, and to replace protected moorlands with wind turbines—all against the consent of local people. The Secretary of State for Housing, Communities and Local Government is taking away from local people the power to decide how they would like to see their rural communities expand, while providing no commitment whatsoever to improve services and infrastructure alongside any increased demand. The Secretary of State for Transport is scrapping the £2 bus cap, which the previous Government introduced as a vital part of the rural transport plan. Labour’s change leaves many people in remote rural communities paying even more to get to work or to visit friends and loved ones.
The Chancellor is stifling rural growth by hiking national insurance for small business owners, who are the backbone of our rural community, alongside her disastrous changes to inheritance tax relief through the ill-thought-through cap on agricultural property relief and business property relief, which will affect not only multigenerational family farms but trading businesses with assets valued well over the Government’s ridiculous £1 million cap. The Chancellor is also taxing double-cab pick-up trucks, as well as increasing the fertiliser tax, which is expected to increase costs by up to £50 a tonne.
Then, of course, the Secretary of State for Environment, Food and Rural Affairs has willingly sold off his own budget to the Chancellor and broken every pre-election promise that he and his Government made to farmers, and then had the cheek to tell them to do more with less. That is all while he is dramatically reducing the delinked payment rates, which take effect next year, despite many farming businesses already having factored the income into their cash-flow forecasts. It is quite simple: this Labour Government do not understand rural communities and, what is worse, do not even appear to want to listen to them.
Pippa Heylings (South Cambridgeshire) (LD)
Does the hon. Gentleman agree with me and David Walston from Thriplow in South Cambridgeshire that the impact of house prices and infrastructure means there is a complete disconnect between land value and income, which is affecting—
Robbie Moore
I know David well, as a fellow Nuffield farming scholar, and I agree with him on this Budget’s catastrophic consequences.
I am not sure how many farmers the Secretary of State spoke to in Croydon over the weekend, but I can tell him that the many farmers I spoke to are up in arms. Just last week I was at the northern farming conference in Hexham where, perhaps unsurprisingly, a huge number of complaints were raised by the farmers in attendance, with some even protesting at the gates. Ian Brown, a constituent of the hon. Member for North Northumberland (David Smith), said that this Budget will have catastrophic consequences for the farming community, yet all we heard from the Minister during that conference was a defence of the new Government, and not a single word about how they may have got it wrong. I understand that when he addressed the egg and poultry conference this morning, the Secretary of State concluded that farmers are exaggerating the consequences of the Budget. It is just staggering.
I am sure that many of the new Labour MPs, representing some of our fantastic rural constituencies, have received huge amounts of correspondence from farmers outlining their disgust at Labour’s Budget, but we heard very little from them in voicing their concerns. I am not sure whether the Whips are silencing them from raising their concerns, or whether they are completely tone deaf to the Budget’s direct impact on many of their constituents. If they would like some help, maybe I could outline some of the things they should be raising in this debate, such as increases in taxes on machinery, fertiliser, building materials, farm diversification and employees, and, worst of all, the crippling family farm tax, which risks forcing thousands of hard-working farmers to surrender their life’s work to the Chancellor.
Labour Members do not understand that the vast majority of family farmers are not multimillionaires; most are cash poor and operate under tiny margins, with many struggling to break even. To sustain their businesses, they generally operate from an asset base that has a high value. That is why the APR and BPR caps that have been imposed are so out of touch with the reality on the ground, as my hon. Friend the Member for Gordon and Buchan (Harriet Cross) rightly outlined. When the value of the farmland, the farmhouse and perhaps a cottage or two is taken into account, and then the value of any livestock, growing crops, machinery, stocks or crops in store is added, along with the value of any farm diversification project that may have taken place, the value of any asset is likely to be well in excess of the £1 million cap, so the tax will impact the vast majority of farming businesses.
The Minister will say, “Look at the detail”, but I assure him we have looked at the detail, as have the NFU, the CLA, the Tenant Farmers Association, the Central Association of Agricultural Valuers, and many professionals, be they accountants, solicitors or land agents working in the sector, as well as many of the constituents of right hon. and hon. Members on the Conservative Benches. We have all come to the same conclusion: Labour’s positioning is wrong, will have catastrophic consequences and must change. I again ask the Minister to provide clarity on the information he is relying on to make these decisions.
The smokescreen of a £3 million cap is incompatible with many farming businesses. It will not provide many farming businesses or family farming set-ups with the reassurance the Chancellor claims to be giving them. The same can be said about the justification of the 10-year payment for any IHT debt. That debt would result in assets having to be disposed of, because businesses will simply not have the funds to pay, nor will the banks be willing to lend against any IHT tax, should it be imposed, because many farmers will not be able to service such a loan. Will the Government publish a full impact assessment of the consequences their Budget will have on many farming businesses, food security and the larger rural sector?
We should never forget that this debate is about people. Hard-working farmers are at the heart of the debate. Some of their lives will be changed for ever. Farming can be a very lonely business, with long hours and the constant stress of battling against the odds. Our farmers are under extreme pressure, but unfortunately this Budget has done nothing to provide them with any reassurance, support or certainty that the Government are on their side. It is no surprise that charities are raising concerns about the shocking rise in mental health issues among our farming communities following the announcements in the Government’s Budget. I pay tribute to those farming charities and organisation that help to provide much-needed support, not only to our farmers but to all those involved in our remote rural communities.
To sum up, sometimes in politics it is hard to admit to being wrong, but after speaking to farmers, agricultural businesses and farming organisations up and down the UK, it is clear that the Government have got this wrong and are completely off the mark. I suspect even the Ministers on the Treasury Bench know that they have got this wrong, but they have chosen to double down. For the sake of our farmers and our rural communities—in fact, everyone who has been impacted by the Budget—I say to the Government that change was one of Labour’s key promises in the election and, right now, nothing would be more welcome.
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
It is a pleasure to have the opportunity to wind up this debate and to add my gratitude to, and support for, farmers working hard up and down the country to feed the nation and protect our environment.
I welcome the shadow Ministers to their places on the Opposition Front Bench. I spent nearly five years sitting there, and I have to say it is better on this side. During that time, how rarely we ever got to discuss rural policy in the Chamber. It is interesting that it has taken a Labour Government to give Government time to allow Members to speak up for rural areas. What brilliant contributions we have had from Labour Members about the things that matter to rural areas. I shall mention some of the excellent speeches.
I was thrilled to hear the three maiden speeches. My hon. Friend the Member for Cannock Chase (Josh Newbury) spoke about a range of issues—[Interruption.] Of course farming is important, but Conservatives should remember that many other things are going on in rural areas. We heard about those from my hon. Friend, but we also heard about ghastly homophobic bullying, and I pay tribute to him for his brave comments. We heard from my hon. Friend the Member for Stirling and Strathallan (Chris Kane) about the extraordinary pedigree in his constituency, as well the wide range of issues, including film and television production, that help to create rural prosperity.
Closer to my part of the world, my hon. Friend the Member for Hemel Hempstead (David Taylor) described the beautiful countryside, but also talked of the challenges in housing and the food banks that scar our country. How much we should all work to ensure that food poverty is not faced in the future.
I cannot talk about all the speeches today, but I was pleased to hear the right hon. Member for East Hampshire (Damian Hinds) raising some other issues beyond the one that I will come to in a moment. We heard from my hon. Friend the Member for Doncaster East and the Isle of Axholme (Lee Pitcher) about flooding—a feature of many speeches. We heard a powerful speech from my hon. Friend the Member for Shrewsbury (Julia Buckley) about the positive things that the Labour Government are doing to address the real issues that we face.
We also heard from the Chair of the Select Committee, who is not in his place—[Interruption.] I am sorry—I missed him. I think he has moved. I always listen closely to his speeches and he made an important point when he said it is not about the figures. That is true, because the figures have been misrepresented, but he was right to say that there is a real fear out there—precisely because of the misrepresentations, not because of the figures.
We heard from my hon. Friend the Member for South Norfolk (Ben Goldsborough), who showed the difference between this side of the House and the other side. The future will be different for rural areas, food production and farming—[Interruption.] In a good way, because we are the future, they are the past. Then we went to my hon. Friend the Member for Whitehaven and Workington (Josh MacAlister), and we heard about how important it is to work collaboratively with people. We also heard about the important transition from the basic payments system towards the new way of working with and rewarding farmers effectively.
From my hon. Friend the Member for Macclesfield (Tim Roca) we heard about crime. It was interesting that it took a Labour Member, so deep into the debate, to talk about an issue that anyone who had actually been out on farms would have heard about—the constant thefts of GPS units. I sometimes wonder what world Conservative Members are living in—do they just read The Daily Telegraph all the time? Is that where they get their information?
My hon. Friend the Member for Bolton West (Phil Brickell) spoke about wonderful national parks and better access to the countryside, which is important for so many people; the Government will deliver on that. My hon. Friend the Member for Dunfermline and Dollar (Graeme Downie) spoke about how prosperity comes to rural areas. Sometimes it comes from filming and TV. There are many ways in which prosperity is earned in the countryside; this is the future. My hon. Friend the Member for Carlisle (Ms Minns) spoke about rural crime and PC Susan Holliday; I very much commend her for her work. My hon. Friend the Member for York Outer (Mr Charters) spoke about not just flooding but biosecurity, which is so important, and mental health, which we will come to in the Adjournment debate. I associate myself with the comments of the shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), about the important work that so many charities are doing.
My hon. Friend the Member for North East Hertfordshire (Chris Hinchliff) spoke about rural homelessness, which is an important topic. I was struck by how negative Opposition Members are about the prospect of building more homes. That is what matters to all our constituents. They need somewhere to live, not just somewhere to rent out to people at extortionate rates. My hon. Friend the Member for North West Cambridgeshire (Sam Carling) reminded the House about the extraordinary low levels of farmer confidence when the last Government were in power. The Conservatives bear some responsibility for that lack of confidence.
I was delighted to visit Hexham last week for the excellent conference. I say to the shadow Minister, it is striking how many people come up to me after each of these events and say, “You’re right. You’re right. You’re right.” Of course, against the huge peer pressure they are reluctant to say it, but they know that we are right. My hon. Friend the Member for Hexham (Joe Morris) is the first Labour MP for that area. The Conservatives might want to think about why that is. I think it is because they are looking to the past, not the future. We finished by hearing from my hon. Friend the Member for Rugby (John Slinger). How long it took in the debate to get to parish councils—the people closest to the ground.
Let me turn to the issue that the Opposition are consistently raising. I hear and understand what people are saying, but I waited in vain through the entire debate for an Opposition Member to address the real figures—the actual claims that have been made under APR. They are not a projection or a guess, but the figures published by the people in the Treasury who actually collect the tax. Those figures are of course the figures that we have been quoting: between 400 and 500 claims per year. With the changes in behaviour that are likely as a consequence of the policy—possibly, and quite likely, very good consequences—the numbers will be very small. That is not just what we have said; Paul Johnson from the Institute for Fiscal Studies has said it.
Daniel Zeichner
I will not, because I am afraid we are very close to the end. Opposition Members had four hours to get to the figures, but of course they would not want to engage with them because they tell a different story. We are confident that the policy can be made to work, but I am in discussion with the NFU and others on the figures so that they can understand how we arrived at the policy. We will continue to ensure that we engage properly with everybody. My hon. Friends have discovered that when they go and talk to people and explain it clearly, people are reassured. People should be reassuring rather than frightening.
Members raised issues around the devolved budgets. This year’s settlement has been carried forward in the same way as before, but what has changed is that it is no longer ringfenced for the devolved Administrations, so they can make the decisions. I would hope that the devolved Administrations would welcome that.
Let me finish on the positive news about the future that we are setting out for our food production system. I give credit to the previous Government for the agricultural transition that they began. The difference now is that we will turbocharge it and ensure that we transition in such a way that in the future we not only have strong food production in this country, but protect the environment and nature, with the stability of the biggest budget ever—over half a billion pounds for SFI this year. That would not have happened under the previous Government. I am confident that we will have a strong future for British farming in this country, provided that people do not spend the whole time talking it down.
Question put and agreed to.
Resolved,
That this House has considered rural affairs.
Mental Health: Farming and Agricultural Communities
(1 week, 3 days ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Aphra Brandreth (Chester South and Eddisbury) (Con)
I am grateful to have secured a debate on the vital and pertinent issue of mental health in farming and agricultural communities.
It is sadly no exaggeration to say that we have a mental health crisis in our rural and agricultural communities. In January 2021, the Royal Agricultural Benevolent Institution launched a large research project called the big farming survey. The audience of the survey was 15,000 farmers, contractors and their households, and its aim was to achieve a better understanding of the health and wellbeing of the farming community in England and Wales. The report found that the farming community has lower than average mental wellbeing compared with the wider UK population. A point of concern is that over a third of those who completed the survey had significantly low mental wellbeing scores. Worryingly, a similar number said that they were probably or possibly depressed, according to NHS thresholds.
Sarah Dyke (Glastonbury and Somerton) (LD)
I thank the hon. Member for giving way and congratulate her on securing this important debate. The Royal Agricultural Benevolent Institution’s big farming survey also found that 52% of farmers experience regular pain and discomfort, while one in four has mobility problems. Does she agree that we must recognise that physical health has an impact on mental health, and ensure that the NHS, GPs and mental health services are joined up?
Aphra Brandreth
The hon. Member, who is an excellent champion for farmers in her community, makes an important point on physical health.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady, to whom I spoke beforehand, on securing the debate. The Ulster Farmers Union runs its “Mind Your Head” campaign every February to bring down the stigma attached to poor mental health in the farming sector. That is so important because research shows that 95% of young farmers in this great United Kingdom of Great Britain and Northern Ireland have concerns about their mental health. Does she feel that this matter should be considered not just in England and Wales, but across this great nation?
Aphra Brandreth
The hon. Member makes an important point: this issue impacts every part of our Union. I will refer to the impact on young people later in my speech.
To go back to the RABI survey, the report found that the farming community has lower than average mental wellbeing compared with the wider UK population. A point of concern is that over a third of those who completed the survey had significantly low mental wellbeing scores. Worryingly, a similar number said that they were probably or possibly depressed. Nearly half of respondents said that they were experiencing some form of anxiety. Tragically, one in five respondents knew someone who had attempted to take their own life. I remind the House that the survey had 15,000 responses, so that is a shockingly high statistic, and I hope that its gravity hits home with Members across the House.
Since the report was launched in January 2021, things have not become any easier for farmers and the rural community. Putin’s illegal invasion of Ukraine, and its consequences for energy and fertiliser prices, and for the flow of commodities such as grain and oilseeds, have caused farmers a great deal of concern. Economic factors such as inflation have also hit farmers hard, and like several places across the country, we in Cheshire have had a particularly bad year with regard to rainfall. Those problems all compound existing challenges, thereby putting a significant strain on farmers who are already under huge pressure.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
I thank my hon. Friend for securing this debate and for giving way. Just last Friday, I visited a farm in my constituency. It is a family farm: David runs the construction side of the business, Robert runs the farm, and their sister Sharon runs the books. By any measure, it is a successful farm. That family has owned the property for a long period of time, but when they spoke to me, they talked—as my hon. Friend has said—about high energy costs, high interest rates, tougher international competition, tougher regulations on pesticides and the use of chemicals, and a volatile climate. Then, to raise the issue that was the subject of our last debate, they talked about the new rules on inheritance tax. Is it any surprise that many people in the farming industry feel stressed and under pressure, considering the policies introduced by this Government?
Aphra Brandreth
I thank my hon. Friend for raising that issue. The sector faces a wide range of challenges, and of course, the decisions that the Government are making will contribute in part to some of those challenges. Some are outside the control of all of us, the weather being one example.
I represent Chester South and Eddisbury, a constituency with a large rural area. Because of the nature of Cheshire’s ground and topography, dairy is the predominant mode of farming locally. That brings additional challenges through the risks of animal disease outbreaks, and their financial and emotional consequences.
I would like to take a moment to share some of the very real stories that demonstrate why I have asked for today’s debate, because behind every statistic is a personal story. There are families, loved ones, friends and communities who are deeply affected. Those of us who represent rural and agricultural communities know that the suicide rate among farmers is tragically high. Sadly, even in the short time that I have had the privilege of representing Chester South and Eddisbury, I have had examples in my constituency that have caused a great deal of pain to the families and the surrounding area. When something like this happens, it rocks a tight-knit community to its core, and the impact is felt by many.
Only last week, I heard of a tragic incident where a daughter found her father after he had taken his own life in one of the barns on their family farm. In a tribute, the daughter wrote of how her father worked so incredibly hard, and how proud he was to have increased the acreage and yield of the family farm during his stewardship. He was immensely proud of the operation he had built. His daughter summed up the vocation of farming in her online tribute:
“Farmers work harder and longer than most other trades and earn significantly less. We love what we do, or we wouldn’t do it. We feed the nation to the best of our abilities”.
I cannot begin to imagine what the families of those two farmers are going through, but as I said earlier, such cases are too common. Members from right across the House will have heard other stories like these in their own constituencies.
David Smith (North Northumberland) (Lab)
I thank the hon. Lady for giving way and for securing this important debate. On the vital issue of the tragedy of suicides among the farming community, I have met several farmers in my constituency who have felt that pressure—the common theme is that everybody knows somebody who has felt that pressure at some point, or sadly has even taken their own life. Does the hon. Lady agree that right across the House, we should agree to support farmers in whatever way we can?
Aphra Brandreth
I appreciate the hon. Member’s comments, and I am sorry to hear about the tragic instances in his constituency. We very much need to be collaborative to improve things for the farming community.
Ellie Chowns (North Herefordshire) (Green)
I thank the hon. Lady for securing the debate. Will she join me in paying tribute to farmer-initiated and farmer-led organisations, such as We are Farming Minds in my constituency? They do such important work to support their colleagues in the farming sector and to tackle mental health challenges head-on.
Aphra Brandreth
I am grateful to the hon. Member for mentioning those excellent organisations; I will note others later in my speech.
For all those reasons, this debate and the actions and commitments from the Minister are important. Women are an often overlooked group when we talk about rural mental health, particularly young women. There are inspiring examples of women who run farms and contribute a great deal to the agricultural sector. Of course, women are almost always involved in a farming operation, even if they are not always hands-on in the yard or fields.
Gregory Stafford (Farnham and Bordon) (Con)
My hon. Friend is making a powerful point. When I visited Pierrepont farm in my constituency, which has just been taken over by a new young female farmer, she talked about the stresses and problems that she is facing. They do not just affect young women, however, but families too; Mathias & Son Nurseries in my constituency equally has those problems. The issue that my hon. Friend is talking about affects established family farms and the new younger generation, and the policies of the new Government are hitting both equally. Does she agree that we need to look after the new young female farmers as well as our established family farms?
Aphra Brandreth
Absolutely; we know that mental health issues have an impact on people across the community. It is not just the individual who is directly affected, but those around that person.
The RABI survey found that women aged 24 to 35 had the worst mental health scores across the sample, so I ask the Minister to think about how policy can address that and how we can raise awareness of the mental health challenges facing all those in farming and rural communities.
I stress that there are some wonderful organisations, locally and nationally, that work hard to support our rural and agricultural communities and to provide support for mental wellbeing. I mention again the RABI and the role it plays in supporting farmers, and others such as the Farming Community Network and the Yellow Wellies’ “Mind Your Head” project, which help farmers when they need it most.
Those organisations, as good as they are, are not the long-term solution, nor can they find and prevent every tragic occurrence and consequence of suicide in the rural community. Any good doctor would say that prevention is better than cure. The cause of a significant amount of stress for farmers, particularly recently, has been Government policy.
Richard Foord (Honiton and Sidmouth) (LD)
I have just got off the telephone to a constituent from Yarcombe in Devon, who is a tenant farmer and is particularly anxious about agricultural property relief and the Government’s proposed inheritance tax changes. Does the hon. Lady agree that that is an appalling proposition?
Aphra Brandreth
I thank the hon. Member for sharing that. The impact of APR will be felt across the community. Unfortunately, in a community that is struggling with mental health, it is an extra blow.
Later, I will offer some thoughts on how we might better prevent mental health problems, but I will briefly mention a few other reasons why mental health issues are disproportionately higher in rural areas. First, there is the issue of isolation, which is multifaceted. It can be attributed to literal isolation, because farmers live in sparsely populated areas far from the nearest village; digital isolation, as they are without broadband or mobile coverage; and physical isolation from a lack of transport links. That issue keenly felt in my constituency, where many rural areas have little or no public transport connections.
A mixture of those forms of isolation means that people in rural areas, such as farmers, often suffer from loneliness. It is not easy for people to go to the local pub or café to talk to friends and neighbours when they live in the countryside. It is harder to get to those places, and harder to make time to socialise due to the demands of farming.
There is also the issue of rural reticence. There has historically been a stigma surrounding mental health; sadly, although we have made good progress in breaking down barriers and encouraging people to talk, there remains a reticence in rural and agricultural communities to talk about problems or feelings. It is not because of hubris or arrogance. Rather, the “I’ll manage myself” culture comes from a desire not to burden neighbours and friends who are also in the community, and will no doubt be facing the same challenges. I am confident that we can do more as a society to break down this barrier and encourage farmers to talk honestly and openly with one another.
Sir John Hayes (South Holland and The Deepings) (Con)
My hon. Friend personifies the Conservative commitment to farms and farming, and she does so with style and acumen. The fear that she has described is exacerbated by the way farmers now face their customers: supermarkets are ruthless in how they deal with farmers. It is the fear that dare not speak its name; our farmers cannot speak, for those are the people to whom they sell their goods. Will my hon. Friend implore the Government to take a tougher line on the sharp practice of the big retailers in the light of its effect on farmers?
Aphra Brandreth
My right hon. Friend always makes such pertinent points. I know the importance he places on issues surrounding food security: he works extremely hard to highlight the challenges that farmers face all around them, and to ensure that they get a fair price from suppliers.
Mental health problems are also more prevalent in agricultural communities because of the volatility of farming. Farmers do not enjoy the luxury of stability and are vulnerable to shocks such as adverse weather and flooding, health issues within herds, such as bovine tuberculosis, and economic problems. Agricultural policy ought to create stability for farmers, not more uncertainty. I will speak more about that issue shortly.
There are many reasons why rural mental health is disproportionately worse, but I hope that the three I have mentioned give the House an idea of why I secured this debate. I have three asks of the Government; I hope that the Minister will be receptive and will commit to working alongside colleagues across the House and within Government to make real progress.
My first request is that the Government take an integrated approach. I humbly suggest to the Minister that that has been an issue with recent Government policy, particularly in relation to agricultural property relief. Ministers in the Department for Environment, Food and Rural Affairs should have been in the room when the decision was made to change APR. If they were in the room, their priority and their plea to the Treasury should have been the impact on family farms, food security and the local economy.
DEFRA Ministers should also be involved in many cross-governmental discussions. We need a joined-up approach whereby farmers and the rural community are consistently represented by Ministers who have their best interests at heart. Only then can we hope to see a policy that does not cause the agricultural community more concern, leading to further uncertainty and exacerbating the challenges. The decision on APR has once again brought rural mental health to the forefront. We have seen too many tragic stories in the papers. I hope that this is a wake-up call to the Government to start taking rural policy seriously, and not see farmers as a community to exploit.
My second ask of the Minister is that a specific strategy be put in place for young people who live in rural communities. Statistics show a significant uptick in mental health problems among young people, particularly after the pandemic, but many of the problems that I have outlined as compounding factors making rural mental health worse are even more prominent among younger people. Research conducted by Yellow Wellies shows that 95% of farmers under 40 believe that mental health is the biggest hidden problem facing farmers today. That is a shockingly high statistic.
We know that there is a shortage of young people entering the agricultural sector. That shortage is very often driven by the isolation of rural areas and by the lack of opportunity. If we want the countryside to thrive and farming to be a successful and attractive sector, we must do more to support young people. An important part of that is making sure that their mental health is in as good a place as it can be, so I ask the Minister to reassure the House that this will be a priority for him, and to meet me and representatives from the Cheshire Young Farmers’ Clubs to discuss how the Department for Environment, Food and Rural Affairs can better understand the mental health pressures on young people in rural areas.
My final ask is that we make sure that farmers are at the centre of policy decisions that relate to rural areas and the agricultural sector. The ask is simple but very necessary. When the Government are formulating policy, I urge them to think of its implications and consequences. I ask them to think about the motivations behind the policy, and to remind themselves of the motivations behind our farmers’ work. They are motivated by service to our country, by providing food and caring for our countryside, and by being part of their local community, supporting friends and family, and working to support the local economy.
Farmers are part of the fabric of our country, the backbone of local economies and stalwarts in our communities. When Ministers feed into policy, I ask that they remember that and reflect the values of the rural and agricultural communities. If Ministers do that, we can go a long way towards improving mental health in areas where that is so desperately needed.
The Minister for Food Security and Rural Affairs (Daniel Zeichner)
I thank the hon. Member for Chester South and Eddisbury (Aphra Brandreth) for introducing this very serious debate in such a calm and measured way befitting the seriousness of the subject. Let me start by extending my sincere condolences to all those who in recent times have lost loved ones, and to their friends, families and communities. Every suicide is a tragedy that has a devastating and enduring impact on families and friends. I absolutely recognise that farmers face challenges on many fronts, and we will do everything we can to safeguard the mental health of people working in the sector.
In recent years there has been a growing awareness of the importance of mental health in the sector, which I absolutely welcome; I agree with the hon. Lady’s comments about the impact on women, and we will continue to work with the full range of farming charities. I particularly echo her comments about amazing organisations such as the Farming Community Network and the Royal Agricultural Benevolent Institution, and I very much recognise the points about the survey; indeed, the hon. Member for Glastonbury and Somerton (Sarah Dyke) and I were on a panel discussing this very issue with Yellow Wellies last year. We are supporting the mental health and wellbeing of our farmers, and in the coming weeks I will invite charities and other stakeholders with expertise in this area to discuss how we can grow a better national support system for farmers.
I do not have much time, so I will not go into a whole range of detail, but extreme weather events, such as floods, and the pressure of disease clearly put additional stress on people; we fully appreciate that. We will continue to seek out opportunities to support people. Today I have agreed to continue the funding for the Farming Community Network, which supports communities affected by bovine tuberculosis; we are putting in place a three-year contract, starting on 1 December. That support began back in 2009, and it provides TB-affected farmers and their families with a national, free-to-access business and pastoral advice service. It has been successful, and we are very pleased to continue it.
Furthermore, we continue to provide funding for several organisations that will deliver projects to address these issues. The Farming Community Network, Lincolnshire Rural Support Network, the Farmer Network and You Are Not Alone are all in receipt of funding this year, and we will continue to work with third-sector organisations to keep delivering support into the future.
On suicide prevention, we are working across government to improve mental health and access to services. I pay tribute to everyone who is working to raise awareness, and I encourage those who are struggling to reach out for help. We recognise the points about isolation and difficulty in asking for help, so we are giving mental health the same attention and focus as physical health. We want everyone to be confident about accessing high-quality mental health support when they need it. I am pleased that we have announced that we will recruit 8,500 new mental health workers, who will be trained to support people at risk of suicide. The £10 million suicide prevention grant fund, which runs until March 2025, continues to provide funding to a range of voluntary and community organisations to support their work on suicide prevention.
The hon. Lady made good points about loneliness and isolation. Suicide is a complex, multifaceted issue, and loneliness and isolation are particular risk factors for people in rural areas, such as farmers and agricultural workers. We are committed to tackling loneliness, including by providing advice on loneliness as part of the “Better Health—Every Mind Matters” campaign. The Department for Culture, Media and Sport also supports organisations that can play a role in reducing loneliness stigma among men in particular, through the Tackling Loneliness Hub. That online platform connects professionals from across sectors working to reduce loneliness. I conclude by thanking the hon. Lady for bringing this important subject to the attention of the House.
Aphra Brandreth
I appreciate the Minister’s constructive comments, and some of the policies he mentioned that he put in place. As I noted, I want to raise the importance of the impact on young people in the farming industry, so will he meet me and Cheshire Young Farmers’ Clubs, so that young farmers can hear at first hand from the Minister and put questions to him on this issue?
Daniel Zeichner
I welcome the hon. Lady’s commitment to supporting young people. It is certainly one of my passions to ensure that we transform the system to make it easier for young people to come into farming and prosper. I am on a perpetual tour of the country, and I am sure that I can find a time and opportunity to meet her and her young people. I look forward to doing so.
In conclusion, the Government are committed to supporting farmers and agricultural workers in accessing the support that they need to protect their mental health and wellbeing. We will work to tackle loneliness and isolation in rural areas. We will ensure provision of high-quality, accessible mental health support. We are determined to support farmers as they do the vital work of producing food and looking after nature and the environment.
Question put and agreed to.
Written Corrections
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Ministerial Corrections
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Cabinet Office
(1 week, 3 days ago)
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Georgia Gould
The Chancellor of the Exchequer recently took decisive action by appointing a new covid counter-fraud commissioner to help us recover public money and ensure that this never happens again.
[Official Report, 24 October 2024; Vol. 755, c. 388.]
Written correction submitted by the Parliamentary Secretary, Cabinet Office, the hon. Member for Queen's Park and Maida Vale (Georgia Gould):
Georgia Gould
The Chancellor of the Exchequer recently took decisive action by commencing the appointment of a new covid counter-fraud commissioner to help us recover public money and ensure that this never happens again.
Defence
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Luke Pollard
The agreement we have with the Pakistani Government means that anyone who is being assessed as part of the ARAP scheme will not be deported back to Afghanistan, which is really important, but there is still a requirement to make sure that we can relocate eligible individuals and their immediate families to the UK in an appropriate and reasonable way.
[Official Report, 14 October 2024; Vol. 754, c. 618.]
Written correction submitted by the Minister for the Armed Forces, the hon. Member for Plymouth Sutton and Devonport (Luke Pollard):
Luke Pollard
The agreement we have with the Pakistani Government means that anyone who is confirmed as ARAP-eligible should not be deported back to Afghanistan, which is really important, but there is still a requirement to make sure that we can relocate eligible individuals and their immediate families to the UK in an appropriate and reasonable way.
Other Correction
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Dr Ben Spencer
Cancer Strategy for England
The following extract is from the Westminster Hall debate on Cancer Strategy for England on 31 October 2024.
Dr Ben Spencer
Community diagnostic centres and surgical hubs made a difference. They were backed by a £2.3 billion investment, the largest cash investment in MRI and CT scanning in the history of the NHS; those scans, tests and checks are now being delivered in 170 CDC sites.
[Official Report, 31 October 2024; Vol. 755, c. 371WH.]
Written correction submitted by the hon. Member for Runnymede and Weybridge (Dr Spencer):
Dr Ben Spencer
Community diagnostic centres and surgical hubs made a difference. They were backed by a £2.3 billion investment, the largest cash investment in MRI and CT scanning in the history of the NHS; those scans, tests and checks are now being delivered in at least 165 CDC sites.
Written Statement
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COP29: Priorities
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The Secretary of State for Energy Security and Net Zero (Ed Miliband)
We are halfway through the critical decade for tackling climate change, but the world is off-track from limiting global warming to 1.5°C. We are facing a triple planetary crisis of climate, biodiversity loss and pollution posing critical threats to the UK’s national interests across security, resilience, health, the economy and partnerships with other countries.
With global temperatures continuing to rise, the impacts of the climate and nature crises—storms, floods, droughts, food and water insecurity, displaced communities—will be a profound source of global disorder. To engage only with the effects of climate change, war, poverty, pandemics or irregular migration when they arrive on our doorstep is to set ourselves up to fail. This is why the UK needs to re-establish itself as a climate leader on the global stage.
Taking on the challenge of climate change is also an incredible opportunity for jobs and growth all across the country. It will improve our health, our quality of life and our overall prosperity.
The Government have already begun work to deliver on this opportunity, through our mission to achieve clean power by 2030 and accelerating our transition to net zero. We have lifted the de facto ban on onshore wind in England, consented significant amounts of solar, introduced legislation to switch on Great British Energy, created the UK’s first carbon capture clusters, and held the most successful renewables auction to date.
We have put clean energy at the heart of our mission-driven Government, because we know that boosting home-grown, renewable energy is the best way to reduce our exposure to volatile fossil fuel markets, protect bill payers, and strengthen our energy independence. The UK will restore its position as a global leader on climate action, building on the power of example to encourage other nations to follow its lead, and working with international partners to support decarbonisation globally.
COP28 in Dubai saw the first global stocktake under the Paris agreement which illustrated the scale of the challenge—by 2030, emissions need to fall by 43% versus the 2% currently projected and climate finance must increase at least fivefold, drawing on all sources.
The 29th conference of the parties under the UNFCCC will be hosted by Azerbaijan in Baku from 11 to 22 November. It presents the first opportunity in 15 years to agree a new finance goal to replace the current $100 billion target. At the same time, countries must demonstrate progress towards delivering on existing commitments including those in the global stocktake—to transition away from fossil fuels, triple renewables, double energy efficiency, and halt and reverse nature and forest loss.
The UK will work with the COP29 presidency and other partners to push for progress in the following three key areas:
Scaling up finance from all sources to accelerate global transitions. We need to agree an ambitious new collective quantified goal on climate finance for the period after 2025. The UK is committed to working with countries to design a climate finance goal that is fit for purpose and supports those most vulnerable to climate impacts, crowding in private finance while recognising the constraints on the public finances in the UK. Outside the negotiations, we need to accelerate reform of the global financial system to address the transition and resilience finance gaps and barriers that countries face.
Scaling up ambition and action to keep 1.5 Paris agreement goal within reach ahead of COP30. As agreed at COP28, countries must come forward with ambitious, all-economy, 1.5°C-aligned nationally determined contributions for 2035 by next February to bridge the emissions gap. As the Prime Minister announced at the United Nations General Assembly in September, the UK will come forward with our own ambitious, 1.5-aligned NDC at COP29 and will support others to do the same. Globally, we need to accelerate the global transition in energy and other sectors and the UK will show progress on this through initiatives such as the breakthrough agenda and the global clean power alliance—a progressive alliance of developed and developing countries working together to accelerate the deployment of clean power globally and mobilise public and private finance to support clean energy. The alliance will help to bridge the financing gap with the global south and enable more countries to secure the benefits of clean, cheap power.
Building resilience to current and future climate impacts. The UK is committed to achieving a climate-resilient and nature-positive world, supporting the most vulnerable and marginalised who are experiencing the worst impacts of the climate and nature crises. Within the NCQG process, we will work for an ambitious outcome on adaptation finance that maximises nature co-benefits. We would also like to see progress on both the global goal on adaptation and the operationalisation of the fund for responding to loss and damage.
Across all these areas, we must recognise the crucial, often overlooked role of high-ambition action on nature including forests in mitigating and adapting to climate change. This means aligning UNFCCC outcomes with the targets of the global biodiversity framework and joining up approaches to tackling climate, biodiversity, and pollution across NDCs, national adaptation plans and national biodiversity strategies and action plans all in the broader context of achieving the sustainable development goals. It includes protecting the ocean through the ocean and climate change dialogue and restoring forests through the Forest and Climate Leaders’ Partnership.
The Prime Minister, along with other ministers, will attend COP over the two weeks and I will be leading the UK’s delegation during the negotiations.
We are determined to do everything in our power to accelerate global action to reduce emissions this decade and keep within reach the 1.5°C goal in the Paris agreement.
[HCWS201]
Grand Committee
Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024
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Lord Hanson of Flint
That the Grand Committee do consider the Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
It is a pleasure to be here today, with the interest in the instrument before us, and I am pleased to see members of the Front Benches here with us this afternoon.
I shall give a little background to the regulations, if possible. The Economic Crime and Corporate Transparency Act 2023 contained a wide range of measures of reforms to reduce economic crime and increase transparency over corporate entities conducting business in the United Kingdom. That included a range of measures enabling targeted information-sharing, tackling money laundering and removing reporting burdens on businesses. Additionally, the Act introduced new intelligence-gathering powers for law enforcement and reform of outdated criminal corporate liability laws. It also introduced reforms to unexplained wealth orders, corporate liability laws and targeted information-sharing, which are already in force.
More recently, guidance for the new offence of failure to prevent fraud was published last week, and I was pleased to support that on 6 November. The offence itself comes into effect in September 2025, helping to support fraud prevention measures before this offence comes into force. The Act also introduced the new regime to tackle criminal and terrorist crypto assets; this is relevant to the debate today. The use of crypto assets in illegal activity is sadly increasing and, when introducing and reviewing legislation, we want to consider the emerging technologies and how they can be harnessed by criminals to commit crime or indeed hide their illegal gains.
The previous Government introduced a bespoke regime to the Proceeds of Crime Act 2002, which allowed effective seizure of both criminal and terrorist crypto assets. This regime was introduced in the Economic Crime and Corporate Transparency Act 2023 to make it easier to confiscate crypto assets from criminals and to forfeit crypto assets obtained from, or indeed to be used in, crime or terrorism. On 26 April, the crypto assets measure that this debate relates to came into force. The powers are operational in England and Wales and, as of the end of October, over 80 cases have exercised the new powers, including crypto asset seizures or confiscation cases involving crypto assets.
I want briefly to outline the purpose of this instrument, however. The regulations here will make a set of amendments that are consequential on the Criminal Finances Act 2017 and on the Economic Crime and Corporate Transparency Act 2023. The regulations make consequential amendments to the Proceeds of Crime Act 2002 and will ensure that the investigative powers of that Act include, for example, reference to crypto asset investigations in all the necessary sections for the powers to function properly and in accordance with their policy intention.
This draft instrument is required to complete that commencement of the Economic Crime and Corporate Transparency Act 2023, and will ensure that all the necessary legislation is now in place and there is legal certainty about how cases will be dealt with. I hope that noble Lords will see that this is an important aspect in the fight against crime, and particularly in the use of crypto assets. I commend the statutory instrument to the Committee.
Lord Sharkey (LD)
We support this statutory instrument but have a few observations and questions. It is clear that more needs to be done to combat fraud, now our most frequent crime. Fraud accounts for around 40% of all crimes in England and Wales, with an estimated 3.2 million offences per year, and was said by the previous Government in February to cost society about £6.8 billion a year. There are, in fact, much larger estimates. The Annual Fraud Indicator estimated that UK annual losses to fraud could be £219 billion in total, with £8.3 billion coming from individuals.
It is also clear that our current armoury needs extending. Both POCA and the Economic Crime and Corporate Transparency Act are either defective or inadequate, or both. It is not surprising that POCA 2002 requires updating—22 years is an aeon when it comes to the more exotic and newer means of being scammed. However, it is rather surprising that the Economic Crime and Corporate Transparency Act 2023, which received Royal Assent on 26 October last year, did not incorporate some of the variations introduced by this SI. The Act did, after all, deal with the seizure of assets, including crypto assets, in its Schedule 8. The Explanatory Memorandum, at paragraph 5.1, says that,
“a huge rise in the use of digital technologies in crypto assets has provided new methods to conduct crime and deposit gains from criminality”.
Paragraph 5.3 says that,
“consequential amendments are required … so that search and seizure are exercisable and effective for the purpose of crypto asset investigations”.
Could the Minister expand on all this? Where were the provisions of the ECCT Act inadequate? What events or information triggered the realisation that the amendment was needed? The fact that the amendments were needed raises the question of what else was wrong or missing from POCA or the ECCT Act. What reassurance can the Minister give us that all the defects in these Acts are remedied by this SI? Do further aspects of either Act need at least an attempt at future-proofing?
I would be grateful for an explanation from the Minister of some of the detailed provisions in the SI. The term “substantial value” is used as a qualifier four times in Regulation 2(4); it is obviously an important qualification. What is the test for
“is likely to be of substantial value”,
and is it the same test—or tests—in all four appearances of the phrase in this instrument? Who decides what the threshold is in each case?
I have a couple more questions about interpretation. Regulation 2(4)(b) inserts new subsection (7G)(a), which refers to
“any other question as to its derivation”.
Does “derivation” here mean provenance, or has it some alternative meaning? The same question applies to the use of “derivation” in Regulation 2(6). Is not the phrase “any other question” in itself extremely wide in scope? What questions, if any, are excluded by this phrasing?
I was pleased to see the attempt at an impact assessment incorporated in the EM. I wondered, however, what weight to give to the assessment of benefits. The range offered is very large, even if the lower bound quoted in the EM, of £107.60, is a misprint of £107.6 million. The difficulty in assessing the usefulness and reliability of these estimates is exacerbated by the qualifying sentences in paragraph 9.2 of the EM, which say:
“The data and assumptions surrounding cryptoassets are limited due to the technology being relatively new and rapidly changing. It is also sensitive, and many figures and police data are not suitable for the public domain”.
This seems rather opaque. Can the Minister say whether enforcement authorities are significantly disadvantaged when it comes to dealing with likely crypto asset issues? Can he be a little less mysterious about that final sentence in paragraph 9.2 of the EM—in particular, is it reasonable to rely on unspecified and apparently secret data whose reliability we cannot estimate or properly qualify? After saying all that, I should repeat that we support this SI.
Lord Murray of Blidworth (Con)
My Lords, I apologise to the Committee for not attending promptly. I am glad to say that I welcome these regulations and I very much hope that they will allow the police to act decisively against criminals who abuse our corporate frameworks, ensuring that Britain remains an inhospitable environment for illicit financial activity.
The regulations extend two previous pieces of legislation designed to cover crypto asset investigations. Under the regulations, search and seizure powers will be able to be exercised for the purposes of investigating crypto assets. This is an entirely necessary move, born of the fact that many criminals use new and innovative ways to avoid detection in their illegal activities.
The National Crime Agency’s national asset centre estimates that illicit crypto transactions linked to the United Kingdom are likely to have reached at least £1.2 billion in 2021 and are surely even higher now. Recent figures from the law firm RPC and Action Fraud show that losses from crypto asset fraud increased 41% last year. Can the Minister provide the latest figures on the cost to the UK economy of crypto asset fraud and the number of illicit transactions estimated to be taking place?
Lord Hanson of Flint (Lab)
I am grateful for noble Lords’ contributions. I welcome the noble Lord, Lord Murray, to his new position. I wish him well—as well as I can do in government. I hope that he enjoys his position. He used to hold my position in government; he will know how challenging, diverse and enjoyable it is.
The noble Lord, Lord Sharkey, asked about the discussions in relation to the crypto asset legislation and why this instrument is being brought forward. The asset legislation is extensive. It branches into three detailed schedules on the new regime, covering criminal, civil and investigatory powers. I hold my hands up: at the time of drafting, some small omissions were made; for example, references to what a crypto asset investigation is are not included. That predates me, but these things happen. Legislation is for discussion. The noble Lords, Lord Murray and Lord Sharpe, were in office at the time, but it is not for me to throw rocks in this case. I simply say that we must tighten the regulations as best as we can.
The omissions were a drafting oversight, the reason for which is the complex, technical nature of legislation—in particular, the crypto asset provision. As the noble Lord, Lord Murray, will know, the legislation came into force on 26 April 2024. This instrument was scheduled to be debated prior to the general election but it fell with the election. It ha, therefore fallen to new Ministers to take the omission forward; that is what we have accordingly done.
The noble Lord, Lord Sharkey, asked about fraud generally. I accept fully the points that he made. He recognises, I hope, that I am now the first specific Fraud Minister. I have been tasked by the Prime Minister and the Home Secretary to look at fraud in particular. The Minister in the Commons, my honourable friend Dan Jarvis, is looking at economic crime. We have established a mechanism to review the fraud strategy put in place by the previous Government, which was published in May 2023. It had a number of strands of activity in it. Roughly 27 or 28 of those strands have now been completed, and another 17 or so are in the process of being completed.
I have committed to see through the previous Government’s fraud strategy. We are now refreshing it to look at a number of key areas, including data sharing, international co-operation and the technical abilities of both telecommunications companies and tech companies. We will revise the fraud strategy at some point during the first half of this Parliament to ensure that we address some of the issues and take it forward still further.
The noble Lord, Lord Sharkey, mentioned “substantial value”. Again, if he will let me, I will reflect with officials on how we can interpret that, but it is important to note the asset seizures that have taken place this year; this also goes back to the point that the noble Lord, Lord Murray, mentioned. Between April and October, 23 crypto asset seizures, with a value of £2.5 million, and 64 confiscation cases, involving identification of crypto assets totalling £6 million, have taken place. I regard those as substantial value in the terms of the instrument. I am pleased to have the noble Lord’s support for this instrument. If he will let me reflect with officials on whether we can define that further then I will certainly write to him, but I hope that will not be a bar to passing the instrument.
The noble Lord raised a number of other important but technical points on some of the issues in the economic statement. Again, if he will let me reflect on those I will make sure that he gets a full answer, but I hope they will not prevent him supporting this instrument.
I am grateful for the support for the instrument from the noble Lord, Lord Murray. I have tried to answer the points he raised relating to the seizures that have taken place. It is not for me to determine the number of prison sentences that might accrue as a result of that and of the changes we are making, but he needs to know, as I am sure he understands, that the Government, in passing this instrument and taking the action that we are on fraud, want to send a very strong signal to those who trade in or hold their criminal assets in crypto assets that we will come looking for them. If he wishes to know the impact of that, I can tell him that, under his Government between 2018 and 2024, £1.6 billion was recovered from criminals using asset recovery powers under POCA, and £140.7 million was paid in victim compensation from confiscation orders. With this statutory instrument, we want to ensure that we do not have that narrow misidentification that allows a problem to exist when we can take action under legislation that had mutual support from all parties in this House and in the Commons in the previous Parliament.
I hope that, with those points, I can assure both Front Benches that this is an important instrument that tightens a loophole and redresses the powers that were missing in the previous legislation. It is done for a purpose, which is to ensure that those who use and benefit from crypto assets have the ability to have those crypto assets identified and, if necessary, taken as assets.
Immigration and Nationality (Fees) (Amendment) Order 2024
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Lord Hanson of Flint
That the Grand Committee do consider the Immigration and Nationality (Fees) (Amendment) Order 2024.
Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, this order has been laid to introduce a power to charge a fee for UK visa qualification equivalency and English language proficiency assessment services, and to set the maximum fee that can be charged. For noble Lords’ benefit, I will provide some background to the fee structure we currently have in place. For the Home Office to charge for immigration and nationality functions, the Immigration Act 2014 requires that fees must be set in secondary legislation. The Immigration and Nationality (Fees) Order 2016, an amendment to which we are discussing, sets out the functions for which a fee can be charged and sets the maximum fee that can be charged. Fee levels are subsequently set in separate secondary legislation—the Immigration and Nationality (Fees) Regulations 2018—which is subject to parliamentary agreement through the negative procedure.
The fees for the services we are seeking to regulate are for assessments used on certain visa and nationality routes, including family, skilled worker, settlement, and student routes, where that route requires an applicant to demonstrate proficiency in the English language at a specified level or that they have gained a qualification that is equivalent to one obtained in the UK. There are a number of ways in which the English language proficiency test can be taken, using an academic qualification obtained in English and awarded by an educational establishment outside the United Kingdom.
Where an applicant is seeking to demonstrate that they have gained a qualification equivalent to one obtained in the UK, or their proficiency in the English language by using an academic qualification obtained outside the UK, these must be provided by Ecctis Ltd. Ecctis Ltd provides these services through a concession contract with the Home Office and has done so for over a decade.
It is important to be clear at this point that we are not introducing a new cost for applicants seeking to enter or remain in the UK: the requirement for applicants to use these services has existed for a number of years. Where a visa or nationality applicant uses the services provided by Ecctis, they apply through the website and pay an appropriate fee. The outcome of the assessment can take in the region of 10 working days for the English language assessment and around 30 working days for a qualification equivalency assessment. The maximum fee in this order for the qualification and English language proficiency assessment is set at £400. This will allow the Home Office to set fee levels later this year at the current levels, which are £140 for English language and £210 for the qualification equivalency assessment. By setting the maximum above this level, we have a reasonable degree of headroom to adjust fees if, for example, there is an increase in the cost of providing these services.
The Home Office is bringing this order forward today and legislation to regulate these fees now where they have already been charged and where the nature of the service itself, or the requirement in the Immigration Rules, have changed. This is due, again, to the department identifying, in the course of preparing for a reprocurement of the existing service earlier this year, that these fees should already have been regulated, due to the requirement to use the service in respect of applications on certain routes. Having identified this oversight, action was taken immediately to legislate at this earliest opportunity to ensure that the fees have an appropriate statutory footing, although this process was delayed, as indeed was the instrument we dealt with earlier, because of the general election in mid-2024.
Noble Lords will be aware that the Secondary Legislation Scrutiny Committee drew special attention to the Explanatory Memorandum that was published alongside this order, and produced a report on 10 October raising concerns that the Explanatory Memorandum did not provide a clear and open statement about why this instrument was brought forward. I fully appreciate the need for transparency. I recognise the committee’s view that further explanation of the context of this legislation was required, and my colleague the Minister for Migration and Citizenship sent a letter to the committee chair, the noble Lord, Lord Hunt of Wirral, on 15 October explaining in more detail why the order was brought forward now and the exploration of the possibility of pursuing retrospective legislation that would put fees paid to date on a statutory footing.
I am not yet able to confirm the specific approach to be taken on how we regulate those fees downstream and, given the uncertainty, it is not appropriate or helpful to go into further detail now. However, I emphasise that this department takes its responsibilities on parliamentary transparency seriously. I assure noble Lords that we are taking forward considerations in respect of previously charged fees as a priority and the intention of this order, subject to the approval of this House, is to lay an amendment to the Immigration and Nationality (Fees) Regulations in early December to set the fee levels that we have considered in the order today. I hope noble Lords will accept that we are trying to rectify an oversight that has crossed over from before the general election. We are regulating to close that loophole and I beg to move.
Baroness Brinton (LD)
My Lords, I cannot sit at the right desk, so I apologise for being in the wrong place.
I thank the Minister for explaining the reason for the order, although I think his description of “an oversight” for fees that have actually been charged illegally, because they were not approved by Parliament, is a bit of an understatement. I am also concerned that we still have no opportunity to see a new Explanatory Memorandum that sets out the record, but I will come back to that. I particularly thank the Secondary Legislation Scrutiny Committee for its careful and thoughtful third report of Session 2024-25.
However, before I come on to that, I want to note that this is the second Home Office SI on immigration matters that has come to Grand Committee since the Summer Recess which has not just been problematic. The other one—the Illegal Migration Act 2023 (Amendment) Regulations 2024—corrected policy matters in the Act that meant it could not be enacted because they were wrong, so it was also illegal. Therefore the amendments that the Grand Committee saw—I was going to say last month but it might have been a little before that—were to remove retrospective elements of the Illegal Migration Act that were themselves illegal.
Lord Murray of Blidworth (Con)
My Lords, I welcome this amendment order, which proposes to adjust the fees in relation to certain immigration and nationality services, and in particular the English language qualification process. It is one of the features of the complexities of the system that these kinds of situations arise, and I am not going to be critical of the Home Office for laying an amendment order in these circumstances. It is obviously right that the Secondary Legislation Scrutiny Committee has picked up on a perception that Explanatory Notes did not set out in enough detail the purpose of the instrument. Perhaps the Minister could let us know whether it is proposed to provide revised Explanatory Notes and, if so, when. Perhaps he could also reassure the Committee on the quality of Explanatory Notes, which I know officials in the Home Office strive hard to ensure are accurate and detailed. I am sure that the Minister will take back to the department the message that crystal clarity is required in Explanatory Notes.
Of course, the fees structure is essential in maintaining a secure system of immigration control, and indeed provides an element of being self-funding. That, of course, itself achieves the kind of immigration system that we wish to see and strengthens British immigration policy. Therefore, I welcome the order and would be grateful for an answer in relation to Explanatory Notes.
Lord Hanson of Flint (Lab)
I am grateful to both opposition Front Benches for their comments. I find myself in the genuinely strange position of moving an order to rectify something that happened when we were nowhere near the legislation that is being rectified. I hope that both opposition Front Benches will recognise the fact that my honourable friend Seema Malhotra bringing forward this order in the Commons and me doing so in in the Lords are attempting to rectify an issue that was spotted prior to the general election, which would have been brought forward had the general election not been held in July.
I genuinely cannot say with any certainty why the fees for the services were not regulated when they were first set out. The rules relate to the historic nature of the issue and potential changes in a complex interaction of regulations at the time. I do not know why that happened but I am grateful that previous Ministers, with the advice of civil servants who have reviewed this as part of the procurement exercise that commenced earlier this year, have noticed a gap and therefore have asked Ministers to sign off the measures that will close that gap. Minister Malhotra, who is the lead Minister for this area in the Commons, and myself as the responsible Minister here in this House, have both agreed to take this order through accordingly.
I say to the noble Baroness, Lady Brinton, that there are no issues on the quality of the education and training provided under the orders. I am not aware of a slew of complaints about the fee levels in the past. This is simply an order to rectify what was seen to be an illegality. The Committee should welcome that and understand that that is why this order is being brought forward.
The regulations are being laid at the earliest opportunity to begin the process of rectifying the issue that has been identified. I want to assure this Committee that structures and processes are in place to ensure that the fees for new visa routes and requirements are captured in the immigration and nationality fees regulations when associated changes are made to the Immigration Rules. As has been mentioned, we are hoping to bring forward at an early opportunity, we hope before Christmas, the revised fee structure to rectify where we are currently. That will, I hope, set those fees on a proper legal footing and rectify the challenges that we have had to date.
Again, the noble Baroness, Lady Brinton, mentioned the sharing of information between Administrations. I find that hard. I was in Parliament in 2008. I was in the Ministry of Justice then, not the Home Office, but to be honest with her, I cannot really answer on what happened in 2008 in the Home Office with this order and its background at that time. I can simply say to her again that it is unusual for previous Administrations’ paperwork to be passed to a subsequent Administration. It did not happen in 2010 and it is not happening now. I can ask questions of officials and get good responses about issues but there is not an automatic assumption of access to previous papers. That might be something to be considered but that is a far greater sandwich display than we have before us today, if I may put it that way.
I note and take the noble Baroness’s point. However, we have to reflect on the fact that this measure is brought forward as a joint enterprise between two Administrations handing over a baton to rectify a particular problem identified previously, which this Administration are now taking forward.
Both noble Lords asked about the Explanatory Memorandum. Again, it is important to recognise that it was not the best Explanatory Memorandum in place. It is what it is now. The noble Baroness, Lady Brinton, asked about a review. For the Home Office, and for other departments, given the view of statutory instruments and the importance of SIs to both Houses of Parliament, the new Government have asked for a Minister to be appointed in each department with oversight of the statutory instrument process. I am that Minister now in the Home Office, and I have to look at, clear and be held to account for the SIs that come through any part of the Home Office department. They will have to be cleared and signed by myself. That does not guarantee—because we are all human—that something that I see and clear is going to be perfect. But I hope it gives oversight to that process, which we have not had before. The Leader of the House of Commons, Lucy Powell MP, has been clear that both Houses of Parliament need to up their game on the Explanatory Memoranda, the oversight and the accountability of SIs to both Houses. Four months into the job, I ask the noble Baroness, Lady Brinton, to give me space but to hold me to account in due course, as I know she will, on the performance on SIs particularly.
If there are further points that I have missed, I will reflect on them with colleagues and respond in writing, certainly to the noble Baroness, Lady Brinton. I hope that we can agree this order today and rectify the gap that has been identified. I look forward to bringing forward future SIs to continue that process in relation to the meat of this order.
Radio Equipment (Amendment) (Northern Ireland) Regulations 2024
(1 week, 3 days ago)
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Baroness Jones of Whitchurch
That the Grand Committee do consider the Radio Equipment (Amendment) (Northern Ireland) Regulations 2024.
Relevant document: 4th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I begin by setting out the background to this instrument. The radio equipment directive—directive 2014/53/EU—establishes a framework of regulatory requirements for specific categories of electrical and electronic equipment that are placed on the EU market or put into service in the EU. When we were in the EU, the UK’s Radio Equipment Regulations 2017 implemented the radio equipment directive in domestic law on a UK-wide basis.
In November 2022, the EU formally adopted the common charger directive, which amended the radio equipment directive. The common charger directive requires, among other things, a common charging solution—based on USB-C—for smartphones and certain other portable electronic devices that use wired charging from December 2024, and for laptops from April 2026. To provide for its continued unique dual access to the UK internal market and the EU single market, certain EU legislation continues to apply in Northern Ireland—including the radio equipment directive, under the terms of the Windsor Framework. This instrument will therefore amend the UK’s Radio Equipment Regulations 2017, in order to implement these latest changes in Northern Ireland and enable them to be legally enforced.
Before I move on to the specific detail of the instrument, I want to explain at the outset that this instrument is expected to have a limited impact in practice. The reason for this is that many manufacturers have already moved to USB-C to continue to supply the EU market. As a result, USB-C has, in effect, already become the industry default in Europe. The industry tells us that it is also using USB-C for devices supplied for the whole of the UK in order to avoid supply chain complexity. Devices that comply with common charger requirements will also be able to be legally placed on the GB market. So we consider it highly likely that the same devices with USB-C charger ports will be available across the whole of the UK.
I also want to explain that the common charger measures aim to reduce environmental waste, increase consumer convenience and save money for consumers, as they will not need to buy separate chargers for each device. We consider that it would potentially help businesses, as well as deliver consumer and environmental benefits, if we were to introduce similar standardised requirements across the UK. We have, therefore, launched a call for evidence at the same time as laying this instrument before the Committee. The implementation of common charger measures in Northern Ireland also ensures our compliance with international law, which facilitates Northern Ireland’s continued unique dual access to both the UK internal market and the EU single market.
Having set out the context, I will now move on to the detail of the instrument. This instrument introduces new regulatory requirements for specific categories of electrical and electronic equipment that use wired charging and are placed on the Northern Ireland market. It amends the Radio Equipment Regulations 2017 to provide for the following: simplified charging whereby USB-C will be the common charging port, meaning that one charger will work for multiple devices and bringing cost savings and environmental benefits; standardised fast charging technology, meaning that charging speed is the same when using any compatible charger for a device; unbundling the sale of a charger, meaning that consumers will have the option to purchase new devices without a charger, thereby reducing electronic waste and costs; and additional visual and written information about charging characteristics, the power the device requires and whether it supports fast charging, thereby improving the information available to consumers. This will help consumers understand whether their existing chargers meet new devices’ requirements and help consumers select compatible chargers. The common charger measures will apply to certain categories of handheld devices, including smartphones that use wired charging, from 28 December 2024, and to laptops from 28 April 2026.
I turn to offences and enforcement. Offences will be amended to cover the common charger requirements already mentioned, including to ensure that consumers are offered the choice of purchasing specific categories of electrical and electronic equipment without a charging device if they wish; and that the equipment is accompanied by visual information showing whether a charging device is included. However, I assure noble Lords that enforcement authorities will continue to take a proportionate approach to compliance and enforcement activities in accordance with the Regulators’ Code. In almost all cases, we expect that, by working with and supporting businesses, compliance will be achieved without recourse to the use of criminal penalties. The Northern Ireland Department of Justice has confirmed that it considers that the offences provided for by this instrument are consistent and proportionate, and will have no negative effect on the criminal justice system in Northern Ireland.
We are taking action to help industry with these new requirements. My officials in the Office for Product Safety and Standards will provide industry guidance to ensure that businesses have the information they need on how to comply with the new requirements. My officials are also liaising with the Northern Ireland district councils, which are responsible for enforcing the Radio Equipment Regulations in Northern Ireland, ensuring that they have all the necessary information they require in order to do so.
With USB-C charging becoming the industry default, in effect, it is the Government’s view that, by providing regulatory certainty, it would potentially help UK businesses and deliver consumer and environmental benefits if we were to introduce similar requirements across the whole of the UK. We therefore launched a call for evidence at the same time as laying this instrument in the House.
We expect this instrument to bring consumer and environmental benefits in Northern Ireland. It also ensures our compliance with international law, which facilitates Northern Ireland’s continued dual access to the UK internal market and the EU single market. I am pleased to commend these draft regulations to the Committee. I beg to move.
Lord Sandhurst (Con)
My Lords, I thank the Minister for her helpful explanation. This is an important legislative instrument to regulate electronic devices in Northern Ireland. It implements the common charger directive, which in turn amends the existing radio equipment directive 2014/53/EU. The purpose now is to standardise the charging solutions for electronic devices, ensuring that they use a common USB-C charging solution. It aims to improve consumer convenience, reduce electronic waste and streamline the tech ecosystem across the EU and Northern Ireland.
At face value, the intention behind these changes should benefit consumers by simplifying charging and reducing the environmental impact of electronic waste, but the question remains: what will be the effect on UK businesses, particularly small and medium-sized enterprises, of complying with them? The Government assert that these changes will support innovation and enhance consumer choice. That will be good if it is the effect but the impact on businesses, particularly smaller ones, must be carefully considered. What will be the impact on production costs in particular, and thence on competition?
The Government have announced that they intend to include provisions in the Product Regulation and Metrology Bill to allow Ministers to amend the Radio Equipment Regulations 2017 to a similar end. It is crucial that the findings of the Government’s call for evidence on radio equipment, which began at the beginning of October, are published before any further action is taken in this jurisdiction. The Government must ensure that any regulatory framework proposed is evidence-based.
In considering whether these common charger regulations should be rolled out further across the United Kingdom, it is essential first to assess the impact on businesses, particularly SMEs. Costs related to product redesign, new testing requirements and potential delays in getting products to market could harm competition. We must first be confident that the benefits of this charging standardisation outweigh any burdens placed on manufacturers in this country.
Furthermore, the regulations introduce stricter penalties for businesses that fail to comply with the new rules. These include possible imprisonment. The exact terms of these penalties have not yet been fully clarified. Given the scope of the changes and the potential for confusion about what constitutes full compliance, the Government must first ensure that the enforcement mechanisms are clear in order to ensure fairness.
Lord Browne of Belmont (DUP)
My Lords, this is yet another example of Northern Ireland being subject to EU laws under the Northern Ireland protocol and Windsor agreement so, first, I declare that I remain 100% opposed to the Windsor Framework and the protocol. I will ask the Minister a few questions but, before that, I should say that many chargers on the market are extremely dangerous. They are coming in from abroad and have been responsible for setting fire to many properties, so I believe that these chargers should be regulated.
Having said that, does this instrument apply to Great Britain? If it is so important in Northern Ireland, why has it not been rolled out across the rest of the United Kingdom? Also, who will be responsible for enforcement? Will the prosecutions apply to the manufacturer, the distributor or the retailer? Because the instrument will apply to just Northern Ireland, will these chargers have to be stamped with something like, “Suitable for use only in Northern Ireland”? This will add to the cost.
At present, British Telecom is installing new digital telephones in Northern Ireland, but these will not be able to contact the emergency services if there is a power cut. There is a battery, which will last for one hour; after that, they will not be able to contact the emergency services unless they are attached to a battery or a charger. Will this instrument also apply to chargers for these phones so that elderly people can contact the emergency services?
Lord McCrea of Magherafelt and Cookstown (DUP)
My Lords, further to what my noble friend Lord Browne mentioned, when the United Kingdom left the European Union we were told that we left as one. When the votes were counted and it was said that in Scotland and in Northern Ireland people were against leaving, we were told, “No—we left as one”. This is another example of how that statement is not true. How could we have left as one when the Explanatory Note says:
“The Windsor Framework requires that the European Union … legislation listed in its Annex 2 is implemented in Northern Ireland”?
Surely this is another example of how the Windsor Framework and the protocol differentiate Northern Ireland from the rest of the United Kingdom. It is another example of regulations that are placed on Northern Ireland, over which Northern Ireland’s elected representatives or even this Parliament have no authority but a foreign jurisdiction, the EU, says it must be done.
Lord Morrow (DUP)
My Lords, I agree entirely with what my two colleagues said. However, can the Minister give us the commencement dates, please? I think she said this but I missed it; I am not sure whether she said 2025 or 2026.
We are also told that the Northern Ireland Assembly will have a vote, albeit a type of vote that has not happened in Northern Ireland for over 50 years, because we do not do majoritarianism any longer in Northern Ireland. That is not the way it is done, but it is very clear that the process is that it will be a majority vote. That is a complete departure from what the Belfast agreement says on how Northern Ireland will proceed and go forward.
If this measure comes into force before there is a vote in the Northern Ireland Assembly, will it just be another example of saying, “You folk over there, you don’t really count. We’re not too much interested in democracy; we’re just doing this because of an agreement with Europe”? We were told that Northern Ireland’s position within the United Kingdom would be decided by the people of Northern Ireland. I suspect that, with all those decisions, whether they are being done by statutory instruments or not, this is a substitute for a proper Bill and a proper debate. This is all coming through piecemeal.
To be very fair and honest, I do not so much blame the present Government for this, although they are now the Government and have the authority and power to make legislation and change things. However, I would be grateful if the Minister would go over those points again. I accept that she may already have said it, but I hope that she will indulge me.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank noble Lords for their consideration of this instrument, and for their excellent questions and contributions to this debate. This instrument will implement common charger measures in Northern Ireland but, in practice, as I hope that I explained in my opening statement, it will have a very limited impact, because the USB-C has effectively become the industry default, not only across Europe but, increasingly, across the world. We consider that similar measures introduced across the UK would potentially help to deliver business benefits and environmental and consumer savings.
To pick up on a few of the questions that have been raised, I thank the noble Lord, Lord Sandhurst, for his comments about the consumer and environmental benefits. That is a very strong point. All too often, we find that we are forced to buy another charger, even though we already have one, because they all come as a package. Like most people, we end up with an awful lot of chargers lying around the house that no longer charge anything, and we do not know what to do with them and it is all very frustrating. The fact that these are now being streamlined into one standard benefits consumers and, as the noble Lord said, will cut down on environmental waste, which has to be a good thing.
The noble Lord asked that, when we do the call for evidence for the UK, we make sure that it is evidence based. He makes an important point there. We do not want to rush this; we want to make sure that we get it right.
We judge that the measure will not have a huge impact on small businesses. The producers of this equipment are mainly the big multinationals, so the cost to small and micro-businesses will be very small.
The noble Lord, Lord Browne, made the point that chargers should be safe. I absolutely agree with that; we all know of the awful cases where these materials are misused or mis-sold, causing fires. As we know, my noble friend Lord Leong is taking the product safety Bill through the Lords, and it will address some of those safety issues.
I was asked whether the measure would apply to the whole of the UK. We hope that it will apply to Northern Ireland and the rest of the UK. That is what our call for evidence is about. Although the timeframe is slightly different, we hope that this will happen to everybody across the board; there will not be a distinction between Northern Ireland and the rest of the UK. If things go to plan—and I think that businesses will support this—we will have a standardised process across the UK that uses the USB-C, a standardised thing that we will all use. It is a standard system and most companies are already producing this equipment to that standard; we are not trying to impose something different on Northern Ireland from what will happen everywhere else. To my mind, that is a bit of a no-brainer, although I understand the concerns of colleagues in Northern Ireland. But we will be catching up with you, rather than the other way around—we will catch up with you very soon, I hope.
The noble Lord, Lord Morrow, asked about commencement dates. For portable electronic equipment the date is December 2024 and, for laptops, it is April 2026, so there is a fairly tight timescale for portable equipment to bring us in line with the EU. But as I say, Northern Ireland is the forerunner of what will happen anyway; it is increasingly standard throughout the world, and I hope that you will have nothing to fear from that. I hope that I have persuaded noble Lords—maybe I have not, but there are huge consumer benefits to this move. I do not think that businesses feel any concern about this measure, as they are increasingly beginning to produce equipment that meets these standards. This will be the new standard and we have to make sure that we grow it in the right way. I hope that I have persuaded noble Lords on this issue, and am therefore pleased to commend the SI to the Committee.
Barnsley and Sheffield (Boundary Change) Order 2024
(1 week, 3 days ago)
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Baroness Taylor of Stevenage
That the Grand Committee do consider the Barnsley and Sheffield (Boundary Change) Order 2024.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, the order before us today was laid before the House on 7 October. This instrument provides for the boundary between Barnsley and Sheffield to be revised so that the whole of the Oughtibridge Mill housing development will be in the city of Sheffield. It also provides for consequential changes to the corresponding ward and parish boundary. Both the councils concerned support the boundary change, as do both the affected parish councils.
Prior to coming on to the detail of the order, I must, with sincere apologies, draw the Committee’s attention to the correction slip issued to correct minor drafting and formatting errors. The first correction removes “Ministry of” where the order refers to the Secretary of State for Housing, Communities and Local Government. That is in the first and second paragraphs on page 1; in Article 2 on page 2; in the signatory box on page 5; and in paragraphs 2 and 6 of the Explanatory Memorandum.
The second correction provides a clearer map of the boundary change for the Explanatory Memorandum. A formatting issue meant that the map lacked clarity when it was inputted on to the order. With the help of the statutory instrument registrar, the correction slip now enables that same map to be sufficiently clear and to cover a full page. These minor errors in the original draft order are now corrected. The substance of the order, however, is unchanged. I hope that the reformatted map provides greater clarity for all.
Few reviews of the external administrative boundaries of local authority areas in England have been carried out since 1992. As a consequence, from time to time, there are small-scale boundary anomalies between local authorities caused by new developments and population change. Although, in practice, local government will put in place informal arrangements to deal with such situations, the very fact that it needs to do so is not conducive to effective and convenient local government. Such anomalies can also impact on perceptions of community identity: where residents do not feel part of an area, for whatever reason, they are potentially less likely to take an interest in their council.
On 14 April 2022, the Local Government Boundary Commission for England received a formal request for a review of the boundary in this area, made jointly by Barnsley Council and Sheffield City Council. The existing boundary runs along the River Don, but this has resulted in the Oughtibridge Mill development being split between the two councils. Both councils told the Local Government Boundary Commission for England that, due to the geography of the local communities and the existing road layout, the impact on service demand would mostly be felt by Sheffield Council, and that services would be best delivered by that council.
The Local Government Boundary Commission for England undertook a review of the boundary and consulted those affected. Of the 19 responses, there was a majority in support of the boundary change. Following the consultation, the final recommendation of the Local Government Boundary Commission for England was to transfer the area of the Oughtibridge Mill housing development in Barnsley into Sheffield.
This would move a section of the councils’ shared boundary at the River Don to encapsulate the Oughtibridge Mill development of 12 existing and 284 future dwellings. A recommendation to realign the ward boundaries was also made, as well as a suggestion for the realignment of the parish boundaries. After having received the final recommendations, the Secretary of State also allowed four weeks for interested parties to make representations. The department received no such representations.
The instrument I have brought forward provides for the boundary between Barnsley and Sheffield to be revised so that the whole area of the Oughtibridge Mill housing development will be in the city of Sheffield. I beg to move.
Baroness Pinnock (LD)
My Lords, I thank the Minister for her introduction to this statutory instrument and for highlighting the changes made. I know she has the misfortune of being from the south of England but, in Yorkshire, we call it “Orterbridge”, rather than “Outerbridge” as the Minister pronounced it. I know we have a lot of strange pronunciations in Yorkshire, but I think people there would appreciate it being pronounced as they do.
This is a sensible proposal. Populations move and expand; in response, political and administrative boundaries should move to make them fit local perceptions of place. While local government can and do respond informally to boundaries that do not make practical sense, such as by making arrangements about bin collections, local government boundary changes per se are less frequent. I wonder whether this is because the process is quite long. In this case, as the Minister said, the relevant local authorities made a formal request in April 2022, and despite broad agreement—the two local authorities in fact proposing the change—it has taken over two years to reach this final stage. Does the Local Government Boundary Commission encourage proposals for boundary changes that are supported by the relevant local authorities, especially where there is a clear anomaly?
One situation that is not raised in the Explanatory Memorandum is what happens if a councillor of either the existing parish or the existing council lives in the area to be moved to another council. If the councillor qualifies only by residency, I presume that that would result in their being unable to continue once their term of office ends. It would be helpful if the Minister could confirm that that is the case. I assume that, in this instance, that will not arise, because otherwise—I hope—it would be within the explanation. It would be useful to understand what will happen if somebody wants to continue serving their population but is then moved. From Barnsley to Sheffield, that is a big move. I jest not.
I have spoken to colleagues in Barnsley who agree that residents in Oughtibridge will feel that they belong to Stocksbridge in Sheffield, which is where they are moving, so they support the proposal in this statutory instrument.
Baroness Scott of Bybrook (Con)
My Lords, as the Minister said, this order provides for the boundary between Barnsley and Sheffield to be revised so that the whole of the area of Oughtibridge Mill housing development will be in the City of Sheffield, as well as providing for consequential changes to corresponding wards and parish boundaries. I am pleased that the councils concerned both support boundary change, as do the affected parish councils. I also note that the LGBCE published a draft of this and asked for responses locally. There were 19 responses, I understand, including six from residents, five of whom were in favour and only one opposed. Therefore, one can say that the proposal is accepted locally.
His Majesty’s loyal Opposition do not oppose these sensible boundary changes, as they suit not only local residents but the relevant public authorities and bodies. I also accept the late minor changes in the draft SI.
Baroness Taylor of Stevenage (Lab)
I am grateful to the two noble Baronesses who have made excellent and important contributions to this debate. I thank the noble Baroness, Lady Pinnock, for her correction to my southern pronunciation of Oughtibridge. I am very grateful. I will not get that wrong again, will I? Thank you very much for that.
A number of points were made, which I will respond to. First, the noble Baroness, Lady Pinnock, raised the issue of the process for review. I have to say that the measure probably was slightly held up by the election, but it has still taken quite a long time. I will take that back, because all of us who have been councillors—I think that everybody taking part in this debate has been—will know that such anomalies often occur. If the process needs to be made more straightforward, we should look at that, because all the reasons given for this SI would apply similarly to other areas where there are revisions to boundaries.
As for councillor qualification, I understand that that is set out in Article 7 of the order, which allows for a change of councillor. I am not aware that there is an issue there in this case, but I understand the residency qualification issue. Of course, councillors can qualify if they have a business or for other reasons but, if it is a residency qualification, that would need to be taken into account. However, as both participants were supportive of this proposal, it is probably the case that there was no issue, but we will bear that in mind if any future SIs like this come forward. We have to be very clear about what is happening in relation to councillor representation, because if a residency qualification is at issue, there may be implications, but that is all set out in Article 7.
The Local Government Boundary Commission for England recommendation meets the statutory obligation to secure effective and convenient local government while reflecting the interests and identities of local communities. That sits right at the heart of this SI. In short, the order makes a small boundary change, supported by both local councils and recommended by the Local Government Boundary Commission, and I beg to move.
Judicial Pensions (Amendment) Regulations 2024
(1 week, 3 days ago)
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Lord Ponsonby of Shulbrede
That the Grand Committee do consider the Judicial Pensions (Amendment) Regulations 2024.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, the statutory instrument before us today amends a number of the judicial pensions regulations, specifically: the Judicial Pensions (Fee-Paid Judges) Regulations 2017, referred to as the FPJPS regulations; the Judicial Pensions (Fee-Paid Judges) (Amendment) Regulations 2023, referred to as the 2023 FPJPS amendments; the Judicial Pensions Regulations 2022, referred to as the JPS 2022 regulations; the Judicial Pensions Regulations 2015, referred to as the JPS 2015 regulations; and the Public Service Pensions Act 2013 (Judicial Offices) Order 2015, referred to as the judicial offices order.
The judicial pension scheme is made up of a number of historical pension schemes. Since April 2022, the only scheme open for pension benefit accruals is the judicial pension scheme 2022. All preceding judicial pension schemes closed to further accruals on 31 March 2022, but these older schemes are still relevant as the majority of judges have service extending across multiple schemes.
The FPJPS regulations established the fee-paid judicial pension scheme. The JPS 2015 and JPS 2022 regulations established, respectively, the judicial pension scheme 2015 and the judicial pension scheme 2022. These schemes regulate the pensions of the fee-paid and salaried judiciary. These amendments will make a range of changes to improve and, where necessary, correct the running of these schemes in line with statutory requirements and actuarial advice. The last time we debated the judicial pension scheme, which was when I was in opposition, I said that I suspected it would not be the last time we would have such amendments; it appears I was right. There may be more amendments to come.
By their nature, these regulations are highly technical. In essence, these amendments to the existing schemes do the following. First, they provide for an employer cost cap in the judicial pension scheme 2022, following the completion of the scheme valuation in February 2024. Secondly, they add further eligible judicial offices to their appropriate pension scheme, where that eligibility has now been determined. Thirdly, they extend a number of deadlines for member elections under the fee-paid judicial scheme. Fourthly, they extend powers to reconcile amounts that were paid to judges whose pre-2000 service must now be taken into account as a result of the O’Brien 2 litigation, in respect of those new, pre-2000 entitlements, with their formal entitlements for that period.
A number of technical changes are required to facilitate the smooth running of the pension schemes, which I shall take in turn. The first is the employer cost cap. The inclusion of a cost control mechanism, or CCM, in the JPS 2022 regulations is a statutory requirement under the Public Sector Pensions Act 2013 for all public sector pension schemes. These amendments add the CCM to the JPS 2022 regulations. This must be included by 6 February 2025, one year on from the first actuarial valuation of the scheme by the Government Actuary’s Department.
The CCM is designed to ensure a fair balance of risk with regard to the cost of providing public service defined benefit schemes between members of those schemes and the Exchequer. This is partly achieved through the setting of an employer cost cap. If, when the overall CCM is tested, costs have increased or decreased by more than a specified percentage of the pensionable pay compared with the employer cost cap, members’ benefits and/or contributions in the relevant scheme are adjusted to bring costs back to target. This could mean, for example, that a member’s contribution rate could go up or down. However, the mechanism is designed with the intention that benefit rectification would be triggered only by “extraordinary, unpredictable events”.
Moving on to additional offices, JPS 2015 came into effect on 1 April 2015 and was open to eligible fee-paid and salaried judges with service between 1 April 2015 and 31 March 2022. JPS 2022 came into effect on 1 April 2022, when all eligible judges moved into this scheme in respect of accruals for future service. JPS 2022 covers eligible service in fee-paid and salaried offices from 1 April 2022. These amendments add a number of judicial offices into FPJPS, JPS 2015 and JPS 2022 where their eligibility for a judicial pension has been determined. This will allow these members to accrue pensions in the correct scheme for their office and, where applicable, to have access to retrospective entitlements in JPS 2015 and JPS 2022. This will allow members with service in these offices to access the benefits they are entitled to and make the correct contributions to the scheme.
Lord Marks of Henley-on-Thames (LD)
My Lords, first, I congratulate the noble Lord on his concise and detailed opening on a complicated set of regulations. I note that the regulations were introduced by the last Government and have hardly undergone any significant change since their introduction, so it is unsurprising that they are likely to be relatively uncontroversial. There will certainly be no opposition from the Liberal Democrats to these proposals.
The most significant of what are largely tidying-up amendments are those that bring into line with other fee-paid judges a number of tribunal judges and chairs. That is completely in line with the view that we all take—that tribunal judges and chairs are a very important part of the working judiciary and that the tribunal system does the whole work extremely well. It is right that the pension arrangements for paid judges should be aligned.
The other significant point is that the pension arrangements for part-time service in the light of the O’Brien judgment are now going to be tidied up so that some of the anomalies that arose from that judgment have been eliminated, so far as they can be, although it is a difficult area—and I appreciate that the regulations have to reflect that difficulty.
I noted from the Explanatory Memorandum and the Minister’s opening that there was a consultation, which attracted no fewer than six responses, none of them critical—and, I take it, all of them raising questions that have been satisfactorily answered. In view of that, I have no further questions for the Minister on this SI.
Lord Wolfson of Tredegar (Con)
I am not sure whether I need to declare a formal interest, as my wife sits as a fee-paid tribunal judge but, for the avoidance of any doubt, I do. I suspect that the impact of this regulation on her will be de minimis and no doubt happen in many years’ time.
That said, I can be brief because the Minister has been so comprehensive. As we heard from the noble Lord, Lord Marks of Henley-on-Thames, these regulations emanate from the previous Government; this is not an area where, historically, there has been political controversy. Indeed, as the Minister said, we debated similar regulations when our roles were reversed. I echo his comment to me that this is probably not the last time we will come back to debate and discuss these pension regulations, because they are complex. Part of the reason for that is the history and the litigation that has arisen, but the one thing we share around the Committee is the importance of having an attractive pension scheme so that we attract the finest candidates to our judiciary—and retain them. Indeed, one of the things we did in the previous Government was to increase the retirement age to 75. The Minister referred to our outstanding and independent judiciary, and we absolutely endorse those two adjectives; it is outstanding, and it is totally independent.
I also endorse the point made by the noble Lord, Lord Marks of Henley-on-Thames: the fact that we are widening some of these pension schemes to include more tribunal judges is testament to the fact that so much of the important work of our judiciary is done by tribunal judges, both full-time and part-time—I think fee-paid is the proper term. Day in, day out, tribunals up and down the country deal with really important issues for people on the ground, so to speak. They are often unsung, and far from the legal journals and law reports, but they deal with important legal issues on a daily basis.
I have only one question for the Minister, which I ask as a matter of interest rather than in any controversial way. I note that, by these regulations, we are extending the time to enable judges to make choices between the pre-1995 and post-1995 schemes. I am interested in why we are extending time for that and why this particular period of extension has been chosen.
Other than that, I am tempted—as I think they are still debating the Budget in the Chamber—to point out that, although it is important to have attractive and gold-plated pensions in the public sector, that does not mean that we should raid private pensions in the private sector. If I say any more on that I will take this debate to places where it ought not to go, so I will stop there and make it unequivocally clear that we on these Benches are also firmly in favour of these regulations. I thank the Minister for introducing and explaining them so clearly.
Lord Ponsonby of Shulbrede (Lab)
My Lords, I thank both noble Lords for their support for these regulations. I will first address the question that the noble Lord, Lord Wolfson, asked about why the deadlines for member elections are being extended. The answer is that, for members to be able to make an informed decision on their member elections, we need to provide detailed, illustrative information to affected members, which requires significant data inputs from our suppliers. The extension to 31 March 2027 will ensure that we can get this information to members with enough time for them to make a decision. I think that answers the noble Lord’s question.
I wish to say how much I agree with the noble Lord, Lord Marks, about the wider judicial family, and the importance of tribunal chairs and judges feeling part of that family and of their pensions recognising that fact. Of course, the part-timers—or fee-paid judges—fall into that category as well. That point was well worth reinforcing.
I also reinforce the point that the noble Lord, Lord Wolfson, made in his conclusion, about how our judiciary is a huge asset and resource for our country. It is indeed outstanding and independent—those are appropriate adjectives. There is never any question about its independence or ability. I have never, in either my business life or my political life, heard anyone seriously question judges’ independence or capability, if I may put it like that. We need to value that fact, and do so by making good but fair pension schemes. I hope these regulations are a small step in the road to maintaining that.
House of Lords
Police: Junior Cadet Schemes
(1 week, 3 days ago)
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Lord Bailey of Paddington
To ask His Majesty’s Government what steps they are taking to support junior police cadet schemes.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
The Government recognise the value of volunteer police cadet programmes and the role they play in supporting young people and their communities. The annual Lord Ferrers Awards ceremony is organised by the Home Office to recognise the efforts of volunteer police cadets and other volunteers for their local communities. However, the management of police forces’ volunteer police cadet programme schemes is the responsibility of chief constables and police and crime commissioners.
Lord Bailey of Paddington (Con)
Given that the relationship between young people and the Met police is at such a low ebb and that police cadets have a positive impact on community relations and young people’s safety, what assurances can the Minister give the House that funding police cadets remains a priority for the Government?
Lord Hanson of Flint (Lab)
As I just mentioned, police cadet funding is the responsibility of the police and crime commissioner and chief constable in each local area. There is no direct funding from this Government, nor was there from the previous Government over the last 14 years. However, we take very seriously the need to support police cadets; we have a safer streets mission proposing a Young Futures programme to help establish local prevention partnerships, with local interventions to help young people who might be brought into violence get involved in preventive activity. The noble Lord raises an extremely important point.
Lord Hogan-Howe (CB)
My Lords, I support the point made by the noble Lord, Lord Bailey, about the strength and benefit of volunteer cadets. I appreciate the Minister’s point that these are down to local decisions, but would it be worth the Home Office considering some kind of target for the number of cadets, as sometimes this can get lost when there are other priorities? About one in five goes on to become a police officer or member of police staff, and about one in three in London is from a minority community. They get contact with a lot of people and families who might otherwise not have contact with the Met police. They are worth supporting, but a target may help.
Lord Hanson of Flint (Lab)
The noble Lord makes a valuable point; I re-emphasise that we are trying to give discretion to local forces, chief constables and PCCs to determine their priorities. It is a valuable tool, which involves some people going on to the police. The vast majority do not, but they are still engrained in community support, prevention work and, as the noble Lord mentioned, understanding the role of the police. However, I hope he understands why I cannot really agree to his point about targets.
Viscount Hailsham (Con)
My Lords, in supporting my noble friend Lord Bailey, I suggest that it might be a good idea to encourage individuals to join the special constabulary, as I once did, because that is a good way of getting people to look to the regular police force as a career. It would also be a good idea to pay special constables, as we do retained firemen and members of the TA.
Lord Hanson of Flint (Lab)
I am still getting used to this. I agree wholeheartedly about special constables. When I was last Police Minister 14 and a half years ago, there were 15,505 special constables in the United Kingdom; today, there are 6,118. It is certainly something that we wish to look at and encourage because they play a full role, but the last 14 years’ decline is not down to me.
Baroness Doocey (LD)
My Lords, the Met said that its decision on cadets was driven by resource challenges, but part of this problem is that all police forces are spending vast amounts of their time doing the work of other agencies, because the other agencies cannot cope with the demand. I am talking about, for example, looking after children who are in a dreadful state because they have been taken away from care. Does the Minister agree that before the situation gets out of control, we ought to sit down and come to an agreement about exactly what it is we want our police to do, and follow that up with a fundamental review of how the police are structured and resourced?
Lord Hanson of Flint (Lab)
I am grateful to the noble Baroness for those comments. She will know that one of the manifesto commitments of this incoming Government was to look at how we could improve neighbourhood policing as one major thrust on this, looking at a very local, community-based effort based on local requirements to get some engagement with the police—this goes back to the points made by the noble Lord earlier in his supplementary question. This will ensure that we can focus on the community response to policing issues. We are looking at all sorts of issues now regarding the reform of policing. When the police Bill comes before this House and the House of Commons later in this Session, there will be an opportunity to discuss some of the reforms that we are trying to make.
Lord Murray of Blidworth (Con)
My Lords, the last Government met their manifesto pledge to recruit another 20,000 police officers. Does the Minister agree that to build on that record of success, it would be useful to improve the conversion rate of police cadets into recruited police officers? What steps will he take to do that?
Lord Hanson of Flint (Lab)
I welcome the noble Lord to his new responsibilities. On behalf of myself and my team, I ask him to pass on my thanks to the noble Lord, Lord Sharpe of Epsom, for the work that he did. He was very welcoming to me in my first four months in this House; I will try to be welcoming to the noble Lord as well.
The noble Lord says that the last Government met their objectives of recruiting 20,000 police officers. That happened after a reduction of 20,000 from when I was Police Minister in 2010, and it happened under the Liberal Democrat-Conservative coalition. Only latterly did the Government recognise the folly of that cut and slowly build those forces back up to their right size now. I agree with him that it would be very good to try to encourage police cadets to join the force. We want to build on the neighbourhood policing model, but I think it is a bit disingenuous on his first outing at the Dispatch Box to claim 20,000 new officers, when this number in fact replaced officers cut by his Government.
Lord Harris of Haringey (Lab)
My Lords, first, I declare my interest in that it was—I think—54 years ago that I was a volunteer police cadet.
Lord Harris of Haringey (Lab)
I would be grateful if the Minister, in expressing his commitment both to volunteer police cadets but also to the voluntary roles of special constables, could consider whether there is in fact a role for the Home Office generally in promoting these schemes—of course, not abrogating the specific responsibilities of a chief constable or a police and crime commissioner, but I think it is something the Home Office could run a national scheme about.
Lord Hanson of Flint (Lab)
I thank my noble friend for his question. I find it impossible to believe that that was 54 years ago; he must have been a very young man at the time. He makes a very valuable point. We agree on the importance of the youth cadets, which is why Earl Ferrers, a former Home Office Minister, instituted the scheme to welcome and recognise good cadets. I presented the Lord Ferrers Awards with the Earl in 2009; he was very proud of the awards and should get credit for them. The Home Office wishes to continue that scheme and that recognition and will do all it can to encourage people to play their role as youth cadets, special constables and, indeed, proper constables.
Lord Naseby (Con)
My Lords, almost parallel to the police cadets is the Combined Cadet Force, which is particularly relevant to the military services; it faces very similar problems. Given what the Minister just referred to, will he look at some of the constituent parts of the police cadets schemes to make them more successful? At the same time, one should open that up a little more broadly to look at the rather similar problems that the Combined Cadet Force is having.
Lord Hanson of Flint (Lab)
It is slightly outside my scope of responsibility, but I give credit to the noble Lord for the fact that the RAF, Army and Navy cadets are all very valuable. Only this weekend, we saw them marching and playing a full role in Remembrance services across the United Kingdom. It is an important point, and I will refer his comments to the appropriate Defence Minister to recognise his strength of feeling.
Lord Paddick (Non-Afl)
My Lords, I declare my interests as set out in the register. The Minister says how supportive he is of volunteer cadets and how powerless the Home Office is in doing anything about them because of police and crime commissioners. Is it not time to review the system of police and crime commissioners to enable the Government to achieve what they want with police services?
Lord Hanson of Flint (Lab)
I am afraid that is a no for the noble Lord.
Lord Watts (Lab)
My Lords, is it not the case that, after 14 years of cuts from the Tories and the Liberals, we now find ourselves having to rebuild the police force? Does the Minister think that the Opposition should apologise for 13 years of cuts and take the blame for the problems that we have with our police service?
Lord Hanson of Flint (Lab)
I am grateful to my noble friend for his questions. I am very proud of the fact that, when I was the Police Minister, we had the largest number of police officers on the beat in the country ever in the history of policing. That was eroded through decisions taken by the coalition Government. It was slowly built back up to its current level by the post-coalition Government, but they still cannot get away from the fact that they were responsible for a reduction in policing. Latterly that was recognised, which is to be welcomed. I want to build on that with our new neighbourhood policing model over our time in office.
Newly Qualified Young Drivers
(1 week, 3 days ago)
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Baroness Seccombe
To ask His Majesty’s Government what plans they have to introduce legislation further to regulate newly qualified young drivers.
Lord Colgrain (Con)
My Lords, on behalf of my noble friend Lady Seccombe, and with her permission, I beg leave to ask the Question standing in her name on the Order Paper.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
This Government take road safety very seriously, and reducing the number of those killed and injured on our roads is a key priority. The department is currently considering policy options in this area, and my right honourable friend the Secretary of State for Transport is meeting with campaigners this week. While we are not considering graduated driving licences, we absolutely recognise that young people are disproportionately victims of tragic incidents on our roads, and we are considering other measures to tackle this problem and to protect young drivers.
Lord Colgrain (Con)
When a young person passes their driving test, it is an occasion for pride and congratulation; it is seldom mentioned that they have been put in charge of a lethal weapon. Any subsequent accident that brings about their death or the death of their friends causes excruciating pain to their families and survivors, and it begs many questions. Does the Minister agree with me, therefore, that we should do more to mitigate these terrible circumstances? Does he support the suggestion that, for six months after a driving test is passed, the driver should be allowed only one passenger, located in the front seat? Does he agree that, before a test is taken, the learner driver should be made to watch the film produced by county fire and rescue services, which narrates in graphic detail the role played by fire, police and ambulance services when a fatal accident occurs?
Lord Hendy of Richmond Hill (Lab)
Every death on our roads is a tragedy, and our thoughts remain with the families of everyone who has lost a loved one in this way. As I have said, the Secretary of State is meeting this week with some campaigners who, tragically, are in that position. There is a form of restricting novice drivers through the Road Traffic (New Drivers) Act 1995. On acquiring their first full licence, a new driver is on probation for two years. During that time, they are subject to a more rigorous limit of penalty points, and if they breach that they will lose their full licence. I have not seen the film that the noble Lord refers to but will certainly give that some thought.
Lord Swire (Con)
Granted, the priority must be to deal with the backlog of young people taking their driving test, in order to increase their productivity, but is it not also time to look again at the basic driving test, whereby a young person can pass and drive away from that test for the first time on either a motorway or in the dark?
Lord Hendy of Richmond Hill (Lab)
The Government and their agency are working extremely hard to reduce the backlog of driving test appointments, but it is also quite clear that people should be ready for the test at the time that they present themselves to take it. The department’s THINK! campaign, which is a road safety campaign, is aimed primarily at young men aged 17 to 24. It focuses on a number of priority issues, all of which would help to reduce death and serious injury both to that category and to other road users.
Baroness Pidgeon (LD)
My Lords, given the significant increase in low-powered motorcycles and scooters being ridden on L-plates for food deliveries, what plans do the Government have to strengthen the compulsory basic training for motorcyclists to improve road safety?
Lord Hendy of Richmond Hill (Lab)
The Government are, of course, completely committed to ensuring that motorcyclists are equipped with the specialist skills necessary to stay safe on the road. I will write to the noble Baroness with further details of what might be proposed in the future to improve the competence of motorcycle drivers.
Lord Dubs (Lab)
My Lords, is the Minister sympathetic to the argument that there are quite a number of older drivers who are driving beyond the point when they are fit to be safe on the roads—
Lord Dubs (Lab)
Nobody here.
Could that be dealt with? Granted, there is a difficulty in having enough driving tests at the moment, but would it not be a good aim for people, say, over the age of 75 to do a driving test again every couple of years?
Lord Hendy of Richmond Hill (Lab)
I thank my noble friend. I am afraid I am already one of those people who is subject to the more rigorous requirements; as a vocational licence holder over the age of 70, I have to have a medical every year. The current driving licence arrangements take into account the risks that an individual poses to road safety. They are designed to be fair and proportionate to all drivers who remain fit and competent to drive, regardless of age.
Lord McLoughlin (Con)
Will the Government, while acknowledging that there may be a case for a graduated driving licence, also look at the issues which cause most of the accidents on our roads and perhaps look again at the penalties that are there for using the phone while driving?
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord for that thought, and of course he has great experience in this matter. The Government are very conscious of the principal reasons for fatalities and serious injuries, and I will certainly take away the thought that we should look further at driving while using a mobile phone, but the existing penalties for this and their enforcement are very stringent.
Lord Vaux of Harrowden (CB)
My Lords, on the subject of driving test dates, what steps will the Government take to prevent the exploitation of learner drivers who are unable to get a date through the conventional route and have to use these dodgy websites that buy dates in bulk and then sell them off at a massively inflated price?
Lord Hendy of Richmond Hill (Lab)
The Government would completely agree that it is quite wrong that people should need to use what were referred to as “dodgy websites”—which is obviously a technical term. The Driver & Vehicle Standards Agency has closed down several hundred of those websites by enforcing more strictly the rules by which people can obtain driving tests. The correct way to obtain a driving test is, first, for a learner driver to prepare so that the date that they select is a date when they can pass and, secondly, to do it through the DVSA website or through the helpline.
Baroness Hayter of Kentish Town (Lab)
My Lords, I draw attention to my interests. One of the issues for young drivers is the enormous cost of insurance, and the insurance industry would like to help address that. Therefore, a probation period or maybe zero alcohol for the first five years or until a certain age might be a way to help insurance companies to produce better rates for young drivers, for whom a car can be essential for work. Would the Minister agree to look at a range of possibilities, so that we can keep young people on the road more safely?
Lord Hendy of Richmond Hill (Lab)
Of course, we all agree that insurance is necessary and that its costs have been rising. Indeed, my right honourable friend the Secretary of State for Transport has instituted a review, with the aid of the industry, about the cost of insurance. There are a number of ideas to help young drivers obtain insurance, some of which need great thought to make sure that they are enforceable. The primary way that they can get insurance and remain safe is to practise for the test properly, to take the test, to be successful and then to drive with the same safety that we want of everybody on the roads.
Lord Moylan (Con)
My Lords, I return to the question asked by the noble Baroness, Lady Pidgeon. The Minister replied as if she had asked a question about motorcycles but, unless I misunderstood, she asked as much about electrically powered bicycles used for deliveries as about motorcycles. Does the Minister agree that the licensing system has now become completely incoherent? In some cases, electrically powered bicycles are more powerful than smaller motorcycles, yet the driver of one requires a licence and the driver of the other does not. Will the Minister agree to a wholesale review of the system, as it is breaking down?
Lord Hendy of Richmond Hill (Lab)
I would say that the driving licence system is not breaking down. We are seeing new cycles, some of which are not in fact cycles. If they are adapted to do more than 15.5 miles an hour, they are not cycles and should be subject to the licensing regulations for motor vehicles and motorcycles. That definition is clear. However, a number of users are adapting these bicycles illegally, turning them into vehicles but not subjecting themselves to proper licensing. It will have to be for the enforcement authorities to find and catch those people, as some of them have done.
Generative AI: Intellectual Property Rights
(1 week, 3 days ago)
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Lord Clement-Jones
To ask His Majesty’s Government, following the recommendation of the Vallance review of the regulation of emerging digital technologies, whether they plan to set out a policy position on the relationship between intellectual property rights and the training of generative AI models.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, the AI and creative sectors are both essential to our mission to grow the UK economy. Our goal is to find the right balance between fostering innovation in AI while ensuring protection for creators and our vibrant creative industries. This is an important but complex area and we are very aware of the need to resolve the issues. We are working with stakeholders to understand their views and will set out our next steps soon.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for that reply, but the Prime Minister, in a recent letter to the News Media Association, said:
“We recognise the basic principle that publishers should have control over and seek payment for their work, including when thinking about the role of AI”.
Will the Minister therefore agree with the House of Lords Communications and Digital Committee and affirm the rights of copyright owners in relation to their content used for training purposes on large language models? Will she rule out any widening of the text and data-mining exception and include in any future AI legislation a duty on developers to keep records of the material and data used to train their AI models?
Baroness Jones of Whitchurch (Lab)
My Lords, I pay tribute to the Lords committee that has considered this issue. We are keen to make progress in this area but it is important that we get it right. The previous Government had this on their table for a long time and were not able to resolve it. The Intellectual Property Office, DSIT and DCMS are working together to try to find a way forward that will provide a solution for creative media and the AI sectors. Ministers—my colleagues Chris Bryant and Feryal Clark—held round tables with representatives of the creative industries and the AI sector recently, and we are looking at how we can take this forward to resolve the many issues and questions that the noble Lord has quite rightly posed for me today.
The Earl of Devon (CB)
My Lords, in the absence of legislation or policy it is left to the courts to wrestle with whether the training of large language models infringes copyright. For over two years now, cases have been progressing in the US, in Europe and in the UK. A German first-instance decision recently found in favour of the machines—it will be appealed. Noting my interests as an IP litigator, do the Government believe, as I do, that English common law is capable of resolving this tricky issue?
Baroness Jones of Whitchurch (Lab)
My Lords, the Government are clear that copyright law must be respected when content is used to train AI models. If copies are made of protected work, licences must be required from the copyright owner unless a specific copyright exception applies. The problem is that the law does not yet apply equally to generative AI models, and that is the issue we are grappling with. Our view is that this should not necessarily be left to the law; unfortunately, it takes a long time for these legal cases to be resolved. We are trying to find a way forward that will be fair to everybody but that does not require the long legislative process that I know the noble Earl is all too aware of.
Lord Holmes of Richmond (Con)
My Lords, I declare my technology interests as set out in the register. Does the Minister agree that this is not just a question of fairness? We must have a respected, remunerated, consented, dynamic licensing market for IP and copyrighted works for both the benefit of IP and creatives and for a flourishing AI market in the UK.
Baroness Jones of Whitchurch (Lab)
The noble Lord is quite right: we have to find a way forward that reflects the importance of both these sectors to our economy. The creative industries are one of the UK’s most powerful economic activities, worth £124 billion in GVA at the moment, so they are hugely important. We know that we have to respect the creative sector and the journalists working in it, but equally, we know that the future will be about an enhanced AI system. More and more businesses in the UK are now using AI, so that is the way forward and we have to find a way through this, but there is not a simple answer. I assure noble Lords that my colleagues, particularly Chris Bryant and Feryal Clark, are very aware of this issue. It has to be resolved but we would just ask for a little bit more space to allow us to make some progress.
Lord Spellar (Lab)
My Lords, the Minister rightly referenced the importance of the cultural sector not only to our national life but particularly to our economy. Does not the music sector, in particular, require a pipeline of talent and the protection, therefore, of the original work to enable people to develop their skills but also to make a living? Should this not be a crucial part of any such policy?
Baroness Jones of Whitchurch (Lab)
My noble friend makes a very good point, and I can assure him that my colleague Chris Bryant is very aware of this; he will know of his passion for this issue. We are working on finding a way forward, and I can assure my noble friend that no stone will remain unturned as we try to do so. I hope to come back with a further progress report in the very near future.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, shall we hear from the former Leader of the House next? Then we will hear from the Cross Benches.
Baroness Stowell of Beeston (Con)
I am very grateful to the noble Lord. Copyright clearly affects a lot of different sectors, but given the value of real-time news to the AI platforms, particularly in the production of services and products that they offer to consumers, what steps are the Government taking to ensure that there is a mutually beneficial deal between the platforms and news organisations, so that we can safeguard the content that will be so important to the continuing advancement of this technology?
Baroness Jones of Whitchurch (Lab)
The noble Baroness will know that there was an attempt to come to a voluntary agreement on this under the previous Government that would have been a way forward for both sectors. Unfortunately, that voluntary agreement did not work out, so the ball has bounced back into our court. The noble Baroness is absolutely right about journalism: if we do not have a vibrant journalistic bedrock for this society, we do not really have a democratic society; we need to know what is going on in the UK and the world. The noble Baroness is right that we need to protect journalists: we need to ensure that their work is rewarded and paid in the right way. We are working on this. I am sorry that I am beginning to sound a bit like a stuck record, but I assure noble Lords that we are working at pace to try to resolve these issues.
Viscount Colville of Culross (CB)
My Lords, many creators sold their IP rights to big publishers before the advent of large language models. Since then, those publishers have been exploiting creators’ work for the training of large language models and the creation of new AI performances, but they have failed to recompense the original creators. Does the Minister think that creators’ performance and moral rights should be updated in the face of the new use by AI of their work?
Baroness Jones of Whitchurch (Lab)
That is exactly what we are trying to achieve. Creatives need to be properly respected and rewarded for their activities. We need to make sure that when scraping and web-crawling takes place, there is transparency about that and the originators of the material are properly recognised and rewarded.
Lord Markham (Con)
My Lords, as the Minister knows, AI model training and associated copyright infringement can occur anywhere in the world, effectively offshoring copyright infringement. So while we welcome the Minister for AI’s statement that the Government will end uncertainty around the use of copyright content for AI, I am afraid I have another tricky question to add. How do we intend to do that in the space of protecting UK content from international offshoring?
Baroness Jones of Whitchurch (Lab)
The noble Lord is quite right: not only is our material used internationally, but UK-based AI sites are using internationally created material. So this is an international problem—we cannot resolve it just within the UK. We are working closely with international partners, and it is a shared priority for Governments across the world. The Intellectual Property Office is engaging with international partners and other offices, including the World Intellectual Property Organization, to try to advance discussions on this issue. As the noble Lord said, it is an important international issue. We cannot resolve it on our own.
Drax Power Limited: Ofgem Investigation
(1 week, 3 days ago)
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Baroness Boycott
To ask His Majesty’s Government what assessment they have made of Ofgem’s investigation into Drax Power Limited, which found “Drax misreporting data” and “being unable to provide Ofgem with sufficient evidence … to support the reliability of its profiling data reporting of forestry type”, and what plans they have to ensure that companies receiving public subsidies are not able to claim them without concrete evidence.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, Ofgem’s investigation found that Drax had failed to report data accurately. Data misreporting is a serious matter and the Government expect full compliance with all regulatory obligations. Drax’s £25 million redress payment underscores the robustness of the regulatory system.
Baroness Boycott (CB)
My Lords, I thank the Minister for that Answer. KPMG was commissioned by Drax to look into the results; this was done in secret at its behest, and it was reported in this week’s issue of Private Eye. It corroborated that Drax had provide inaccurate data to Ofgem and that there was evidence of
“material financial misstatement … fraud or misconduct”.
Therefore, we cannot trust Drax to be honest or to behave honourably. Will the Minister use his good offices to put an end to the enormous subsidy that we pay to Drax on an annual basis, which, according to one of the latest adverts put out by an environment group, is costing every individual in this country £100 a day?
Lord Hunt of Kings Heath (Lab)
My Lords, on the issue of data, I have checked with Ofgem. At the moment, it has no reason to think that Drax is not compliant, but it will not hesitate to act if required. On the question of subsidy to Drax, the noble Baroness is referring to the ROC system of subsidies, which the last Government oversaw for many years. The ROC comes to an end in 2027. The last Government issued a consultation on whether there should be transitional subsidy arrangements. We are considering the results of that work at the moment.
Baroness Bloomfield of Hinton Waldrist (Con)
Noble Lords will remember the “Panorama” exposé of the illegal sourcing of wood pellets from Canadian forests, a charge vigorously denied at the time by Drax. Our Conservative Government introduced the strict criteria that allowed Ofgem to conclude that there was not “sufficient evidence”. What plans do this Government have to ensure that Ofgem can continue to investigate any company receiving a subsidy?
Lord Hunt of Kings Heath (Lab)
My Lords, it is clearly very important that companies in receipt of the ROC payments—and, indeed, where their biomass electricity generation is classified as low-carbon—are acting according to sustainability criteria. The last Government issued a call for evidence in 2021 and then took two years to publish a strategy, in 2023. On the revision of sustainability criteria, they rather ducked it, saying that they would produce a cross-sector consultation this year, which never happened. We are now working on that. It is clear that sustainability criteria need to be kept up to date. We will ensure that that happens.
Lord Birt (CB)
My Lords, I have seen the deeply troubling allegations presented by a staff whistleblower to at least one member of the Drax board. It is troubling reading. They allege outright dishonesty, cover-up, offers of under-the-table bribes and naked threats by some senior Drax executives. Has the Minister seen this evidence, or, as already mentioned, KPMG’s internal investigations following the BBC “Panorama” report on Drax? If not, given the substantial public funding that Drax receives, will he ask to see them?
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord. I have seen the media reports, but I have to say to the House that it is the responsibility of Ofgem to make judgments as to whether a company is applying the sustainability criteria. The issue before us today is data information. Clearly, Ofgem found that Drax was not complying with the requirements—hence the redress payment. However, it did not find that Drax was not complying with sustainability criteria.
Lord Teverson (LD)
My Lords, given the amount of private money that has been spent in this area, is it not important for Ofgem to be rather more ahead of the curve on these issues? I notice in the report that Drax is now going to have external audit. Why did it not have this before? More importantly, why does not Ofgem get off its backside and go to the United States and Canada to check these items out for itself? Is it about to do that?
Lord Hunt of Kings Heath (Lab)
My Lords, first, it is not for Ministers to tell Ofgem how to regulate; we have to rely on its rigorous approach. Secondly, in the US and Canada, we depend on the rigorousness of the regulators locally. Ofgem’s job is to ensure that, as a whole, sustainability criteria are correct. I do not believe that it would be fair to say that Ofgem is not doing a thorough job. That is not my experience.
Baroness Jones of Moulsecoomb (GP)
My Lords, it is clear that this Government know that what is coming from Drax is not renewable energy. At the moment, every single energy bill payer in Britain pays Drax for renewable energy. It is not renewable; the company emits 12 million tonnes of carbon a year. The Government know that and choose to allow international regulations to cover it up.
Lord Hunt of Kings Heath (Lab)
My Lords, I do not recognise what the noble Baroness says. It is true that Drax is an emitter of carbon but that is offset—netted off—by the new forestry growth that takes place and absorbs the carbon. This is not a fanciful notion by the Government; the International Energy Agency, the IPCC and the Committee on Climate Change all accept that biomass, as long as sustainability criteria are applied and accepted, is in that way a low-carbon renewable energy.
Lord Forsyth of Drumlean (Con)
My Lords, is not the problem, as the noble Baroness has said, that the idea that cutting down trees in North America and California, turning them into pellets, dragging them across the Atlantic Ocean using diesel-powered ships, shipping them across the country and then burning them at Drax is somehow saving the planet is mad?
Lord Hunt of Kings Heath (Lab)
My Lords, I realise that it sometimes sounds counterintuitive. None the less, the carbon emitted during the supply-chain process, and in the process at Drax and places like it, is netted off by the growth in forestry, which absorbs the carbon. That is a well-accepted international approach. It produces 2.6 gigawatts at Drax, 4% of our electricity generation in this country, with over 2,500 people employed in the local region, and it is classified as renewable.
The Earl of Effingham (Con)
My Lords, the Government have introduced further environmental levies, which the OBR predicts will add an additional £2.8 billion to electricity bills between 2025 and 2030. Can the Minister please explain what support the Government will offer to consumers so they are not adversely affected by this move?
Lord Hunt of Kings Heath (Lab)
I remind the noble Lord that policy costs on bills have increased from £115 on average in 2010 to an estimated £309 in 2024, so a lot of this increase occurred under his Government and the previous Conservative and Lib Dem Administrations. If we are serious about going towards clean power and net zero then we have to accept that we must finance the development of new energy-generating structures, and that is the case for biomass. Equally, that has to be done under sustainability criteria regulations that will ensure it happens. As for the OBR, its analysis has highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts.
Lord Watts (Lab)
My Lords, is this not a case of the regulators letting down the public again? Do we not need to have more accountability for our regulators? I suggest that each regulator has to produce an annual report that goes to a committee of the House of Commons, so that we can review what they are doing. At the moment, they are badly letting us down.
Lord Hunt of Kings Heath (Lab)
My Lords, I think that, by implication, my noble friend is being critical of Ofgem, but I must say that that is not my experience. Ofgem is actually a rigorous regulator. It produces an annual report, and of course it would appear before a Select Committee if required.
Autumn Budget 2024
(1 week, 3 days ago)
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Lord Livermore
That this House takes note of the Autumn Budget 2024.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, it is a privilege to open this Budget debate in your Lordships’ House, and to speak alongside so many distinguished and expert noble Lords. It is, of course, a particular pleasure given it is the first Budget of a Labour Government in 14 years. I take this opportunity to welcome the noble Baroness, Lady Penn, to her place and to welcome the noble Lord, Lord Booth-Smith, to your Lordships’ House. I very much look forward to his maiden speech.
This was a Budget to fix the foundations; to restore stability by repairing the public finances; to rebuild our public services after years of neglect; to choose investment rather than decline; and to keep our promises to working people. It was a once-in-a-generation Budget, on a scale commensurate with the challenging inheritance we faced. That meant taking difficult decisions, but they were the right decisions. As a result of those decisions, we have now wiped the slate clean. We have created a foundation of stability on which we will take forward our agenda of growth and reform, delivering the mandate for change on which this Government were elected.
Let me set out first the inheritance we faced. As noble Lords will know, on her arrival at the Treasury in July, the Chancellor was informed of a £22 billion black hole in the public finances—a series of commitments made by the previous Government which they did not fund and did not disclose. Ahead of this Budget, the independent Office for Budget Responsibility conducted a review into the circumstances surrounding a meeting it held with the Treasury on 8 February this year at which the Government were obliged to disclose all unfunded pressure against the reserve.
The OBR’s review has established that at that point the previous Government concealed £9.5 billion. The OBR’s report states that they
“did not provide the OBR with all information available”.
It has made 10 recommendations to prevent this happening again, which we have accepted in full. Of course, at that point, the previous Government still had five months left in office, during which time they continued to amass unfunded commitments which they did not disclose. By the Spring Budget, Treasury records show these had reached £16.3 billion. By July, they had reached £22 billion.
The Treasury has now provided to the OBR a line-by-line breakdown of these unfunded commitments —260 separate pressures that the previous Government did not fund and did not disclose. Neither did they budget for costs which they knew would materialise, including funding for compensation schemes for two terrible injustices. So, this Budget provides, for the first time, funding of £11.8 billion to compensate victims of the infected blood scandal and sets aside £1.8 billion to compensate victims of the Post Office Horizon scandal.
However, the country did not just inherit broken public finances; it inherited broken public services too: NHS waiting lists at record levels, children in portakabins as school roofs crumbled, rivers filled with polluted waste. Yet since 2021, there had been no spending review—no detailed plans for departmental spending set out beyond this year.
Faced with this reality, any responsible Chancellor would have to act. Some may argue otherwise: that we should have ignored the problems in the public finances. But that is the path of irresponsibility, the path chosen by the Liz Truss mini-Budget, when mortgage costs rose by £300 a month, for which working people are still paying the price. This Government’s number one commitment is economic and fiscal stability. That is why the very first Act we passed was the Budget Responsibility Act, strengthening the OBR, and why we have established robust fiscal rules. These fiscal rules put the public finances on a sustainable path while allowing a step change in investment to drive long-term growth.
The first rule is the stability rule. This brings the current Budget into balance so we do not borrow to fund day-to-day spending. The significant fiscal consolidation over the course of this Parliament takes borrowing as a share of GDP from 4.5% to 2.1%, as we achieve the biggest current budget surplus in over 20 years. Over the past 14 years, borrowing averaged 5.6% of GDP; over this Parliament, it will average 2.6%.
But while being tough on spending, we must create the space for investment. We inherited a situation where the UK is the only G7 country with private investment levels below 20% as a share of the economy, and we inherited plans where public investment was set to fall from 2.5% to 1.7% of GDP. As the IMF has said, more public investment is badly needed in the UK. So, the second fiscal rule is the investment rule. As set out in our manifesto, we will target debt falling as a share of the economy, which will be defined as “net financial debt”, a measure that has been published by the Office for National Statistics, and forecast by the Office for Budget Responsibility, since 2016. Net financial debt recognises that government investment delivers returns for the taxpayer by counting not just the costs of investment but the benefits too. Like our stability rule, the OBR has confirmed the investment rule will also be met two years early.
To meet our stability rule, in the context of the hole in the public finances, the compensation schemes that were not funded and the need to avoid austerity in our public services, the Budget raises taxes by £40 billion. Of course, before any Government can consider changes to taxation, they must first ensure efficiency and reduce wasteful spending. The Budget set a 2% productivity target for all departments; it took steps to ensure welfare spending is more sustainable; and it ensured more people will pay the tax that they already owe.
This Budget made another important choice: to keep the manifesto commitment we made to working people to not increase their income tax, their national insurance or VAT. And we went further, by freezing fuel duty and raising the national minimum and living wage. Compare that to the choice made by the previous Government, who froze income tax thresholds, costing working people nearly £30 billion. We could have extended that freeze, but that was not the choice we made. Instead, from 2028-29, personal tax thresholds will be uprated in line with inflation once again.
However, this Budget does involve some very difficult choices. We will increase employers’ national insurance contributions by 1.2 percentage points to 15 % from April 2025 and reduce the secondary threshold from £9,100 to £5,000 per year. At the same time, to protect the smallest companies, we will increase the employment allowance from £5,000 to £10,500, meaning 865,000 employers will not pay any national insurance at all and over 1 million employers will now pay the same or less than they did before.
The lower rate of capital gains tax will be increased from 10% to 18%, and the higher rate from 20% to 24%, meaning the UK will continue to have the lowest capital gains tax rate of any European G7 economy. We have maintained the lifetime limit for business asset disposal relief at £1 million to encourage entrepreneurs to invest in their businesses. Business asset disposal relief will remain at 10% this year, before rising to 14% in April and to 18% from 2026-27, maintaining a significant gap compared to the higher rate of capital gains tax.
The Budget also set out additional tax measures including introducing a new vaping products duty and measures on tobacco duty, vehicle excise duty, air passenger duty and alcohol duty, as well as making reforms to inheritance tax on pensions and on agricultural and business property. We also delivered on our commitments to abolish the non-dom tax regime, replacing it with a new residence-based scheme, introduced a fairer approach to the way carried interest is taxed as well as reforms to the stamp duty land tax surcharge for second homes and to the energy profits levy, and we introduced VAT on private school fees.
There was no bigger failure of the previous Government than on growth. First, they introduced austerity, which choked off investment. Then their Brexit deal created new trade barriers equivalent to a 13% increase in tariffs for our manufacturing sector and a 21% increase in tariffs for our services sector, permanently reducing growth by 4%. Finally, the disastrous mini-Budget crashed the economy and sent inflation and interest rates soaring.
Had the UK economy grown over the past 14 years at the average rate of other OECD economies, it would have been £171 billion larger. When the Bank of England cut interest rates last week, it forecast that the Budget would add 0.75% to growth next year and that unemployment will now fall. Over the course of this Parliament, the OBR says that growth will be largely unchanged, in the context of a Budget that had to take some very difficult decisions to clear up the mess that we inherited; and, over the longer term, the OBR says that this Budget will permanently increase GDP by 1.4%.
The IMF has welcomed
“the Budget’s focus on boosting growth through a needed increase in public investment”,
but, of course, we need to go further and faster. That is why economic growth remains this Government’s central mission. We have set out extensive planning reforms, a new national wealth fund, new local growth plans and a modern industrial strategy. We have created Skills England and the new growth and skills levy. We will shortly publish the “Get Britain Working” White Paper to tackle inactivity, and the Chancellor will set out pension reforms in her Mansion House speech later this week—all of which will significantly boost growth and none of which are yet included in the OBR’s forecast.
Our growth strategy must also, of course, be developed and delivered alongside business. We are very aware that we are asking business to contribute more and that impacts of the rise in employer national insurance will be felt beyond business, as the OBR has set out. We know that successful businesses depend on the skilled and healthy workforce that these funds aim to deliver. But most of all, we know—because they tell us—that businesses depend on the stability that this Budget, by repairing the public finances, provides.
To ensure certainty, alongside the Budget we published a corporate tax road map, which confirms our commitment to cap the rate of corporation tax at 25%, the lowest in the G7. We are maintaining full expensing and the £1 million annual investment allowance, and continuing the current rates for research and development reliefs to drive innovation. We have announced permanently lower business rates for retail, hospitality and leisure properties. We have frozen the small business multiplier, extended the enterprise investment and venture capital trust schemes until 2035, and taken action on late payments and non-financial reporting burdens. Finally, we know that the significant new capital investment in transport and housing that this Budget delivers is vital for businesses to grow.
The difficult decisions that this Budget takes are for a purpose: not just to repair our public finances but to rebuild our public services. In this, the first phase of the spending review, we have prioritised day-to-day funding towards delivering on our manifesto commitments. Day-to-day spending from 2024-25 onwards will now grow by 1.5% in real terms. In addition, the £100 billion of capital that we set out will drive growth across our country. To unlock the growth industries of the future, we will protect investment in research and development with more than £20 billion of funding. We are providing over £5 billion to progress our manifesto commitment to build 1.5 million homes. On transport, to help grow our economy across the north of England, we are investing in faster and more reliable services, including the trans-Pennine upgrade. We will deliver east-west rail to drive growth between Oxford, Milton Keynes and Cambridge, and we have committed the funding to begin tunnelling work for HS2 to run through to Euston station.
To bring new jobs to Britain, the Budget funded 11 new green hydrogen projects across England, Scotland and Wales. We have also announced significant investment between government and business in carbon capture and storage. We are also increasing the core schools budget by £2.3 billion next year to support our pledge to hire thousands more teachers into key subjects, and we are tripling investment in breakfast clubs, putting them into thousands of schools.
Of course, we are also beginning the work of fixing the NHS after years of neglect. Because of the difficult decisions that we have taken on tax, and because of our investment rule, the Budget announced that we are now able to provide a £22.6 billion increase in the NHS budget over two years. That is the largest real-terms growth in NHS spending, outside Covid years, since 2010. Because of this record injection of funding, the thousands of additional beds that it will secure and the reforms that we are delivering, we can now bring waiting lists down more quickly, moving towards our target for an 18-week waiting time, by delivering our manifesto commitment of 40,000 extra appointments every week.
This Budget delivers on the mandate the British people gave this Government: to fix the foundations of our economy and deliver change. The choices we have made are the right choices. They are not the easy ones but the responsible ones: to repair the public finances, restore stability, rebuild our NHS, invest in the national interest and protect working people.
There are, of course, different choices that could be made. Let us be clear, however: not to make the choices we made on tax would make it impossible to protect working people; not to support the funding for public services would mean cuts to schools and the NHS; and not to support our investment rule would mean delaying or cancelling thousands of projects delivering growth right across our country. We have made our choice: restoring stability, protecting working people, fixing the foundations of our economy, investing in our future and rebuilding Britain. I beg to move.
Lord Johnson of Lainston (Con)
My Lords, I thank the Minister for introducing this debate. I am very much looking forward to hearing the noble Lord, Lord Booth-Smith, make his maiden speech in this debate, and I welcome him to his place.
I congratulate the Minister on such an excellent performance: I slightly think that if he delivers it in one single tone, it will slip past us as if there are good things contained. Looking at the Benches behind him, I noticed there were no cheers of “Hear, hear”, no smiles and no congratulatory nods, because noble Lords, like me, see this Budget for the three things it is: dishonest, unkind and—worst of all for the sake of the British people, our economy and country—incompetent.
The Budget is dishonest because it breaches the promises Labour made to the British people. These were promises made by the Minister, his colleagues and the noble Lords I am regarding across this great historic Chamber of ours today. It is fundamentally unkind—and I never thought I would say this about a Labour Budget in this Chamber—because it hurts hard-working people at every stage of life. And I am afraid it is incompetent because, fundamentally, in almost every action, word and sentence of this Budget, there is not a single pro-growth measure. Everything is designed to make life more difficult for us to realise the best version of ourselves in whatever manner that may be.
During the general election, many Labour politicians spoke of fixing the foundations of the economy. They talked of their fiscal rules; their manifesto claimed that this changed Labour Party would be based on sound money and economic stability. Yet, in their first Budget, they have genuinely fiddled the rules. Frankly, they have plunged our country into a further £32 billion-worth of debt by the end of the Parliament. The Minister described it as a “once in a generation” Budget. Well, all I can say is, thank goodness for that, because we could not possibly put up with this year after year.
I find it distressing to be continually told about the so-called black hole. The numbers moved around, even in his speech, from £16 billion to £22 billion to £30 billion. I still cannot keep track of where the black hole actually is. We know full well that the black hole has been created by this Government to give excessive pay rises to those people who they want to ensure support them into the future. It is a perfectly sensible political tactic; in some respects, I may even admire it slightly. But it is fiscally incompetent, it causes huge long-term damage and it is fundamentally dishonest when it comes to running the economy.
The Prime Minister was asked many times this summer whether Labour would increase taxes. Do any noble Lords remember those comments? He said time and time again the same line:
“Labour will not increase taxes on working people”.
The Labour Party’s manifesto, quoted by the Minister, was categorical. He quoted these very words:
“We will not increase national insurance, the basic or higher or additional rates of income tax or VAT”.
We know now, however, that the Office for Budget Responsibility—about which we have heard so much from the Minister—has estimated that 60% of the cost of the increased employed national insurance contributions will be passed on to working people through lower wages and higher prices. I must ask the Minister: why have they done this?
Tesco came out over the weekend and said that its additional costs would be £1 billion a year—£1 billion a year for Britian’s biggest supermarket. I hear cries that it can come out of their so-called profits or through lower dividends to pension funds—probably in which many of the unions that have backed so many of my noble colleagues opposite invest—but the reality is that it will simply result in higher costs in supermarkets, or the organisation employing fewer people as it has less capital to deploy or less money to reinvest.
I see noble Lords opposite who know this to be a fact: if you raise costs on businesses at that level, the economic costs on the economy will be substantial. It is a simple, measurable economic fact. I find it very alarming that the Minister, who with his experience understands these economic principles, is not so aware as to be honest about the true long-term economic damage that the national insurance contribution change will have across the country. It will result directly in unemployment rising.
Sadly, for me, with young children coming into the labour market—particularly sadly since I have to pay their additional school fees before they get there—they will find it even harder to find work. We see this in other European countries, where tax rates are so high on the national insurance side that, if you are a young person coming into the market, you simply cannot find work. I do not understand how that could possibly be at the core of the tenets of the Labour philosophy. Frankly, I would feel a great sense of shame if I had to present this Budget from the Government Benches because it is doing nothing at all for the social values we purport to hear from their side.
It fundamentally goes against the principles of how they campaigned in the election—that they would effectively be tax-neutral on the working person. This was fundamental, not just in technical terms. People who have been in government understand the need to be flexibly minded. I am talking not about the details—a penny here or a point there—but the principle of how this Government went into the election saying that they would not raise taxes on working people. They have, in magnificent quantities and to huge effect. I would like to hear from the Minister and his colleagues how this could possibly be justified.
This is also unfortunately an unkind Budget that harms people at every stage of their lives. The first announcement made by the Labour Administration—going into the election, in fact—was that they would raise VAT on tuition fees, which the OBR believes will affect 600,000 students. It will have huge ramifications on the private education sector, which is an enormous export. Aside from anything else, it is a crucial component of our economy. This is aside from all the specialist and small schools that provide such an enormous, essential service to people in their communities.
Why would this Government, who talk about growth and their desire to see a stronger and growing economy, want to attack aspiration? It is because of ideology. That is what I find so depressing. This should be a Budget about economics, to make people richer and make our country stronger, but it is about ideology, the dislike of people having some type of advantage and the idea that a parent does not want the best for their children. I will say one thing to the Minister: you are not attacking me. I have been to school, although it may not look like it. The people you are attacking are children. I do not understand why your first measure—I see the guilty expressions on the faces of the noble Lords opposite—should be to attack the aspirational opportunities and life chances of children. Shame on the Government for doing this. I feel sorry for my colleagues opposite for having to face their constituents and their Peers knowing what they have done to young children’s futures in the name of socialism.
The next group in the catalogue of people to whom this Government have been unkind in this Budget is the vulnerable elderly. I will not repeat the well-made arguments on the iniquities of changing the regulations on the winter fuel allowance, but I would like to come on to the second component, which is relevant. I declare an interest in that I had rather hoped to inherit relations’ pension pots tax free, but now that will not be the case. These people, who have worked all their lives, paid their taxes and built up their pension funds, will now be taxed on the point of inheritance and then further taxed when their beneficiaries and descendants try to access those funds. Can that be right?
This goes back to the Minister’s point on predictability and certainty. The Government want to bring some type of consistency back to the Budget process, which I thoroughly applaud. But how can it be considered predictable and certain? How can we make long-term investment decisions when at every turn they are making significant, radical and deadly changes to the very essence of our system of economic foundations, which is to have long-term pensions that are allowed to be invested in this economy to try to produce the growth this Government want? How does the Minister defend this concept of eating into our pensions savings and destroying the principle of the inheritability of the pensions pot?
I turn to two groups that particularly deserve representation. I can understand that a socialist Government do not like private schools or people who make money on capital gains. I can understand a Government who may not want people to inherit the pension pots built up by their parents and grandparents. But why would any Government want to attack small family farmers and small businesses by ending the business inheritance relief on agricultural inheritance? I do not understand that, when this entire country is based so centrally on small businesses. This is not just an economic question but a social point about the vitality of small businesses and small family-owned farms. Why would a Government want to deliberately target those two sectors of our communities and our economy, to make their lives not just difficult but impossible? It will be fundamentally impossible to inherit an average-sized farm in this country in two years’ time.
I do not know how many noble Lords on my Benches or elsewhere are from the farming community, but I ask all noble Lords, and the Minister: who on earth will feed us? Who will be the guardians and custodians of our countryside if the farming community does not take the baton from the previous generation? I am genuinely interested to know how many people have gone out today and said, “I wish to buy a 250-acre dairy farm and make that my living”. As the noble Lord has just intimated, I would have thought there is hardly anyone. The only reason why these people do what is frankly a national service is because they inherit this legacy, and it is shameful and destructive to target that community in such a way. Frankly, it is also deadly for the long-term survivability of our nation.
I turn to young people and stamp duty. The Minister calls it “stamp duty land tax”—by using as many acronyms as possible, you can cover up what is actually happening. We promised to cut the rate at which it is paid, and that has now been reversed. Again, I do not understand this. Before the election we went clearly into that process, with clear commitments from the Labour Opposition at that time—which I and many of my noble friends on this side of the House thoroughly supported, by the way—to build more homes and give more people in this country greater access to the dream of home ownership. Why on earth would the Minister and his colleagues decide to make that more difficult? Why would they decide to end—or, in fact, restrict and narrow—the passageway to owning your own home, when we all agreed that this was a central and good thing to do? This is particularly true given that I do not believe it will raise a significant amount of money for the Exchequer.
I turn to the other areas of the economy that we depend on: the voluntary sector, charities and the Government themselves. Increasing these levies on how people operate with their employees will increasingly make it incredibly difficult for so many of these smaller organisations. I know full well that so many noble Lords in this House are associated with voluntary and community organisations that will no doubt have come to them in the last week and said, “Please do something about this iniquitous change in the tax rule, which will prevent us carrying out work that people rely on”. This is not just hitting hedge fund managers or taxing carried interests in a different way; it is a hypodermic syringe of poison into the very root of our community activity. The Government have a lot of serious questions to answer about how they will ameliorate these measures for these organisations.
I turn to the third point that I made at the beginning. If noble Lords think that the Budget is both dishonest and unkind, it is also, unfortunately, incompetent, which is probably worst of all. We have had a chance to look at the OBR’s economic and fiscal outlook, and we now know how much damage this Budget will do to our economy. Across all the key metrics, the Government’s policies will leave the UK with a weaker economic future. The Minister spouted various statistics, but the OBR has actually now revised down its estimates for GDP growth. I am never quite sure how important GDP growth is, but I would have thought it is probably better if it is going up rather than down—and it is going down by nearly 0.5% from the March forecast, when the last Government were purported to have colluded with their officials to obfuscate the information given to the OBR. That is a very serious claim in its essence, and it should be looked at closely.
Instead, the Government have put taxes up and they are borrowing more. The Minister mentioned the concept of “no money without reform” but I have seen absolutely no evidence of reform. I say in all truth and sincerity, as a patriot before I am a party-political politician, that we need reform of public services—desperately. Yet I see no evidence of that at all. It is irresponsible and, frankly, bad politics to have paid out so much money at the beginning of the process without any sign of reform. I am afraid that this Government will live to regret this significantly.
If I may come to a conclusion—
Lord Johnson of Lainston (Con)
I thought that noble Lords opposite would be pleased. I could go on. There are so many other areas where the Government have driven a dagger into our economy that if your Lordships want me to, I would be delighted to carry on listing them. However, given the many speakers after me who will no doubt be repeating the points I have made and, almost assuredly, building on them in a more intelligent and capable manner, I say this. After all the promises and pledges made by Labour, we now know the truth. Working people, small business owners, farmers, charities, young people—all will be worse off under Labour. Ministers have shamefully broken the promises they made earlier this year, leaving us with an economic forecast bleaker than when they took office. This Budget is nothing less than dishonest, unkind and incompetent. I am afraid to say that, after 100 years of testing socialism to destruction, it appears that we are still giving it another try. The British people placed their trust in this Government, in all truth, and through this Budget they have shown themselves to be unworthy of this trust. I ask the Minister: why he has done these things to our country?
Lord Fox (LD)
My Lords, it is a great pleasure to speak in this debate and to welcome the noble Lord, Lord Booth-Smith, to his place and the noble Baroness, Lady Penn, back to her place.
The noble Lord, Lord Johnson, is taking his new job as party co-chairman very seriously. Clearly, to entertain his troops, he has turned up the rhetoric to 11. However, for all the huff and puff we have just heard, His Majesty’s loyal Opposition have no moral authority to criticise those who are picking up the mess they left. The parlous state of the economy, the near collapse of public services and the sheer level of financial mismanagement that we saw from the former Government was a disgrace.
One of the benefits of your Lordships getting to debate this Budget somewhat after it was released is that its effect is starting to crystalise, and I suspect that the Minister may be disappointed by the way it has been received. Then again, as he is a seasoned Treasury hand, I would ask him whether he was surprised by the reception the Budget got. OBR data and that of countless other analysts shows that UK households, which are still struggling to absorb the shocks from the pandemic, inflation and the energy crisis, will now be hit by the tax increases in this Budget, one way or another. Meanwhile CPI inflation is expected to rise above previous expectations and interest rate cuts will probably slow. So it cannot really be a surprise that the Chancellor failed to inspire a mood of national cheer.
Nevertheless, we are glad that the Chancellor listened to Liberal Democrat calls for more investment in the NHS in order to start repairing the damage done by the Conservatives. We will now hold the Government to account on delivering their promises, so that people can, for example, see a GP or dentist when they need to. However, we must ensure that this money is not used to paper over the cracks. Structural reform is needed, but more than that, the Government are still ignoring the elephant in the room: the social care crisis. In fact, it is likely that they are making the situation worse, because the employer national insurance increase will hit social and primary care.
Thousands of private care providers are now facing increased costs, forcing them to reduce services and increase charges or even pushing them into collapse. GPs, who are already stretched, will also be hit by this tax change. GPs and social care providers cannot afford these tax rises and you cannot fix the NHS without fixing primary and social care. We urge the Government immediately to sort out the challenges facing these health providers. They must also start cross-party talks on the long-term future of social care and get on with reforming it.
Having boxed themselves in during the election from using big tax opportunities, the Chancellor could have done what we campaigned for: reverse Tory tax cuts in the bank tax, implement an increased tax on betting companies and levy the digital giants. Instead, the Chancellor turned to business to raise a spectacular amount of tax. As a result, the UK tax take is set to rise to a historic high. This was a tough Budget for employers to swallow, particularly small and medium businesses, social enterprises and charities.
SMEs have had a tough time for years, struggling with rising energy prices, Covid loans, high interest rates and rocketing input costs. They were hammered by the previous Conservative Government, who broke their promise to reform business rates and tangled them up in red tape. Given their importance to our economy, it is wrong to hit them like this. The burden of this Budget should fall on the likes of big banks, social media giants, gambling companies and oil and gas firms—not small businesses.
Added to increased NIC costs, the living wage increases will have a big effect. Leaders in the hospitality and retail sectors told the Business Secretary that the tax bill for employing a part-time worker had increased by 73% as a result of lowering the threshold for national insurance contributions. This sort of rise cannot be absorbed in these low-margin sectors. Then there are the changes in agricultural and business property relief. Your Lordships will likely hear today—and already have—how these changes threaten the generational chain of family farm ownership. I add my voice to that. As someone from Herefordshire, I know the effect this is already having on rural communities.
Less publicised is the possible plight facing family businesses. Will the Minister say how these businesses will be valued when they are taxed? How does the introduction of this liability encourage family firm entrepreneurs to grow their business? I note that these changes raise little more than £500 million overall. Given the individual anguish they are already causing in our communities and the political trouble they are causing him, I wonder whether the Minister would rather have increased the betting tax instead.
With all this, the Chancellor looked to sweeten the pill. The Minister set out those measures very well. The message is that, in return for the pain, there will be progress: an industrial strategy, infrastructure investment, including accelerating the drive to net zero, and investment in people and skills. These Benches say “bravo” to that, and I congratulate the Chancellor on continuing the industrial strategy put in place by Vince Cable on and investing in key sectors. Capital-intensive sectors have also welcomed the commitment to long-term political stability, be it through the corporation tax road map or the full expensing regime, but what new ideas can we expect?
On infrastructure and net zero, it is all about delivery. The startling thing about the Chancellor’s projections is the very low level of growth over the next five years: 2% or less is not a good return on the investment the Government say they will make. It should also be noted that this Budget is very front end-loaded. The money going into public services in years four and five dwindles spectacularly. The Government are hoping that actual growth will increase beyond current projections to bail out those last two years. That requires delivery.
We want this Budget to succeed. The list that the Minister just rattled off was full of important things that this country needs, but we have no time to waste. We will be strong on chasing delivery. I for one worry whether the UK has the capacity to absorb investment on the scale the Government intend, not least because they are moving slowly on the skills sector. The Minister mentioned Skills England, but when will any results of that start to affect how investment is delivered? Where is the workforce going to come from to deliver the growth we need, and how will investment be delivered?
We await the Government’s 10-year infrastructure strategy. What will the vision be for infrastructure investment? How will projects be prioritised? Can the Minister please clarify how the new national infrastructure and service transformation authority will improve delivery, and when will we see all of this?
Of course, there is a golden opportunity to boost growth. If the Government are serious about growth, they have to materially fix our relationship with the EU. That means beginning the work that will set us forward towards future membership of the single market.
In summary, burdening small businesses, GPs and small care providers with a jobs tax is wrong. Small businesses have had a very tough time for years and countless small care providers are on the brink. Making things even harder for their workers is not right.
Family farms have experienced one shock after another in recent years, from spiralling energy, fertiliser and feed prices to the Conservatives’ terrible trade deals. This Government should not have dealt them another blow, especially when they are making real-terms cuts to the Defra budget. We will be standing up for family farms.
We are also calling on the Government to exempt social care providers and GPs from the employers’ national insurance tax rise, and we will continue to speak up for those struggling with the cost of living crisis, holding the Government to account on their decisions to cut the winter fuel payment and to increase bus fares. I look forward to hearing from your Lordships in the debate.
Lord Burns (CB)
I thank the Minister for his introduction to the debate. The first Budget of a new Government is always a significant event, and I am very pleased to see the emphasis on sustainable public finances.
However, I worry that in the Budget speech there was too much attention on the short-term politics of dealing with the “black holes” and, by contrast, rather insufficient attention on the lasting impact of the major worldwide shocks of the past 15 years, which continue to cast a shadow on economic performance.
At the time, there was general political consensus that these crises—the global financial crisis, the Covid crisis and the energy crisis—should be dealt with by large-scale government borrowing and spending. As a result, public sector debt increased from under 40% of GDP in 2007 to 100% today. This has inevitable consequences and implications for the cost of government borrowing, and debt interest has become a significant budgetary item.
It has also been painfully clear that, in common with many other countries, the underlying growth rate in the UK has been lower since the global financial crisis. That means a slower growth in the tax base, which of course matters hugely for public finances. For many years, we became used to a growth rate of about 2.5%. Since 2008, the annual growth rate has averaged only 1% a year.
There are other consequences of the crises. There is the continuing concern about the impact on health, as evidenced by the continuing high welfare claims for long-term sickness. Consumer prices in the services sector are still rising well above the 2% inflation target, and there is general concern about the disruptions to major public services despite a considerable increase in the number of people employed in those services.
In addition, we face major challenges over the next 15 years which will throw up problems of their own. These have been set out in recent reports by both the Lords Economic Affairs Committee and the OBR: a growing proportion of people at or above retirement age; the need to develop infrastructure for achieving our carbon targets; rising defence expenditure; and the amount of labour market inactivity among those of working age.
This all means that it has been clear for some time that taxes were going to have to go up. This was no secret, but the previous Government struggled with the question of how to pay for the massive recent public spending interventions and too little attention was given to the need to raise more revenue. It now falls to the new Government to address how to get the debt ratio back on a downward path. As I said, the need for higher taxes has been evident for some time; however, in this first Budget, the increase in spending is well ahead of the increase in taxes, rather than the other way around. I fear that these tax increases are unlikely to be the last.
I am generally content with the new draft charter for the OBR; in particular, the emphasis on a balanced current budget and the need for the public sector debt ratio to fall over time. I also understand the separate treatment of fixed investment—not so much because I am greatly convinced that it is better for growth than day-to-day spending but because it is much easier to cut back fixed investment than current expenditure, as the costs come well before the benefits. It needs some protection, and I am pleased to see that we have in place an arrangement that will give it protection. History shows that fixed capital has often been hit disproportionately when savings are needed.
I will offer three observations about the detail of the Budget; I will leave much of that to other noble Lords. First, I agree that it is unfortunate that the Government’s manifesto pledge has led to increasing national insurance contributions on employers rather than reversing the previous cuts for employees. Secondly, it is disappointing that, once again, we are overriding the indexation of fuel duties. Fuel duty has been falling in real terms almost every year since the time of the financial crisis, despite our net-zero objective.
Finally, when the primary objective is raising revenue, my own experience in dealing with Budgets suggests that it is much better to focus on the major taxes, where the consequences are reasonably predictable. The impact of changes to taxes on wealth and inheritance are very difficult to predict. They are largely about incentives and fairness, and they are much better handled under the heading of tax reform than as part of a tax-raising Budget.
The Lord Bishop of Gloucester
My Lords, I will focus on the Budget in the context of criminal justice, and declare my interest as the Anglican Bishop for HM Prisons in England and Wales.
I was encouraged to hear from the Chancellor that the Government intend to
“begin to repair the justice system”,
and I welcome the extra investment in the Ministry of Justice—although how that will be spent is vital. We need to ensure that the aim is not to finance our way out of a prison capacity crisis. Let us first address the purpose of prison and then put the resources in the right place, with a long-term vision of enabling strong and healthy families and communities. As a Christian, I hold fast to hope and transformation. Reoffending continues a pattern of broken relationships and is costly, not only to the fabric of society but in financial terms: it costs approximately £18 billion per year. Let us not increase funds simply to do more of the same, because all the evidence is that it is not working.
I am delighted that the sentencing review will look at alternatives to custody. As we know, a prison place costs more than £40,000 a year. A community sentence costs about 1/10th of that and with better results, yet the use of community sentences has been falling over the last decade. Incidentally, we are currently haemorrhaging money through the dysfunction and delays in courts and the record high numbers held on remand. In the Crown Courts, approximately 14% of people on remand are subsequently acquitted. Over 15% are then given a non-custodial sentence, but by that point a costly pressure has already been placed on prison capacity, as well as the impact on victims, families and wider communities, with monetary implications for health, care and education. Funding additional Crown Court sitting days is only scratching a symptom rather than addressing a cause.
Returning to the sentencing review, I hope that it will shape a criminal justice system that better delivers for victims as well as offenders, such that offenders are enabled to desist from crime, which will in itself have financial benefit. I reiterate that many offenders are also victims—often as children—and I do not believe that we can talk about a justice budget without looking up stream. How I long for us to look at financial resources in a person-centred way, rather than through a departmental lens.
What we spend on education, health, and social care—not least in the early years—has a knock-on effect for who does and does not enter the criminal justice system, and all that that means for subsequent generations, the wider community and, of course, public finance. For a child born today, how will the whole Budget, across departments, enable them to flourish as an individual within a network of relationships?
Then there is the issue of how money is spent on prisons so that they can be places of transformation, including purposeful activity, therapy, education and developing healthy relationships. We do not need more prisons: what we do need is to replace and repair much of what we already have. Let us not forget that, for many people, prison is a place of work. I pay tribute to the committee of prison officers, governors, chaplains and all those who work in prison, often out of sight and too often out of mind. I note a minimum additional investment over the next two years of £500 million to recruit new prison and probation staff. Yet extra resource for recruitment will work only if it is coupled with resources for staff training, development and boosting morale, not least so that existing staff are retained. Unless there is good and adequate resourcing and valuing of probation, it will not be possible to have alternatives to custody or to reduce reoffending through community-focused solutions.
With spending front-loaded for the first two years of this Parliament, I fear we run the risk of short-termism. Reforming the criminal justice system is a long-term and overdue project, but the financing cannot be separated from areas of spending in other departments. We must ensure that our approach is well co-ordinated and far-sighted. In the meantime, this Budget is a step in the right direction for criminal justice, and I look forward to engaging with the Government further on this vital work.
Lord McConnell of Glenscorrodale (Lab)
My Lords, I must start by drawing attention to my entries in the register of interests. I also want to start by congratulating the Minister on an excellent and very detailed introduction to this debate and on what I assume will be his stamina. If this debate does go on for about eight hours, to open and close such a debate is quite a feat and I wish him well for that.
I would also like to congratulate the Chancellor on her bravery and her strength in setting out a Budget in these very difficult economic circumstances. I am sure that we will have a long debate this afternoon and this evening, going through many of the details of that Budget, but no one can doubt her commitment to the economy and the people of this country, and I wish her well in the years ahead.
I am particularly pleased to see the level of increased investment in education, because education is undoubtedly the best investment not just for individuals, children and families but also for our economy and for our country. That educational investment contributes to a very sizeable increase in the resources available for the deployment of the Scottish Government. While I remain concerned about the continuing dependency in the relationship between Scotland and the rest of the UK, the level of investment in this Budget removes any excuse for the Scottish Government for the poor quality of public services in Scotland. They need to stop penalising taxpayers in Scotland and focus on delivery, whether that is in the education system, which has suffered so much at their hands over recent years, or even something as basic as delivering lifeline ferries to our islands.
In the middle of the pandemic, the previous Prime Minister, when he was Chancellor, cut the overseas aid budget by one-third. He did so at a moment when our interdependent world could not have been clearer, and when the world needed an integrated, comprehensive effort to secure global health provision and to preserve trade routes and other economic links.
The uncertainty over Britain’s development aid, over recent years, and the level of spending on refugees in the UK from that aid budget have diminished our reputation internationally and damaged the lives of many poor people around the world. So I have to say that it was with profound disappointment that I saw, in the Budget, that the new Government will cut the overseas aid budget from £15.3 billion in 2023 to £14.3 billion in 2025.
I do not think there is a moral case for spending a third of our aid budget, in country, on asylum seekers, refugees and the work of the Home Office and the borders agency. If we want to be a reliable partner internationally and to restore our global reputation, I believe that spending that money better and ultimately, eventually, spending more will be a central part of that. I hope that the Minister will be willing to take that message back to the Chancellor and that there will be a review in future spending rounds.
Finally, on the 11th day of the 11th month, today we all remember the impact of conflict. We remember that deeply. Many in your Lordships’ House have personal memories, in their families or even themselves, of that impact. For maybe 15 or 17 years, the United Kingdom has had a pooled approach to spending on conflict prevention, peacebuilding and peacekeeping. More recently, the last Government created the Integrated Security Fund from what was previously the Conflict, Stability and Security Fund—a development of Labour’s own Conflict Pool back at the end of the last Labour Government. It is not clear from the Budget what will happen to that Integrated Security Fund; there is an opaque reference to an amount that might be available in the FCDO budget, although the fund lies within the responsibilities of the Cabinet Office. So, in closing, I ask the Minister to spell out in more detail whether its budget has been cut. If so, when will we get a Statement on that and what will be the priorities of the new fund, moving forward?
Lord Lamont of Lerwick (Con)
My Lords, as the first Labour Budget for 14 years, this was bound to be a very big occasion, and indeed it was: it was a bold Budget, with bold increases in taxation, bold increases in borrowing, bold increases in spending and a bold tearing-up of everything that Labour said in the general election.
As we heard from the Minister, this is all justified on the basis of the spurious £22 billion black hole. But Paul Johnson, the IFS director, said that there was no “unknown black hole”. The OBR, despite the Government trying to enlist its support, said that nothing legitimised the figure of £22 billion. It talked of an unaccounted for £9.6 billion, but how does that justify tax increases of £40 billion?
The party opposite—the Government—says it has the worst economic inheritance since the Second World War. In fact, the UK economy is recovering faster from the twin shocks of the pandemic and the energy price rises than our EU partners and all the countries in the G7 other than the United States. The financial position—the deficit—was better than the Conservative Government inherited when they came to office as a coalition.
Labour’s fiction is necessary to justify eating their words and breaking their promises, but the truth is that Labour always intended massive increases in spending but did not dare put forward the tax increases to pay for this during the election. The Chancellor promised that she would not change the fiscal rules, but she has done exactly that and changed the definition of government debt, in effect to exclude borrowing for investment from the total. This mantra of borrowing for investment, which we first got from Gordon Brown, is questionable. First, the distinction between current spending and investment is not clearcut. Some current spending has favourable long-term impacts; Ministers frequently refer to more spending for nurses as an investment, and one understands why.
Borrowing for investment is justified, so the theory goes, because it supports growth as long as the return exceeds the cost of borrowing. But this assumes that projects are well-designed and completed to time and on cost. I need highly emphasise that our record, nationally, does not need very much emphasising.
The argument for borrowing to invest might apply to power stations or infrastructure, but not all public investment yields an economic return. We welcome investment in health or education—it is a good thing in itself—but it earns an economic return only very slightly and over the very long term. If we are serious about sustainable public finances, borrowing for investment should not be accounted for outside the Government’s measure for meeting their own debt target. The truth is that this is not a Budget for growth or investment; it is simply a Budget for the public sector.
There is no ideal target for debt sustainability. What the markets are interested in is a country’s ability to service its debt. Note that, under the plans that the Government have put forward, interest payments have now risen to over £120 billion—over 3% of GDP; over 7% of public spending. The Chancellor believes massive borrowing for public investment will lead to growth, but that is not what the OBR’s forecasts show. They show that growth in the next five years will be less than it said it would be in the next five years during the last Conservative Government at the time of the Budget in March.
The OBR says that the Budget will have little positive effect until 2032 or later. The Government fought the election saying that they intended to have the fastest rate of growth in the G7; they never said they intended to have the fastest rate of growth in the G7 in 10 years’ time.
Debt remains at just under 100% of GDP at a time when the IMF has warned that, internationally, government debt is becoming a problem worldwide. The OBR has warned that UK debt is on trend to reach an unsustainable level of 270% of GDP. You may say, “That won’t happen”, but it will not happen only if we have our eye on the long term and make some very difficult decisions.
The Prime Minister a few weeks ago said that this Government were all about “wealth creation”. When I heard that, I am afraid I laughed out loud. Then he said that the Budget would be a Budget for business. It is a strange Budget for business which has a main tax increase aimed fairly and squarely at the corporate sector.
Many observers question whether the increase in national insurance contributions will raise the £25 billion forecast for it. Paul Johnson of the IFS has forecast that the Government will have to come back for more tax increases in the next couple of years. One can make the pips squeak, but our tax base is relatively narrow. The top 1% of all taxpayers paid 29% of all income tax and the top 10% paid 61%. Those individuals involved are not numerous, and so it does not require a big change in behaviour by these top earners to do huge damage to the country’s tax revenues.
The Prime Minister talks about putting “country before party”. He talked about governing for people who had not voted for him. Where is the sign of that in this Budget? It is massively divisive, it is a massive gamble and it has massive increases in spending and borrowing and a new high for taxation. If the gamble fails, the country, alas, will pay a painful price.
Baroness Wheeler (Lab)
My Lords, the advisory speaking time for this debate is five minutes. I urge all noble Lords to keep remarks within that limit so that the debate may finish at a reasonable time.
Lord O'Neill of Gatley (CB)
My Lords, no pressure there then.
Let me first say, in contrast to the noble Lord, Lord Lamont, how pleased I am to see the Government shifting their rules to deliberately allow for greater public investment spending as a share of GDP. As a vocal advocate of such a move, I think it is highly welcome. Keeping it at 2.6% is a vast improvement over what otherwise would have been a further decline to 1.7%. In my view, there should now be an ambition to get towards 3.5%—closer to that of our developed country peers, most of which, unsurprisingly, have considerably higher productivity.
Whether the specific choice of PSNFL—“persnuffle” as it became known—or, more easily on the tongue, “net financial debt”, is the right new specific debt target is of secondary importance. In principle, it should allow for more ambitious public spending in terms of rewarding investments than the previous, quite stupid, rule.
Secondly—and here I have a bit more sympathy with aspects of what the noble Lord, Lord Lamont, said—what is more important, and in my view key, is not only the ambition but the mentality behind such investments and, in my judgment, the proper, credible guardrails to ensure that projects that come forward have independent, credible and transparent validation. In principle, I welcome the enhanced role for the new NISTA and the National Audit Office and also, presumably, more specifics so that the OBR can give more detailed macroanalysis of any such benefits. These institutions’ real skill sets used in this way will be much more fruitfully put to use.
Thirdly—and perhaps where the markets had somewhat of a brief wobble—it is important that the Government use these guardrails about what investments they choose to make.
Fourthly, I hope that the 10-year infrastructure plan that the Chancellor announced is to be presented in the spring will have gone through this new set of guardrails. I hope it will include projects that are much more likely to encourage the OBR to raise its forecast of the trend rate of growth of the economy. I can think of reasonably obvious ones—again in contrast to the noble Lord, Lord Lamont—such as early years education and preventive healthcare, including obesity, as well as more traditional things, my favourite being Northern Powerhouse Rail. However, it is not for me but for NISTA and the NAO to give their transparent and objective assessments of these benefits and then for the OBR to demonstrate the consequences for long-term growth, welfare and, of course, debt.
On a separate topic, fifthly and finally, and in contrast to widespread belief, of course the increase in employers’ national insurance will have its consequences for the labour markets along with the increase in the minimum wage. In my view, if this plays a role in encouraging companies to invest more in capital and to focus on higher-skilled labour, it might end up having more useful benefits for productivity and real wages than I hear across the widespread commentary.
We live in a very interesting time in the world and financial markets, yet again, especially with the US bond market watching what the returning President Trump is really going to do. This background will mean that our markets will reward credible, transparent, growth-boosting investments but will be less kind otherwise.
Lord Forsyth of Drumlean (Con)
My Lords, the Minister, in his speech, criticised the previous Government’s record on growth. Well, this is certainly a Budget for growth, is it not?
There will be massive growth in taxes, massive growth in the debt that our children and grandchildren will inherit, and growth in the cost of it too, as the noble Lord, Lord Burns, pointed out. There will be growth in inflation, with supermarkets already warning of food prices rising as the Chancellor adds billions to the cost of staff.
There will be growth in blocked beds and hospital waiting lists, as yet another Government fail to tackle social care. With employers’ national insurance increases being imposed on low-paid, part-time workers for the first time, we can be certain of care home closures, rising fees that councils cannot pay and our most vulnerable citizens being denied the support that they need, as the noble Lord, Lord Fox, pointed out in his remarks. Building costs will soar too, undermining the Government’s housing targets.
There will be growth in class sizes, as pupils are forced to leave private schools, with a vicious, wicked mid-term tax on education leading to private school closures and heartbroken parents being forced to tell their children that they can no longer stay at school with their friends because of this Government.
There will be growth in the number of family-owned businesses and farms—held for generations—that are forced to throw in the towel and be broken up, reducing competitiveness, enterprise and choice. There will be growth in the number of wealthy individuals leaving our country and, with them, the private investment capital and tax revenues we desperately need. There will be growth in human misery, as children with special needs are forced out of the security of their specialist school places with no alternative support available from a state already struggling to meet demand.
There will be long-term growth in the number of folk with inadequate pension provisions as constant changes, state interference in investment policies, new taxes and uncertainty destroy trust in saving for a pension. There will be growth in the size of the state and, with it, unaffordable, unfunded, index-linked final salary pensions.
There will be growth in unaffordable student debt. When we looked at this in the Economic Affairs Committee some years ago, we were told that, by 2050, student debt would amount to £1.2 trillion on the Government’s balance sheet. This Government are adding to that.
There will be growth in private sector unemployment as firms are forced to shed labour to meet the tax burden, business rate increases, and the costs and risks of Labour’s so-called employment rights. Insolvency numbers are already rising.
The growth our country desperately needs if we are to have decent public services, and which this Budget does not provide, comes from private enterprise, from releasing the forces of competition, from flexible labour markets, and from government as referee and not player. It comes from unleashing the aspirations of the British people, from rewarding hard work and thrift, and from giving folk in genuine need a hand up and not a handout. It comes from nurturing the family, encouraging self-reliance, independence and excellence, and from encouraging the basic aspiration to hand on a better life to our children, not taxing it.
The adage “primum non nocere”, or “first do no harm”, is often associated with the medical profession. It also applies to Chancellors of the Exchequer. I fear that our first woman Chancellor will be remembered for having forgotten this. Of course the Government inherited a bad situation, as the costs of Covid and war in Europe were funded by quantitative easing, but to deliberately set out on a path that history tells us will sink our economy in pursuit of failed dogma and class war is unforgivable. It is astonishing, is it not, that in a matter of weeks the Government have squandered a great victory, set a course heading for the rocks and betrayed the trust of millions of voters who supported them in the general election?
It is said that the crew rearranged the deckchairs on the “Titanic” when faced with inevitable disaster. In Downing Street now, they are rearranging the pictures; out go the portraits of Margaret Thatcher and William Gladstone, both of whom understood, as Gladstone put it, that
“money is best left to fructify in the pockets of the people”.
Having broken their election promises, the Government now pledge that there will be no return to austerity. Without growth and the kindness of strangers, that is just empty rhetoric. This divisive, nasty and irresponsible Budget puts both prospects in mortal danger.
Lord Eatwell (Lab)
My Lords, the challenge faced by the Chancellor was to change the economy and to achieve a decent rate of equitable growth after 14 years of economic neglect and rising inequality. The black hole of Conservative economics is there for all to see: crumbling schools, the largest ever waiting list in the NHS, a wrecked criminal justice system, pothole-strewn roads, struggling local authorities and the lowest investment in the G7, with an economy on its knees from the neglect of the public sector and a Conservative Government with no clue as to how to nurture the private sector either.
To face up to this challenge, the Chancellor had to first begin to repair the damage, creating the foundations for the change necessary to achieve the growth that Britain needs—hence the expenditure to repair the health service, refund our education system and sustain public services, and the replacement of the Tory Spring Budget cuts in public sector investment with growth in public sector investment and increased research and development spending. It is noticeable that, in the criticism from the other side, there has not as yet been a single positive proposal as to what they would do instead.
The question then raised is: why the apparently limited impact on growth? After all, the OBR forecasts that growth will tail-off after a couple of years. There are two reasons for that. First, it must be remembered that it is far easier to follow the Conservative Party strategy of providing a short-term sugar rush by boosting consumption while neglecting investment. Secondly, investment is a relatively smaller proportion of GDP, hence it has a lesser impact, and the benefits of investment take time to realise. However, the really important point is that a successful growth strategy will involve major changes that would never be picked up by the OBR’s focus on tax and spend.
As the Chancellor argued in her Mais lecture, the dismal economic performance of the past 14 years derives from
“a failure to deliver the supply side reform needed to equip Britain to compete in a fast changing world”—
hence economic policy must
“begin with getting the institutional framework right”.
Getting the institutional framework right means ensuring that capital flows into new investment, whether in productive capacity, research and development or skills.
Is there anything more dispiriting than the strategies of Britain’s major banks, from which capital flows predominantly into mortgages, bidding up the prices of assets that already exist rather than creating new productive assets? Is there anything more dispiriting than the conclusion earlier this year of the Treasury Select Committee in another place that:
“Confidence amongst small and medium-sized enterprises … in accessing finance has fallen … This is accompanied by increasing de-banking … Unfair banking practices … may have further limited access and suppressed demand”?
This difficult small business environment is disincentivising risk-taking and innovation, and reducing growth. That is why the national wealth fund, incorporating a reinvigorated, proactive British Business Bank, is so important. Financial flows in Britain need to be redirected towards investment in new productive assets in the new industries of the future and in updating the everyday industries that shape our lives. Britain’s financial services industry must follow the wealth fund’s lead.
I offer one example of what can be done. Despite current financial difficulties, it is widely acknowledged that our universities are first-class centres of research. Some have created institutional mechanisms for translating that research into globally successful companies, but every one of our more than 160 universities should have a dynamic business advice and incubation unit, and should have access to the dedicated finance necessary to translate new ideas into new businesses. Those new businesses, like the universities, would then be spread throughout the country.
That is a job for the British Business Bank right now, but we cannot just rely on the public sector to take all the risks. The Chancellor has already indicated that reform of pension funds’ investment strategies is an immediate priority. Further reform of financial services is necessary. Funds must flow to new, real investment, not just to secondary markets. This Budget, by having the courage to identify honestly the true state of affairs and fix the foundations, indicates that the Government’s strategy of reform is on track to succeed.
Lord Bilimoria (CB)
My Lords, the Government, the Chancellor and the Prime Minister keep talking about growth, but to do that the private sector has to be supported to grow. It is the private sector that creates the jobs that pay for the taxes that pay for the public services—no growth means no taxes, and if you put up taxes by £40 billion then you get no growth. That is the paradox.
Tax on employment generates £455 billion, which is 45% of total public sector receipts, but high employment taxes can discourage firms from hiring. On top of that, I am sorry to say that the previous Government are to be blamed for raising taxes to their highest level in 70 years. I implored Rishi Sunak, when he was Chancellor and I was president of the CBI, “Don’t put up taxes”. What did he do when he became Prime Minister? He put corporation tax up from 19% to 25%.
Higher taxation is associated with reduced labour supply. Studies show that a 1% rise in tax correlates to a 0.5% drop in hours worked, and studies indicate that higher labour taxes increase unemployment levels. The Labour Party has promised no increases in certain taxes. That is all very well, but, for example, removing the non-dom regime is going to have a hugely detrimental effect. Those 75,000 people pay £9 billion of tax a year; they invest and spend in this country; they are mobile, and that money will fly. What about IR35? There was no mention of that. Maybe the Minister could say why not.
GDP per person in the second quarter of 2024 was 0.6% lower than before the pandemic. Public sector net debt is now almost 100% of GDP. That is four percentage points higher than a year ago and at a level last seen in the early 1960s. According to the IFS, as a share of GDP, the rise in taxation by the end of the decade will be the second largest of any post-war fiscal event. The tax take is forecast to increase to a peacetime record of 38% of GDP.
The removal of inheritance tax relief in terms of a 20% tax for business and agricultural property, AIM shares and pensions is so harmful, particularly for farmers. I do not think that has been thought through. Some 70% of farmers will be hit by it. Will they be able to sell their land to be able to pay the tax? If they are tenants and do not own the land, they cannot even do that. How do you value businesses? How do you sell? This is going to be a disastrous move.
As for VAT on private schools, with £1.3 billion forecast to be raised, in the debates we have had previously we have demonstrated that it will probably cost the Government £1.6 billion, with a higher burden on the state sector and a drop in the number of international boarders. This is a penny-wise and pound-foolish move.
Total public spending is forecast to settle at 44.5% of GDP by the end of the decade. That is almost five percentage points higher than before the pandemic. This is not good news, although the Government are doing the right thing with the blood scandal and the Post Office Horizon scandal.
The OBR has forecast that real household disposable income per person will grow at just over 0.5% a year on average for the next five years. That is the joint lowest on record.
According to an article in the Telegraph today, for many businesses the biggest shock was not the rate increase but a near halving of the threshold at which they have to start paying national insurance, from £9,100 to £5,000. The hospitality industry has warned that this change will cost over £1 billion. Taken together, the changes mean that a company employing a part-time worker doing 15 hours a week will see its national insurance contribution bill increase by 73%. That is ridiculously high. Kate Nicholls, the chief executive of UKHospitality, describes this increase in costs as “eye-watering” and warns that it disproportionately hits companies in her sector given that many employ part-time staff in roles such as waiting and bartending.
Whenever you get a significant cost increase, what do you do as a business? You can put up your prices, reduce your costs or stop investing. The OBR has warned that all the measures in this Budget will lead to low growth. The highest forecast is 2%; most are just over 1%. Inflation is going to go up. Businesses are bearing the brunt of the £40 billion tax increase, and relief on business rates is going down from 75% to 40%. How are pubs and restaurants going to manage? How is the high street going to manage? On top of this, we have the £5 billion costs and the impact of employment regulation. We have one of the most flexible labour markets in the world. That is a huge advantage now being eroded.
After 16 years of financial crisis, austerity, Brexit, the pandemic, the Ukraine war, inflation at 11%, energy inflation, the cost of living crisis, 7 October, the tragedy after that and the uncertainty every way that you look, how much more can business deal with? How resilient can our businesses be? This is not a pro-business Budget or a pro-entrepreneurship Budget. It is government’s job to be a catalyst and create the environment for businesses and entrepreneurship to flourish and grow. I am sorry, but this Budget does exactly the opposite. I am afraid to say that I warn the Government that this Budget is going to come back like a boomerang and bite us.
Baroness Neville-Rolfe (Con)
My Lords, I am speaking from the Back Benches today about productivity, but I want to start with a thank you to the Minister on two counts. He has rightly resisted the temptation to erode further horse racing’s competitiveness, vis-à-vis France and Ireland, by increasing betting duty—I declare an interest as a member of the racing APPG. I was also pleased to hear that the Government are going to tackle the ever-exploding level of retail crime. A few years ago, from the Back Benches, I sought an amendment to the Policing and Crime Bill to achieve just that, but although I worked constructively with the noble Lord, Lord Coaker, on a proposed amendment, I could not persuade him to be sufficiently radical. This Pauline conversion is most welcome.
As a country, our greatest economic challenge is to increase the growth rate, by which I mean GDP per person. The only sustainable way to do that is to increase productivity, and I was disappointed that the Budget includes so little to advance that aim. The truth is that the productivity figures since the financial crisis of 2008 make depressing reading. The situation is not the same everywhere, and I note that, in my old sector of retail, matters are somewhat better than elsewhere. According to the BRC, productivity in retail is 8.1% higher than in Q4 2019—which was before Covid—while the equivalent figure for the whole economy is 1.45%.
What should we do? The most important change is to have efficiency in mind when taking all decisions. The Government state that growth and productivity are right at the forefront of their concerns. That is a good start, but they have to act as though they mean it. They state in the Red Book that, in the medium term, above-inflation pay awards will be funded from improved productivity—good. It is a pity they did not follow that policy when, on attaining office, they awarded public sector bodies above-inflation pay awards costing £9.4 billion without any productivity conditions. I am glad the Government have seen the light on this, but will Minister look at my proposal for a new productivity and growth assessment to accompany all legislation, which I mentioned in our debate in the House on 9 October?
Other necessities are to reduce unnecessary bureaucracy and to examine environmental requirements. On bureaucracy, I do not believe that checks to counter money laundering need to be anything like as onerous and time-consuming as they are. The march of the data society, with its many benefits, has made government, regulators and others lazy. They do too much checking and collect too much information, instead of focusing on what really matters and doing that speedily. It creates some pretty awful jobs too, in both the public and private sectors. David Graeber, in his splendid book Bullshit Jobs, stresses how depressing this can be.
On environmental protection, I read with despair that HS2 has spent £100 million on building a tunnel to protect bats. Can we have a sense of proportion? Moreover, why are our electricity prices for industrial users, which make up the most productive part of the economy, treble those in India and the US? Both phenomena seem good candidates for early study by the new Office for Value for Money.
I turn to construction, including housebuilding and infrastructure; I have two points. The first relates to planning controls, which need simplifying and speeding up. The second relates to the building-related workforce. There is much evidence that more skilled labour of every kind will be required for the foreseeable future. What plans do the Government have to help in that regard?
Likes others, I am very concerned about the triple whammy of increased national insurance—especially the lower threshold—the new national minimum wage and the new regulation on workers’ rights. I know from my own experience that these are particularly difficult for SMEs because of the extra cost and bureaucracy that they will bring. The “good news”—I suppose—from a short-term productivity point of view is that this will send the less efficient into insolvency, but that is a very hard way to improve productivity.
As our new Conservative leader has so rightly said:
“It is not the Government that creates growth, it’s business that creates growth”.
The Government’s attitude to business and public sector efficiency so far is unsatisfactory. If they are to achieve their growth ambitions—which we all share—they need another Pauline conversion.
Baroness Liddell of Coatdyke (Lab)
My Lords, listening to the Benches opposite, from the comedy turn at the beginning and onwards, there is no recognition of how they managed to get the worst result in the party’s history at the last general election. It is because they crashed the economy; that is, purely and simply, at the core of things as we discuss this today. This was always going to be a difficult Budget, the first for a new Government and Chancellor after 14 years out of power. I can remember going into the Treasury in 1997 to find a bank of paper in the gloriously grand office that I was given. It was the identification of all the things that we did not know about. You do not know what you do not know until you walk into that office; that is the challenge the Chancellor has had to face in putting together this Budget.
The Budget’s understanding of the need for investment across both the public and private sectors is reassuring. The changes to the fiscal framework might not get people terribly excited, but that is a framework to encourage investment to modernise our country and make life easier for our citizens. It also sets out to match the modernisation that we have seen among our international competitors. Even before the Budget, the changed relationship with business leaders unlocked more than £60 billion of investment.
Turning around the economy comes at a cost, and sometimes it is painful. The alternative is to blight the future for so many of our citizens, and that is not acceptable. We have to ensure that the most vulnerable are protected. Like others, I want to see the “Get Britain Working” White Paper. Along with a number of Members in the House today, I serve on the Economic Affairs Committee. Some of the stuff that it is unveiling now in relation to poverty and people’s inability to get back into the labour market makes for very difficult reading.
Within the Chancellor’s Budget, we have seen an allocation of £240 million for 16 new trailblazer projects, aimed at getting people into work and in so doing reducing the benefit bill. I can remember something similar to that from when I was a Member of Parliament under the previous Labour Government. One of the changes made by the Chancellor is very special to me: keeping the promise to transfer the investment reserve fund into the Mineworkers’ Pension Scheme. I come from a community of miners; I lost my grandfather and two of my uncles to disease caused by working in the pits, so I was over the moon when I heard about that.
I turn to the situation in Scotland, where £3.4 billion is going to the Scottish Government through the Barnett formula. That was introduced in 1978 by Labour’s Chief Secretary to the Treasury, Joel Barnett, who went on to join this House. Now, all these years later, it has delivered to Scotland a record £47.7 billion from the Westminster Government. That is a sign of partnership. The First Minister was all lined up to condemn the Budget, wanting an end to austerity, and what did he get? The biggest bonus in history—and that is not the end of the story. An SNP-led committee has reported that it is deeply concerned about how Scottish Ministers are spending the country’s money. The lack of the medium-term and long-term planning that we are beginning to see here in the rest of the United Kingdom has never managed to surface in Scotland.
I can see why people are concerned about some of the measures in the Budget. They probably would not have been in it, had it not been for the state that the Chancellor acknowledged. That was at the heart of what had to be sorted out. We are at the beginning of a five-year term, and I can see the commitment of the Chancellor to things that I am interested in. Carbon capture and storage has always been very close to my heart. I am the president of the CCSA; we are promised increased investment in CCS and many other schemes.
This was going to be a difficult Budget. We know that we have to deal with some of the downsides of trying to get the economy right, but we have a Chancellor who is courageous and that gives us an opportunity to get this economy right.
Baroness Bowles of Berkhamsted (LD)
My Lords, the Government are hoping to launch innovative companies into exports, growth and wealth creation. Unfortunately, that will not happen without fair procurement and ending the unfair way in which departments are encouraged to get intellectual property on the cheap. Help may come following the Procurement Act, but if the Government are serious they should revoke the Cabinet Office’s Intellectual Property Rights Guidance Note dated June 2023—although I know that some of it has been going on rather longer.
In the recent science and technology debate, I explained how feasibility studies and early-stage commercialisation contracts require the recipients of grants to give government and its partners free, perpetual, irrevocable and royalty-free licences, together with the right for them to grant sublicences to anyone to use all the information, data, results and conclusions arising from the project. The intention is that all the IP is given to competitors. This appears in contracts for as little as £30,000—for slave labour rates, a grab at IP rights that could be worth a million and a company’s future if they were not expropriated by the Government to give to competitors. Such treatment destroys opportunity to scale and creation of home-grown technology unicorns and decacorns.
On page 14 of the guidance note—which is about procurement, not grants—it encourages departments to retain IP rights and
“gain some future financial benefit from its exploitation”.
That is expropriation for financial gain.
On the same page, the prime directive—if I can call it that—is:
“First and foremost in your thinking should be the needs of the department”.
That is not the public interest, scale-up in the economy or fair dealing, but the department. It does note that:
“The greater the restriction over the IP for the supplier, the higher the cost of the contract will likely be”.
I can think of lots of abuses for that. Who is valuing the IP? How can small companies negotiate? Will the fact that IP is existential to them be taken into account, or are they just quashed because they have no leverage? IP does not neatly divide into background and foreground, so the use and the reach go deep.
Contracts with large organisations press IP requirements into the supply chain. It is becoming obvious why we are unproductive, as we are not commercialising promising R&D. Outside military use, the big excuse is that expropriation of IP is a useful way to avoid subsidy control issues. That is simplistic, and I am very sceptical.
It levels things down in the UK. It undermines innovation and small companies, based on assumptions that cumulative experience, experiments and trials have no value, and everything can be given away to copycat scroungers or insider incumbents who do not carry those costs and can underbid and be fed the IP ripped out of those who have invested in R&D. We need to think harder. What other countries give IP away like this? Do foreign companies have similar terms imposed in their UK contracts? Or is this just Brits on Brits and why contracts go overseas?
What is the NAO analysis of the valuations and additional cost of contracts due to the presence of these clauses? What of investors in innovative companies? At the innovation summit, were foreign investors told to kiss goodbye to any IP, or do they get better treatment? With this IP grab, how can companies be invested in if the route to market needs to be via procurement? Now I understand why the country is failing and why our technology growth companies leave. It is rip-off Britain.
Baroness Warwick of Undercliffe (Lab)
My Lords, the Chancellor’s mission to deliver sustained growth brings a sense of purpose that the country needs so desperately. Investment in the UK has to increase, and the Chancellor has provided a clear sense of policy and governance stability that is essential to attracting that investment.
I was rather encouraged by the response of the CBI which, while acknowledging that in the short term they would be tough on business, went on to commend the Budget changes that will provide a predictable tax environment and support business confidence. The Chancellor said that she wanted to turn the page on the last 14 years. In its integrated focus on growth and the improvement in public services, the Budget Statement rang a very welcome and optimistic bell about the way the Government will do that.
I will call out just a few of the elements in the Budget which contribute to my sense of optimism: the increase in the national living wage; the prospect of rebuilding the NHS and cutting waiting lists; preserving the pension triple lock; investing £40 million in a growth and skills levy to replace the struggling apprenticeship levy; increased investment in R&D and capital investment for skills; and the commitment to deliver a lifelong learning entitlement to expand access to high-quality flexible education and training for adults throughout their working lives. I congratulate my noble friend Lord Vallance on protecting tomorrow’s economic opportunities in a science settlement that was more positive than many feared.
It is clear that the Chancellor had to be both bold and make some hard choices if she is to deliver the necessary growth and national well-being for the country. I found it immensely encouraging that she is so focused on increased private sector and government investment in UK infrastructure and productive assets, underpinned by supporting the net-zero transition in the longer term.
I was also pleased that, within the tough choices the Chancellor had to make, there were some very welcome announcements in the Budget on social and affordable housing, including a £500 million top-up for the affordable homes programme to prevent a sharp fall in social housing delivery. The Government’s decision to review right-to-buy discounts was right—with record levels of overcrowding and child homelessness, it is vital that we protect our existing social homes.
Also very welcome is the additional funding and action to solve the building safety crisis. The shortage of housing, the decline in the percentage of working-age people owning their own home, people bearing mortgages till much later ages, and ever-increasing rents for those in the private sector, impacting in turn on their ability to save for a home, all combine to increase the crisis of securing a decent home for ordinary people.
A significant part of the Budget was the announcement of a new consultation on social rents. Social housing providers and local authorities have faced 15 years of funding cuts. The previous Labour Government introduced a convergence settlement that led the way to a fairer, more transparent system for settling rents. Reintroducing it would unlock additional financial capacity to invest in homes and services, while ensuring that tenants can afford their rents. Can the Minister set out the Government’s view? Will they reintroduce the policy?
It was brilliant to have the Chancellor commit to “invest, invest, invest” after such a long period of underinvesting. I appreciate some of this will, in part, be from tax rises, but I wanted to point out one consequence of the changes to NI contributions. Homeless and supported housing services are not-for-profit organisations, and those additional contributions will make a significant hit on their funds. One in three have already been forced to close in the last year. Will the Minister consider a rebate or relief for those providing these much-needed housing schemes, particularly at a time when rough sleeping is at record levels?
Housing policy affects so many aspects of public services. Social housing can bring down the benefits bill and end reliance on the temporary accommodation that is so costly to local authorities. Looking ahead to the spending review, will the Government commit to a comprehensive housing strategy alongside ambitious financial commitments to build more social housing?
I want to end with one other tough but necessary decision in the Budget: to inflation-proof tuition fees and maintenance loans for higher education students. Some 7,000 jobs in higher education institutions have been lost this year because of financial constraints on them, and this step is a starting point for finding a longer-term solution.
Lord Bridges of Headley (Con)
My Lords, I welcome my noble friend Lord Booth-Smith to his place. I very much look forward to hearing his speech and his contributions.
I will pick up on what my noble friend Lord Forsyth and the noble Lord, Lord Burns, said, and I will focus on one word: debt. Taking a step back, global public debt is expected to exceed $100 trillion this year—about 93% of global gross domestic product. As a number of noble Lords have said, our debt here is sky high, and we need to ensure that it remains sustainable and that we can service it while overcoming other challenges. I have spoken of these before, and they also begin with “d”: defence, demographics, decarbonisation and deglobalisation. As the recent Economic Affairs Committee inquiry into the sustainability of our debt concluded, tackling these challenges means that we must take tough decisions this Parliament—I stress that—if our debt is to be put on a sustainable path. The committee also said that
“to maintain the level and quality of public services and benefits that people have come to expect”,
the choice is between tax rises or the state doing less.
Meanwhile, as so many noble Lords have pointed out, we must ratchet up our growth and improve our productivity, as my noble friend Lady Neville-Rolfe just said. That obviously involves choices—about tax, spending and borrowing. So this Budget was, in so many ways, about how we choose to make our debt sustainable. My position is simple: I trust people to decide what is best for themselves and to spend money as they wish. Like my noble friend Lord Forsyth, I believe that Governments do not create growth; people do. Their hard work, inventiveness and risk-taking are what drives us forward and what Governments should reward and support, not crush. This is the best way to get the growth we need, not just to support the public services we want but to put our debt on a sustainable path.
The brutal truth is that, during 15 years of Conservative government, our record on growth and productivity was not as good as it should have been, as my noble friend Lady Neville-Rolfe said. We can all argue why this was so: we can cite Brexit, Covid and the energy shock. But, as the Chancellor said—here, I agree with her—there is no escaping the fact that we have become a high tax, low growth country. Now is decision time: on that we can agree. We have to choose how to make our debt sustainable while supporting growth.
That brings me to the Budget. As the Minister said, Labour has made its choice. It is there—£70 billion higher spending every year, paid for by historically high levels of taxes, and £32 billion more borrowing every year. We can, should and must hold Ministers to account for breaking their manifesto promises and picking their own so-called tax lock on not raising taxes on working people. But more serious, in my mind, are the consequences of this Budget and what it will do to growth. As has been remarked, after an initial sugar rush, it will lower growth in the medium term, between 2026 and 2027. As my noble friend Lord Lamont said, only some time in the next decade will growth perhaps rise to a sustainable level. When I read the Budget, the only growth I can be absolutely sure of is 5,000 more tax inspectors.
Meanwhile, underlying debt, excluding the Bank of England, rises as a share of national income in every year of the forecast. So, unsurprisingly, the Chancellor did what she said before the election that she would not do: she changed the debt rule to find more so-called “headroom”—which is, by the way, an absurd concept, as if money can be whistled up from thin air. But this is the point: even her new rule is forecast to be met by just £16 billion. That would be wiped out entirely if the Government met their commitment to spend 2.5% of GDP on defence, and it would be wiped out entirely if interest rates or bank yields were 1% higher. If annual productivity growth—which, as I said, we have struggled to improve—were just 0.5% lower, borrowing would rise by £40 billion. Put that together and it is not surprising that, just last week, the OBR told the Economic Affairs Committee that the Budget increases the risk of our debt becoming unsustainable.
So we are on a tightrope, which has become even more precarious after last week’s election in the US. How do we finance increased spending if the US pulls back? How would new US tariffs hit growth? President Trump’s plan is forecast to increase debt by a total of $7.75 trillion. Who is going to buy all that?
Labour promised to turn the page on an era of high tax and low growth. We have turned that page and what do we read? Higher taxes, lower growth. The Government promised to kick-start economic growth. Instead, they have kicked growth into touch. Finally, they said that they would build strong national finances. Instead, they have weakened the foundations, increased the risk of our debt becoming unsustainable and made matters worse.
The Earl of Devon (CB)
My Lords, having trussed themselves into a fiscal straitjacket to get elected, the Government are to be admired for achieving a Budget that delivers both short and long-term investment in public services without spooking the bond markets. To achieve this without raising taxes on working Britons—however they may be defied—has required some notable contortions. One was the decision to revalue government debt—an alchemy I will not pretend to understand but which I suspect may come back to bite us. The second, on which I will focus, is to lay the fiscal burden on small and medium-size enterprise, the engine of our economy, which the Government also expect to drive their growth agenda. I am not an economist, but I am not confident that SMEs can deliver both tax and growth. I will speak to the impact of the Budget on rural Devon, where I live and operate a family-owned heritage and farm business.
The headline has been the fundamental changes to agricultural property relief, APR, and BPR, the impact of which will be earth-shattering for many family-owned farm businesses with elderly proprietors who have long-planned successions dependent upon those exclusions. Having repeatedly promised, both during the election and since, that no changes would be made, it is disappointing that such a fundamental adjustment to the taxation of family farms is proposed without consultation and seemingly without any consensus on its likely impact. The figures put forward by the Treasury are hotly contested by the NFU, the CLA and others, creating unnecessary and damaging mistrust across rural communities.
I implore the Government to think again and to consider how the potentially disastrous impacts of this proposal for family farms—which are so central to food security and the rural economy—can be ameliorated. Get it wrong and we lose many hundreds of family farms, which will be swallowed up by commercial farming interests replete with the professional advice and corporate structures that will navigate the Chancellor’s family farms death tax. Maybe this is what the Government desire.
In some respects, the phasing out of APR, if properly planned and delivered, could be beneficial. It may encourage the transfer of family-owned farms and other rural businesses earlier in life, thereby decreasing the average age of farmers and increasing productivity. I note my own interests as a farmer and land manager who underwent succession not long ago. I recall vividly my disappointment when realisation dawned that it would be most efficient for my father to own the business at the moment when he died. As a relatively young farmer with, hopefully, time on my side, I am not our concern. As proprietor of a 28th-generation family enterprise, whose forebears steered our ever-dwindling resources through rapacious capital taxes, civil wars, attainders, beheadings and the theft of the Isle of Wight, I am not our concern. Our concerns must be for those distressed farmers who cannot readily afford professional advice, whose meagre earnings afford them no provision for retirement and who may not have seven years left to live. They are very afraid right now. I was with a number of such neighbours over the weekend and, having toiled for decades with little reward—save the knowledge that their farm will stay with their family—they are bereft and confused. This treatment by the Government is cruel.
Also confused are the professional advisers charged by the Government with guiding those poor farmers through the transition. They complain of a surprising lack of policy detail and uncertainty over how the changes will be implemented. There is no clarity on the application of rules for lifetime gifts and no information on how the changes will apply to trusts or the apportionment of APR within the 10-year principal charges; there is uncertainty regarding the transfer of farming assets between spouses; and it is totally unclear whether there will be interest charges when paying inheritance tax in instalments.
The Budget has other considerable impacts on farming. The carbon border adjustment mechanism, by which the Government intend to levy a carbon tax on imported fertiliser, will have a huge impact on the cost of food grown domestically in comparison with imported food. Given that we no longer produce fertiliser in the UK, a carbon tax will be levied indirectly on all fertilised produce grown in Britain, yet there is no proposal to tax imported food for fertiliser used overseas.
While the Government’s commitment to the agricultural budget is appreciated, in particular their confirmation of funds to support ELMS, the commitment is only short-term. Given that agricultural budgets are planned over multiple harvests, sudden changes are hard to adjust to. Therefore, the accelerated decoupling from BPS will cause a number of already stressed farms to face yet further hardship. This will not assist in our environmental goals.
Finally, the most significant tax increase is that levied on the costs of employment. Given the amount of economic activity in the south-west peninsula that is found in employment-heavy, low-margin sectors such as food processing and hospitality, this will hit the whole region particularly hard. What assessment have the Government made of the regional impact of the increase in employers’ NIC and the minimum wage? Can the Minister provide any assurance that it will not unevenly impact our rural economy?
Lord Liddle (Lab)
My Lords, I add my congratulations to the noble Lord, Lord Livermore, on his coherent and brilliant introduction to this debate.
I am also looking forward to the maiden speech of the noble Lord, Lord Booth-Smith. It occurred to me, while listening to the very powerful speech of the noble Lord, Lord Bridges, that the noble Lord is in a very good position to tell us where the Conservative Party would have done less in order to balance the books. We hear all this talk about the need for the state to do less; we never hear what it means in practice. Is it not time, after 14 years of failure on this score, for the Conservative Party to tell us what it intended to do? You see, I take a completely different view. For far too long in Britain, we have been trying to have European levels of public service with American levels of taxation, and we have to face up to that problem.
I congratulate our Chancellor, Rachel Reeves, on what she has done and the tough decisions she has taken to make sure of the possibility of a catch-up and restoration of standards in our public services. I also congratulate her on the fact that we have restored public investment to at least a sensible level. Here I agree with the noble Lord, Lord O’Neill, who is no longer in his place, that we need a sustained increase in public investment, which of course would bring in private investment, if we are to raise our rate of long-term economic growth. Investment is crucial for reform of public services and we must make sure that the money we provide is spent on reform. Simply repairing school buildings and hospital roofs is not reform; we must be very rigorous about how we spend the money.
I cannot remember who mentioned it, but I worry that the boost to public investment is not being matched by a boost in skills training and apprenticeships, and providing the people who can actually do the work. We will set up the national skills council and are committed to firm action in this area, but I would like the Government to tell us what we are going to do to make sure we do not have lots of skilled labour shortages.
I agree with the noble Lord, Lord O’Neill, that this increased public investment has to have strong guard-rails around it. We have to demonstrate, not least to the financial markets, that the investment is being spent in a wise way.
We have got to be more ambitious for growth. I think people are being a bit unfair on the Government, in that the OBR does say that the longer-term impact of increasing public investment will be to raise the rate of growth over a five to 10-year timeline.
More immediately, the big challenge we face is on trade. As the noble Lord, Lord Bridges, said, that has not been made easier by the election of Donald Trump. It is in the national interest that we prioritise getting a much better trading relationship with the European Union, our main economic partner in the world. I look forward to assurances from the Minister that that will be at the top of the Government’s priorities.
Lord Booth-Smith (Con) (Maiden Speech)
My Lords, it is an immense privilege to be able to speak today. I am incredibly grateful to the many noble Lords who have shown me such great generosity of spirit since I was introduced. As this is my first spoken contribution in your Lordships’ House, I would like to put on the record how incredibly grateful I am to Black Rod and her team, the doorkeepers, the clerks and all the staff here in the House who have been incredibly kind to me since I was introduced.
I thank my supporters, the noble Lords, Lord Finkelstein and Lord Petitgas, and also my mentor, the most optimistic man in Parliament, the noble Earl, Lord Effingham. It would be remiss of me not to thank noble Lords in the Chamber today who have offered their welcome to me.
I must admit that it is quite humbling being here. If I could go back in time 30 years to the younger version of myself and tell him that one day he would be standing here, I feel pretty confident in saying that he would not believe me. In looking back on my life and experiences, I have come to realise how much I am going to be drawing on them as I forge my way in your Lordships’ House.
In particular, I think of my professional experiences, whether that has been working in the public or private sector, running a small organisation, being a writer, or being an adviser in multiple government departments, most recently based in the Treasury and lastly as the Downing Street chief of staff. This was a job in which I managed to survive the entire tenure of the Prime Minister I served, which, going by recent history, is sadly a much more impressive achievement than it should be.
On that point, I note that I owe a debt of gratitude to the former Prime Minister, Rishi Sunak, for the faith he placed in me. I hope to meet the measure of the decency and calm competence which are ever-present in his character. Like him, I care deeply about the economic future of our country; it is an area on which I intend to focus in your Lordships’ House. Whether that is on the sustainability of our public finances through to the measures necessary to drive economic growth, I know that in this Chamber I am in esteemed and knowledgeable company. I very much look forward to learning from noble Lords here.
I have been told that the convention for a maiden speech is to remain uncontroversial, so I am happy to assure the Minister that, today, I will keep faith with the form. That means that I cannot answer the question of the noble Lord, Lord Liddle, but that is probably more beneficial for me.
With that, one point I would like to make with regard to the Budget—which I think I am allowed to make—is simply to say that however a Government choose to dress it up, debt is debt and borrowing is borrowing, and it must always be paid back. This was a point made by my noble friends Lord Lamont and Lord Bridges. That is important not just because we want to manage short-term market sentiment and how it has a material impact on the way our debt is priced and it being affordable; it is more important in the longer term as part of a more fundamental strategy to ensure that, should a crisis ever emerge, the Government have both the fiscal flexibility and the market credibility to respond as appropriate. I experienced that first hand in the Treasury during Covid, and I know how absolutely critical it was, and it was the work of many previous Chancellors and Governments.
Perhaps more than the issues which I care so much about and on which I hope to make a meaningful contribution in your Lordships’ House, it is the greater virtues of the House which I sincerely hope to live up to: namely, compassion and wisdom. That is the compassion to see the world through the eyes of others, to hear their arguments and to understand them, and then the wisdom to know when those arguments are superior to my own and the graciousness to learn from them.
Baroness Finn (Con)
My Lords, I draw attention to my register of interests.
It is a huge privilege to congratulate my new colleague and noble friend Lord Booth-Smith on his wonderful maiden speech— and made without notes. A previous Cabinet Minister once suggested that we should relocate the House of Lords to Stoke-on-Trent; instead, we welcome one of the finest sons of Stoke-on-Trent to your Lordships’ House. A disciple of Roger Scruton, my noble friend is a deep thinker of Conservative philosophy. Talent-spotted by James Brokenshire, he worked with Roger Scruton to make all new buildings beautiful. Indeed, in No. 10, a bust of Sir Roger kept a watch over him.
It is to my noble friend’s lasting credit that the philosophy of building beautiful has been at the heart of policy for all subsequent Secretaries of State in the previous Government. At the Treasury, he was instrumental in designing the furlough scheme that saved the livelihoods of so many during the ravages of Covid. As chief of staff to the Prime Minister, he helped to bring order to the public finances, ensured that inflation was brought down and, as a champion of the levelling-up agenda, secured support and investment for so many of our towns. Despite his usual leather jacket and the John Travolta moniker, my noble friend is steeped in the ancient wisdom of Conservatism. He has already played a huge role in making this country stronger and more beautiful. With his formidable intellect and great political acumen, he will be an enormous asset in this House.
The global financial crisis, the Covid pandemic and the 2022 energy crisis all prompted previous Governments, for entirely understandable reasons, to expand sovereign debt significantly. Successive Governments of both parties have reached the same conclusion: that improving the UK’s growth prospects and productivity are the ways to avoid some very difficult choices about public services in the years ahead.
This Budget was hailed as a moment to reshape tax and spending in the UK so as to ignite growth. It has certainly reshaped tax, with the biggest increase in a generation. The £40 billion whammy means that it is the highest tax burden on record. The election promises not to raise national insurance have been comprehensively broken. The tax on farms and other family businesses will potentially kill off homegrown family businesses and start-ups.
You do not encourage growth by punishing the very businesses that create that growth. The Office for Budget Responsibility’s forecast following the Budget shows that growth is forecast to fall steadily. Incidentally, the OBR was also unable to corroborate the figures quoted by the Chancellor about the fictitious black hole she has repeatedly claimed to have inherited.
The Chancellor has opted not to confront our ballooning public debt, instead electing to change how that debt is measured to facilitate ever-higher levels of borrowing. This was justified on the grounds that new borrowing will be allocated to capital investment, yet, on closer inspection, the lion’s share of the money raised is for day-to-day expenditure and not capital investment.
The real concern is that the eye-watering rise in taxation is not accompanied by any appreciable plans for public service reform, despite specific assurances by the Prime Minister and the Health Secretary that money would come only with reform. The Government have instead cancelled plans to reduce the Civil Service to pre-pandemic levels and increased the salaries of train drivers without asking for any improvement in productivity in return. The much-vaunted reforms to the NHS seem to have been reduced to an online national conversation, despite a 22% pay rise for junior doctors—although I look forward to the Health Secretary’s Statement later this week.
I read today that the Chancellor will ask for help from businesses with reducing waste. I suggest she looks to the example of the coalition Government; in five years, they cut the running costs of government by a cumulative £52 billion, as well as introducing reforms that led to this country being ranked No. 1 in the world for digital and open government.
What is the money being spent on? If the party opposite is serious about growing the economy through investment, surely its priorities should be transport, housing and big regional capital projects. In fact, transport capital spending will be cut in real terms in future. There is no plan for new nuclear power stations; no money for the Deputy Prime Minister’s highly publicised new towns; and no clarity on spending 2.5% on defence.
The Chancellor claimed her Budget will bring growth of up to 1.4% in the longer term; she neglected to point out that the OBR says this longer term comes in 2074. Keynes pointed out that:
“In the long run we are all dead”.
I am an optimist, so perhaps I will make it to 106, but I suspect we will clearly see long before then that this Budget will have squandered the growth our economy was enjoying; burdened businesses with new tax and costs they cannot easily absorb; and led directly to higher inflation, lower wage growth and higher interest rates.
Viscount Chandos (Lab)
My Lords, there was much comment about the new Government’s first Budget not being delivered until 117 days after they took office—one of the longest intervals in recent history. George Frideric Handel may, famously, have written “Messiah” in 24 days, without much sleep or even food—which I am sure my noble friend the Minister will recognise—but for a Budget of this importance and complexity, with the accompanying new fiscal framework, the time taken and the preparations before the election are justified and have been well-spent. I pay tribute to my noble friend the Minister for the important part he has played, along with my right honourable friend the Chancellor, as well as for introducing today’s debate with such authority.
I am the first speaker from these Benches to have the opportunity to congratulate the noble Lord, Lord Booth-Smith, on his outstanding maiden speech. He may not be the youngest of the recent appointments to this House, but for many of us he still feels extremely young, and he has packed an extraordinary amount of public service and experience into his career so far.
I welcome the new fiscal framework, like the noble Lord, Lord O’Neill of Gatley, and the adoption of public sector net financial debt as the primary measurement, which brings sensible changes to the treatment of at least some government investment. The obstacles to productive public investment presented by irrational fiscal rules and their erratic interpretation seem to have prevailed throughout my adult life. I well remember, though not, I suspect, as vividly as the noble Lord, Lord Howell of Guildford, the collapse of the important gas-gathering pipeline project in the North Sea over 40 years ago, because the proposed guarantee by HMG was going to be included within the PSBR, which was the fetish of the then Prime Minister.
Operating within this new framework, the Government have introduced a well-judged package of measures, balancing the need to fund public services, reintroduce honest financial discipline and support and encourage investment. The incremental increase in employers’ national insurance to a level that the last Government previously imposed is a fair and reasonable ask for larger employers to contribute to the improved resilience of the society from which their employees and customers are drawn and will be to the ultimate benefit of their own businesses.
The noble Lords opposite express outrage at the idea that their Government left a financial black hole. The Economic Affairs Committee report on the sustainability of public debt, to which the committee’s chair, the noble Lord, Lord Bridges, has already referred, referred to two numbers provided to the OBR by the then Government: total current spending and total capital spending. Richard Hughes, the chair of the OBR, gave evidence to the committee and said:
“Some people have referred to that as a work of fiction. That is probably generous, given that someone has bothered to write a work of fiction, whereas the Government have not even bothered to write down their departmental spending plans”.
Is it surprising that the new Government inherited a black hole from the old Government?
I come finally to the increases in inheritance tax on agricultural land and private company shares, including those traded on AIM, albeit to only half the rate applied to other assets. The noble Lord, Lord Johnson of Lainston, in his intemperate and dishonest remarks from the Opposition Front Bench, concentrated on the issue of agricultural land, but as a former investment manager, he will be even more familiar with aggressive promotion of IHT-avoiding AIM portfolios by members of the industry of which he was a member. He may, none the less, have forgotten that the Office of Tax Simplification, created by the then Conservative Government, recommended the abolition of the distorting allowances lying behind these avoidance schemes. Of course, the then Conservative Government ignored the recommendations and abolished the Office of Tax Simplification, demonstrating perhaps once again the prioritisation of vested interests over professional, independent advice.
Lord Londesborough (CB)
My Lords, as speaker number 22 of 75, can I open with a quick observation? Over eight long hours, we each wait to speak for five minutes, raising scores of questions that the Minister will struggle or fail to answer. Is this a great advert for public sector productivity; then again, is the Budget?
I will avoid the bipartisan ping-pong match over that black hole, and, instead, I will start with macro and move on to micro; specifically, the impact on our SMEs, which is my background. The Chancellor was right on a number of big calls: the tax burden had to go up; spending has to increase, especially in health, defence and education; and there is a strong case to increase borrowing for investment, whatever definition of debt you choose. For the UK has an ageing, increasingly sick and economically inactive population, resulting in a shrinking workforce and a surge in dependency ratios. Spend on health and social care, welfare and net zero will significantly outpace the OBR’s trend forecast of just 1.5% growth.
As we know, the tax burden climbed under the Conservatives from 33% of GDP to more than 36%, and it is now heading for 38%; and unless we tackle our low-growth, low-productivity malaise, it is set to reach 40% very quickly. So, yes, Jeremy Hunt’s 2% cut in National Insurance was a reckless fiscal act; the new Chancellor could and should have reversed those cuts to send out a message that it is economy first, politics second—opportunity missed. Instead, she and the Prime Minister tied themselves in knots by pledging not to increase taxes for the “working people”. As a result, business and wealth creators are being saddled with almost the entire £40 billion tax rise, making a mockery of Labour’s core mission to deliver
“the highest sustained growth in the G7”.
To hit employers, especially SMEs, with a £25 billion national insurance tax hike, while raising the minimum wage by more than three times the rate of inflation, is an act of self-harm. Ultimately, of course, it will hit the workers where it matters most, which is in their gross pay.
My Lords, I was an entrepreneur for 30 years and, for the last 10 years, I have backed, chaired and advised over 20 start-ups. I declare my interests as set out in the register. I will briefly share the feedback on the Budget that I have received over the last two weeks from founders and CEOs at the coalface. In short, they will cut pay increases and staff bonuses. They will cut back on new job creation and trim headcount. They will scale back on plans for expansion in both 2025 and 2026. Those who can will pass on the increased costs of employment and their supplies to the consumer.
We are not only taxing jobs and growth, but doing it in a grossly disproportionate way, hitting the small to medium-sized businesses that employ between five and 200 staff. They make up a crucial component of GDP growth.
One of the businesses I support is a rural community pub—the only employer and social hub within a five-mile radius. It tells me that this Budget, combined with the minimum wage hikes which account for a 16% increase over two years, will entirely wipe out their modest profit margins.
I will finish with three quick questions for the Minister. First, why target entrepreneurs, who create jobs and take great risks, while income tax and national insurance for the highly paid is untouched? Secondly, one of the biggest growth blockers in our tax system is stamp duty; why raise it? Thirdly, if you are claiming to be fiscally responsible and committed to net zero, why continue to freeze fuel duty? This Budget may be bold, but it is unbalanced. It is tough on growth and tough on the causes of growth.
Baroness Moyo (Non-Afl)
My Lords, no one in the Chamber should be in any doubt over how much of a challenge setting the Budget must be, given the signs of structural decline that regrettably seem evident in this economy today. It is, for example, worth reminding ourselves that, today, if Britain were ranked against each of the 50 US states in terms of wealth, it would be last, with Britain’s GDP per capita performing below America’s poorest state, Mississippi.
Moreover, Britain’s per capita income has flatlined over the last 10 years, going from £31,000 in 2014 to around £33,000 in 2023. While only 25 years ago, Britain’s economy was larger than China’s, it is now just 20% of its size. This is not simply about China’s exceptional growth trajectory over 30 years; it is also about Britain’s multi-decade policy choices, which have inadvertently created an economic environment that is largely not attractive to investment. Of course, statistics that compare countries against each other over time have their limitations, but these data show trends that have deleterious consequences for the real economic life of citizens and the Government’s ability to fund public goods such as health, education and infrastructure.
These facts also support a damaging narrative of Britain not being a top destination for investment. To this end, as we scrutinise this Budget, a key question is whether private investors, both domestic and international, are now more likely to allocate investment capital to the United Kingdom. The answer is that the future flow of investment into Britain on the back of this Budget will be limited.
On the positive side, there is some investment, as has been mentioned already. Just before the Budget, investment pledges of £60 billion were made at the International Investment Summit. In the Budget, the Government commit to investment in the key industries of the future through the national wealth fund—aerospace, life sciences, green hydrogen, carbon capture, ports and gigafactories. The Budget also earmarks investment for public services, in line with the recommendations of the IMF, to bring the UK’s public spending in line with her peers. All of this sounds promising.
However, this Budget has not adequately addressed the considerable barriers to private investment that remain. First, in spite of the Budget, Britain’s economic growth outlook remains tragically low—below 2% over the next five years. Secondly, the lack of breadth and depth of UK capital markets is a deterrent for new and important start-ups. The FTSE 100 remains dominated by traditional industries such as mining and banking. This could partly explain why, this year, Britain traded at a 40% discount to developed markets. Related to this, Britain’s reputation for burdensome regulation risks it substantially missing out on dividends from the emerging AI and energy transition growth-enhancing supercycles. Regulatory logjams gum up capital markets, meaning scarce opportunities for innovation and technology start-ups to list in London.
We know that global investors have compelling investment opportunities. The magnificent seven technology stocks last year returned 76%. Fast-growing Middle Eastern economies, including those in the GCC, are forecast to be larger than the UK economy by 2026. There is even the ability to generate 5% per annum returns simply by allocating cash to US treasuries—the risk-free rate.
As a director on corporate boards and a member of an endowment’s investment committee, I am aware that many investors will not yet allocate capital to Britain based on this Budget. This is because they interpret it, as it has been described in the Chamber, as a stabilisation Budget; it is largely seeking to reduce political and economic uncertainty and not to spur growth. It is an opportunity to demonstrate credibility and competence in managing the government fiscus, but not to spur growth. While investors see public investment as necessary, they do not see it as sufficient in the pursuit of economic growth.
Crucially, investors see this Budget as only an interim step to pave the way for future growth policies. As such, they will need to see much more aggressive policy, regulatory and fiscal reforms that go for growth, such as overdue reform of the capital markets and especially the easing of regulation. More generally, investors will tolerate either high taxes or heavy regulation, but not both. Over time, remembering this principle will put the UK in a position credibly to compete for investment once more.
Baroness O'Grady of Upper Holloway (Lab)
My Lords, I add my welcome and congratulations to the noble Lord, Lord Booth-Smith, on a very wise maiden speech.
In the lead-up to Budget Day, the new Chancellor faced big decisions about how to deal with the black hole she inherited. Those who criticise her Budget need to explain what alternative choices they would have made and how they would have made the sums add up.
First, do they agree with the Chancellor that the NHS and education in particular urgently needed funding, or would they have returned us to the false economy of austerity and cuts? Secondly, if they recognise that public services are on their knees and need fixing, who should pay—people who must work for a living, or business and the wealthy? Thirdly, what would they do differently to tackle the low-investment, low-productivity, low-growth doom loop the previous Government presided over and which, as the IMF noted recently, relegated the UK to the bottom of the G7 league?
The new leader of the Opposition has said that her party needs to be
“honest about the fact that we made mistakes, honest about the fact that we let standards slip”.
Perhaps there is not enough time to assess all those “mistakes” in this debate, but I highlight just one: the former Conservative Chancellor Jeremy Hunt’s plans relied on cutting public investment from 2.4% to 1.7% of national output by 2028-29—the equivalent of £24 billion a year by the end of the current Parliament. That was a recipe for national neglect, decline and poverty.
In contrast, Labour has set out a plan for a fairer, more prosperous Britain: getting people into work and with a better NHS, skills and education system—a welcome boost for those who work for the minimum wage, especially young people; I remind noble Lords that workers are wealth creators too and deserve a fair share—and a commitment to invest, invest, invest.
Rachel Reeves thinks it makes sense to borrow to invest in transport and secure energy because this will lead to faster growth, higher tax revenues and scope to spend more on public services—she is right. We can discuss whether the Budget could have included more taxes on wealth and excess profits, but surely we can agree the principle that those with the broadest shoulders should contribute a fair share of the cost of rebuilding the UK’s vital national infrastructure, because we all benefit.
Like my noble friend Lady Liddell, I end by celebrating one Budget measure that may not have attracted many national headlines but speaks to Labour values. I should probably declare an interest as my own brother and friends have benefited from this. Rachel Reeves announced that the £1.5 billion mineworkers’ pension fund will be handed over in its entirety to former miners and their families, providing an average increase of £29 a week from November this year. Back in 2019, Boris Johnson promised pensions justice but miners never saw a penny of the money they were owed. Now, Labour has delivered. As the leader of the National Union of Mineworkers, Chris Kitchen, said:
“This is the change we voted for”.
Lord Dobbs (Con)
My Lords, it is a pleasure to be able to welcome, with that wonderful maiden speech, my new noble friend Lord Booth-Smith. It is also a pleasure, if I may say so, to follow the noble Baroness, Lady O’Grady. I understand that it may have been her birthday over the weekend. I have a birthday in a couple of days too, so at least we Scorpios have this to share even if we share nothing else in the Chamber today. I thought some of our Budgets over the years were pretty rubbish.
I went to bed last night counting the various definitions the Government offered about what a worker is. I had reached 23 before I fell fast asleep, so I guess I missed a dozen or more. Labour is, of course, the party of the workers, for the workers—up the workers. The trouble is, there are going to be fewer workers as a result of this Budget. You cannot raise £40 billion without hammering ordinary people. The increase in national insurance will be passed on to employees, not matter what the Chancellor has offered. In ordinary English that means lower pay, slower hiring, fewer jobs and fewer workers. It is sad, it is unintended—I am sure—but it is inevitable.
This is a Government of change. They have said that, and perhaps they will change this. After all, they changed their chief of staff pretty quickly. Did your Lordships notice, by the way, that they changed their policy on freeports? Two days before the Budget, the Prime Minister announced that they would create five new freeports. I thought that was rather a good idea, but then that policy changed too—no new freeports at all. A No. 10 official explained what had happened. They had misread the email from next door. It was, in his words, “a total cock-up”. No change there, then. There will be no flood of exports as the noble Lord, Lord Liddle, wanted—not from those non-existent free ports.
Instead, noble Lords may have noticed that Labour has been concentrating on exporting dozens and dozens of advisers across the Atlantic to help its relentless battle against Donald Trump—a masterstroke. Then there is the Foreign Secretary’s view that President Trump, the next leader of our biggest export market and trading partner, is a “neo-Nazi … sociopath”. It is a fascinating negotiating tactic.
This Budget is an attack on workers. You cannot live, work, farm, go to the shops or even die without getting clobbered, unless of course you happen to be a train driver. It is not just the farmers, factory owners, service industry and supermarkets. Our charities, GPs, care homes, schools and even hospices are all being beaten under Labour’s national insurance hammer. Some workers are luckier than others. Some can find a helpful handout: the odd football ticket, an occasional concert ticket, even a friendly local clothes bank. That was something else that was changed, of course, once it all became public—another policy that, how can I put it, seems to have been tailored swiftly to the moment.
In its entire history the Labour Party has never been further from real workers than it is right now, and it must be our ambition on this side of the House to fill that gap between now and the next election. To govern is to choose, and the Chancellor has chosen badly. It is a Budget that will hit workers. This is another Labour Government who will leave office with unemployment higher than when they came in. The other day the Chancellor said that this is a Budget she does not want to repeat. I commend the Chancellor’s conclusion.
Lord Desai (CB)
I welcome the Budget. I give it about two cheers, not three, for reasons I shall describe.
First, I am very much in favour of high taxation. Indeed, I am notorious for having been sacked twice from the shadow Front Bench for proposing higher taxation when I was in the Labour Party, so I am very pleased that my recommendations, or desires, have been fulfilled. As the noble Lord, Lord Liddle, said, we have to stop believing that we can have an American level of taxation and a British level of welfare state. We should be much more like the northern European countries, which have a 40% or 45% taxation of GDP.
Unless we get to a seriously good rate of taxation we shall have a bad welfare state, bad schools and no growth. We have to stop this delusion that tax cuts lead to growth. We tried it for 14 years during the Conservative Government, and every tax cut destroyed the infrastructure more and more. We cannot go on living like that. When we compare ourselves with America, we forget that in America there is not just the federal tax rate but the state tax rate. Americans have no healthcare and very expensive education, unlike what we have here. We should stop comparing ourselves with Americans and compare ourselves with Sweden, Denmark, Finland and countries like that, which know how to sustain a welfare state in a healthier way. We have to congratulate the Chancellor on having made a beginning to changing this old psychology of having tax cuts all the time and putting us on the path to finally getting a decently financed welfare state.
Having said that, I cannot resist proposing one more tax. It is necessary to say that growth does not come only from investment and, even if it does come from investment, we have to ask how we can encourage people to save more than they do. One of our problems is that the personal savings rate, or investment by private citizens, is not as high as it should be. I think that is because our tax structure is biased against investing in equities and encourages investing in bricks and mortar. There is only one asset in this country that is tax-free. If you have your own house and invest in it, when you sell it, if it is your principal residence, you do not get taxed on the capital gain. Imagine an asset with a 0% taxation rate for capital gains. Obviously, everybody from a very young age wants to get on to the mortgage ladder. Everyone wants to go on investing in housing. In continental Europe, there is a good, healthy rental market, but we do not have a healthy rental market because we destroyed it 50 years ago. I think we need to make people invest not in bricks and mortar but in stocks and shares. If you are going to do that, you have to tax capital gains from housing properly. I urge the Chancellor, next time she has the chance to have a Budget, to tax bricks and mortar properly so that people will stop investing too much in housing and go into stocks and shares.
Lord Oates (LD)
My Lords, I declare my interest as chief executive of United Against Malnutrition and Hunger. I congratulate the noble Lord, Lord Booth-Smith, on his excellent maiden speech. I acknowledge the terrible fiscal legacy that was inherited by the new Government and the need to increase revenue, but I had hoped that the first Labour Budget in 14 years would be one that delivered sustainable development at home and reinvigorated our commitment to sustainable development overseas.
At home, the decision to hike employers’ national insurance contributions is one of the worst tax choices that could have been made. It will, as we have heard, cost jobs, reduce pay growth and impact care and GP services. Alongside that, there is one other thing I shall highlight: the hiking of the bus fare cap while fuel duty remains frozen. That is a deeply regressive move and is also counter to the Government’s climate agenda. If we want growth, we need not only better targeted tax rises, as my noble friend Lord Fox argued—and I commend in particular his call for increased taxes on the gambling industry that is spreading misery through our communities—but, beyond that, we need to overhaul our regulatory and bureaucratic systems.
In the Budget, the Chancellor referred to the importance of life sciences to our economy, but, while public investment in the Life Sciences Innovative Manufacturing Fund may be welcome, it will not do much good if the Medicines and Healthcare products Regulatory Agency remains swamped and its processes remain slow and expensive, leading UK firms to look to jurisdictions overseas. Equally, the increased R&D funding announced in the Budget is welcome, but it will not do much good if the system cannot deliver. Just last week, I was speaking with a leader of one of our medical diagnostic companies, who told me that applications for HMRC R&D tax credits used to be processed in six to eight weeks, but he was still waiting after 14 months for a determination. Businesses are going bust waiting. If we cannot get these basics right, we will not deliver sustainable development at home.
As to our commitment to sustainable development abroad, I share the profound disappointment of the noble Lord, Lord McConnell, at this Budget and the further cuts to the aid budget that result, coming on top of the drastic cuts under the previous Government, in breach of their clear manifesto commitment. One does not need to be an international affairs expert to recognise that need around the world is greater than ever, with rising levels of hunger and malnutrition, multiple crises and climate change bringing more misery to millions. As the Save the Children Fund has noted, the change to the debt rules in the Chancellor’s new fiscal framework have not been matched by a change in the fiscal tests that were set to return to our legal—and, I would say, moral—obligation to get back to our 0.7% commitment. This means that those tests are basically unmeetable, so the Government have effectively abandoned that 0.7% commitment.
This will not only diminish our international standing and impact millions of people around the world but is deeply harmful to our self-interest. The International Rescue Committee notes that 680,000 refugees have fled Sudan for Chad since April 2023, yet the humanitarian response plan for eastern Chad is just 27% funded. With tensions rising due to resource competition, refugees are on the move. Some are already in the camps around Calais and some will almost inevitably end up in the UK, at a cost to the Exchequer far higher than if they could have stayed where they were, close to their home country and able to return when, God willing, peace is restored. This is not the only short-term decision-making. Conflict prevention and stabilisation, as the noble Lord, Lord McConnell, also recognised, was cut under the previous Government and needs to be restored.
In conclusion, the Minister told us that this was a Budget of choices. On employment taxes and the aid budget, they have made the wrong choices.
Lord de Clifford (CB)
My Lords, I welcome a Budget with a notable change in direction for our nation’s finances. This Government’s ambition to improve the growth rate, productivity and public services and take control of the country’s debt is commendable. The need to raise taxes to fund these ambitions was clear, but it was not made clear in the election by either of the main parties. No one ever welcomes tax rises, but tax rises should be targeted at people who can afford to pay them. They should not force businesses to change fundamentally or individuals potentially to lose the way they earn a living and their way of life. I note my entry in the register; I work for a veterinary practice relying on the farming industry.
The change to the agricultural property relief rules is devastating news to the farming community and has created a lot of anger. The community felt let down by the Government’s assurances made in speeches in the past year that APR would not change. The Government stated that 73% of farming businesses will not be affected by this change. This statistic is challenged by farming professional bodies such as the NFU and the Central Association of Agricultural Valuers. Is the Treasury able to publish more detailed figures that support this statistic?
I understand why the Government wish to close a foreseeable inheritance tax loophole, but, when you do such a thing, there are always unintended consequences. That is why the farming community is so upset. Inheritance tax is something you can plan for, as my noble friend Lord Devon explained earlier, but these changes will leave many farmers who believed that APR would remain in place with no time to plan for a significant liability. Farmland is a unique asset. It differs from many other assets in that the value is high but the return is very low. It generates income only if farmed in some way. If we wish to protect our food security, environment, rural economy and the countryside that most of us love, we need to think again about this policy.
In 2023 the average agricultural land value, according to Savills, was between £5,000 and just over £9,000 per acre, depending on land type. If you take a typical 450-acre farm—which is not a large farm—with mixed land types, the value alone could be over £3 million, without even considering the farm machinery, animals, farm buildings and farmhouses. So, even allowing for a possible £3 million exemption when a couple own a farm, there could be a tax liability of at least £200,000 or more. Where are these family businesses meant to find this money, as such a business may have a turnover of only £1 million? A family could sell land, but the result could be that the farm becomes unviable as a stand-alone business. Some upland hill farmers in Wales and Scotland may not be able to sell part of their land.
Farmers cannot raise prices as they have extraordinarily little control over the sale price of the goods they produce; prices are set by supermarkets or food processers, based on a world food market. Farming is an industry that requires government subsidy to make business viable and to achieve food security and improve the environment. Therefore, why are we implementing a policy that will remove a possible £450 million from this industry in 2027-28?
On behalf of the farmers of the UK, I ask the Minster whether a full impact assessment of these changes can please be done within the next year to assess the effect on medium to large family farms.
Baroness Thornton (Lab)
My Lords, I am very pleased to be able to participate in today’s debate. I congratulate the noble Lord, Lord Booth-Smith, on his maiden speech; he is not in his place right now but I am sure that the noble Lord, Lord Dobbs, will pass on those good wishes.
The problem with having been on the Front Bench for the best part of the last 16 years is how rarely one has been able to participate in these great set-piece debates. I thank my noble friend the Minister, who did his usual brilliant job in opening the debate today.
After every Budget, I always look to see what the Women’s Budget Group has to say about its contents. In recent years, in government the party opposite has not scored too well at all, it has to be said. The WBG’s gendered impact assessments have become increasingly important. I invite my noble friend to join me in congratulating the group on the important work that it does.
The first Labour Government Budget in 14 years is very important and marks a shift in the UK’s economic direction, with more resources for public sector spending and investment. This change of direction is welcome news, particularly for women, who have borne the brunt of the austerity-driven public service cuts since 2010. I agree with the Women’s Budget Group when it says that the Budget offers “some promising green shoots” for women through
“additional investment in the NHS and schools and … additional spending for local government and social care. Women and those they care for rely more on these services and are more likely to work in them”.
Indeed, the above-inflation increase in the national living wage was very welcome and will particularly benefit women, who make up the majority of low-paid workers.
I hope that we can look forward to the child poverty review, led by my right honourable friend Liz Kendall, and the spending review next spring, as an opportunity for the Chancellor to build on what she has started with this Budget. I seek assurance from my noble friend the Minister that this is but the first step in helping the poorest in our society, and those women.
I turn to early years provision, as mentioned by the noble Lord, Lord O’Neill. If my great friend June O’Sullivan, chief executive of the over 100 year-old social enterprise, the London Early Years Foundation—which, of course, provides the nursery here in Parliament—says that she is concerned about some aspects of the Budget’s impact, then so am I.
Childcare is part of our national infrastructure; without it, many people simply cannot work. Social enterprises, charities and small businesses running nurseries, whose largest cost is staffing, may be taking a hit from this Budget. This will have a detrimental effect on the 28,000 nursery owners. Given the Government’s commitment to getting people back into the workforce, can my noble friend help me in squaring this circle? We need sustainable childcare, of course, to get people back to work.
When my right honourable friend Bridget Phillipson said that early years education is “more than just childcare” and is about giving every child the “best start in life”, it was a profound moment of recognition of investment in early years. Given the effectiveness of early years professional development programming, giving practitioners the skills they need to help our young, can we have some reassurance that there is a commitment to continue to fund this work post March 2025 and into the future, in the light of the commitments the Government have made? If my noble friend the Minister does not have this information, I would be happy for a letter to be placed in the Library.
This leads me to my last point, which concerns the social enterprise sector providing public services such as healthcare, social care and children’s services. The Department of Health and Social Care, which is responsible for this, said: “In line with precedent from the Health and Social Care Levy, the Department of Health and Social Care is working through the implications of the Chancellor’s tax announcements with the Treasury. We hope to provide further information soon”. The last time this happened, it came good for social enterprises and charities. I hope it will do so this time, too.
Lord Sherbourne of Didsbury (Con)
My Lords, Ministers, in trying to defend the Budget, keep saying in a rather pained way that they have had to take some very difficult decisions; the Minister said that today. Of course, that is what government is all about, and they should not be surprised by that.
However, I do accept that the Chancellor had a particular challenge which all Chancellors face when presenting their Budgets: the voracious demand of the public for ever more public spending. Yet every Government know that these expectations are unrealistic. So why is it? How does this happen? The reason is that Governments, of all parties, hide from the public basic information. The 362 pages of this Budget do not contain the information the public need to have; it is deliberately hidden. That is the problem Chancellors have to face.
Let us take taxation. Nobody has the faintest idea how much VAT they pay. People know the cost of their BBC licence fee because they pay it directly; it is visible. They know the price of their council tax bill. The things they pay for directly, they know. However, they do not know that, when they go to John Lewis and buy a washing machine for £350, £60 of that goes to the taxman. They do not know that, when they get a £25 takeaway, £4 of that goes to the taxman. Every time those prices go up, the Government are taking more—a bigger amount of tax. Of course, the Chancellor does not go to the House of Commons to say that taxes are going up, but they are.
And how the Treasury loves it. It likes nothing more than stealth taxes, which make it much easier to raise tax without protest. How much more honest it would be if, as in the United States, all goods and services showed their net price and, separately and just as clearly, the tax being levied on them. When people go to the States, they are often amazed that they have to pay tax on the goods there, while they do not have to pay it here—they think. How wrong they are. When you do see the VAT—when, for example, you are having building work done and your builder is in the VAT system and charges you £1,000—you then realise that you are paying a whopping £200 on top. What an eye-opener that is.
Let us take income tax. Freezing tax thresholds will, as people earn more, push them unwittingly into a higher tax bracket and paying more tax than they should. If you are on PAYE, the only figure you really see is your take-home pay. Why are gross pay, net pay and tax not shown deliberately and separately—all equally clear? Again, the Treasury would hate that, because its job is so much easier if people do not know how much they are paying.
The same is true about public services. Soon after I came into the House, I heard a speech made by the noble Lord, Lord Desai, who was then speaking from the Labour Benches. He said that it would be a good idea if, when people went for medical treatment, they were shown how much that would cost—not to charge them, but simply to inform them. I remember seeing on television some years ago a young man who thought he was having a heart attack. The NHS treated him brilliantly with an ECG and other tests. He was okay, and he asked the consultant afterwards how much that would have cost. The consultant said £25,000 and he was amazed. I just think that if people were aware of how much such things cost, they would be aware not to expect too much from endless public services. The Government may say, “It is very difficult to provide this information”, but surely, if an organisation is well run, and if the NHS is well run, that information should be available.
If Governments are not more honest and open with the public about the cost of public services and the total amount of tax the public are really paying, I am afraid that the public will go on making unrealistic demands on the public purse. That will go on being a problem for all Chancellors, and it will be a problem partly of their own making.
Lord Monks (Lab)
My Lords, in my contribution to this debate, a debate so well led by my noble friend Lord Livermore, I will focus on growth and vocational skills.
We have to start by honestly acknowledging that the UK performs a lot worse on growth and skills than other comparable countries and similar democracies and that, as a consequence, our productivity, as others have mentioned, is disappointing. There is nothing new there—successive Governments have tried to remedy that; ever since I started work, they have been trying to remedy it and it is very difficult—but now we are about to embark on another quest for the holy grail of high and sustainable growth. Historically we have tried a national plan; we have tried deregulation, low tax and privatisation. We have welcomed globalisation and high immigration, and now we have left the European Union and its single market to try to go it alone. None of those initiatives have been game changers and some, such as Brexit, have been positively harmful, but we are still stuck with the problem that we have identified, even since the 19th century, of a record that is unimpressive in many ways.
I believe that one key reason for that is the narrow focus of much of British business on short-term shareholder value. It produces too many anaemic companies that are too feeble to grow our market share of world trade and lead the way in particular product areas. How are the Government going to encourage longer-termism in Britain’s boardrooms and try to get British companies on a better footing than they are at the moment?
One necessary component is a highly skilled and motivated workforce, with a culture of excellence and an emphasis on lifelong learning that shows that people can change and be flexible. That opens the door to intelligent and constructive relations between management, workers and trade unions.
We also need urgent action immediately to boost colleges and vocational education. The Budget proposes a £300 million cash injection, which is welcome and will, I hope, boost FE, too often squeezed as it is between schools and universities.
I wish Skills England well. This whole area is littered with failed institutions, with most industrial training boards, the Manpower Services Commission and learning and skills councils among the most prominent. Can Skills England be a game-changer and make the crucial differences? To me, frankly, it looks a bit of a medium-term project, and I am looking for more urgent action. As has been said, the capital investment plans being developed will need a lot of skilled workers, but they are not around at the moment. Could we have a national crusade on skills, with crash programmes to tackle likely vital areas of skills shortages? We would not hesitate to do that in wartime conditions. We are in peacetime now, but we have some big problems that need a huge national effort to overcome.
Lastly, on a different tack, I ask the Government to re-establish the TUC’s Union Learning Fund. This brought into the world of skills training and education people who were mostly very poorly educated and unconfident about taking training courses. It set them on a skills improvement trajectory that would benefit them and the community. Successive Education Secretaries—Conservative ones included—supported it, but Gavin Williamson, foolishly, did not. Can it please be reinstated?
Lord Young of Cookham (Con)
My Lords, my comments will be more nuanced than some of those from this side of the Chamber. It may not be for me to say this, but I am not sure it assists our debate for noble Lords to trade accusations of dishonesty across the Chamber.
I agree with the noble Lord, Lord O’Neill, that it was sensible to change the fiscal rules to allow for more productive investment. Within that, I welcome the extra £500 million for more affordable housing. On the revenue side, I welcome the extra £200 million for homelessness and rough sleeping support as well as the extension of the Household Support Fund.
However, we should judge this Budget by the criteria that the Minister himself chose at the beginning of our debate when he said it was about growth and reform. In the debate on the King’s Speech, the Prime Minister said his plan for government would
“take the brakes off Britain”.—[Official Report, Commons, 17/7/24; col. 59.]
That is not a verdict that we have seen widely reported in the press.
The OBR’s comment on the Budget has been referred to before: it will
“leave GDP largely unchanged in five years”.
The Minister sought to downplay that by saying that the OBR had not taken into account all the planning reforms and the rest, but the point made by the noble Baroness, Lady Moyo, is crucial: institutional investors, both in this country and overseas, will have read that the independent forecaster, the OBR, has said GDP is going to remain unchanged for five years, and one cannot downplay the impact of that verdict.
On reform, I was struck by what the rather thoughtful Cabinet Minister Pat McFadden said recently in the Times. He said that
“with extra money comes reform. We cannot keep spending taxpayers’ cash on the same problems without changing the way we tackle them”.
However, the record so far is not good. The train drivers’ dispute was settled with none of the productivity improvements that the employers wanted, and the employers now include the Government; likewise the junior doctors’ dispute, while the extra £22 billion for the NHS was accompanied by no proposals for reform until next spring. I note in passing that that £22 billion dwarfs the extra £600 million for social care next year; again, as my noble friend Lord Forsyth said, problems due for reform have been ducked. Much of that £600 million will be absorbed by the national insurance contributions that providers of care homes and of domiciliary care will have to pay. You cannot fix the NHS without fixing social care.
While I understand the Government’s wish to block IHT loopholes, I agree with the noble Earl, Lord Devon, and others that they have pitched the exemption for farmers far too low. Let me respond to the challenge from the Government to say how I would find the extra money—here, I agree with the noble Lord, Lord Burns; this may upset some of my colleagues. The £3 billion cost of the freeze on fuel duty was wholly misguided, a point made by the noble Lord. The Resolution Foundation estimates that the tax cost of driving has gone down by 38% in real terms since 2010, while cars have become more efficient. Further, petrol now costs 60p per gallon less than it did two years ago, so freezing the fuel duty was quite unnecessary and sits uneasily with the Government’s ambition to promote purchase of electric vehicles and to hit their carbon reduction target. It is perverse to freeze fuel duty while increasing rail fares by 4.6% next year and lifting the cap to £3 on bus fares.
The £600 million for social care is not going to be enough. I think it is absurd that council tax has not been revalued for over 30 years. The highest band in Westminster pays £1,828, whereas the same band in Liverpool pays £4,615. That is absurd. If we are not going to revalue, we should at least introduce two higher bands and put the extra money into social care.
I will end with a sentence from the Budget speech:
“When it comes to choices on tax, this Government choose to protect working people every … time”.—[Official Report, Commons, 30/10/24; col. 821.]
One tax it is indisputable that working people will pay is council tax, so will they be protected from an increase in council tax next April when the bills go out, or will local government get blamed for the breach of a government pledge?
The Duke of Wellington (CB)
My Lords, I declare my agricultural interests as detailed in the register. My concern about the Budget is the effect it will have on small businesses and small farmers. The Budget has put a cap for inheritance tax relief of £1 million for both agriculture and small businesses, or, if the business or the farm is owned by a couple, the cap is effectively £2 million.
The new Secretary of State for Environment, Food and Rural Affairs announced when he was appointed a list of five priorities. The first, which received much approval in this House, was to clean up rivers, lakes and seas. The third priority was to support farmers to boost Britain’s food security. Last Tuesday, on “Farming Today” on Radio 4—I listened again to the clip this morning—he said:
“The wealthiest landowners and the wealthiest people in the sector can afford to contribute more”.
Earlier in the same interview, he said that the new cap was intended to catch the “wealthiest people” buying up land to avoid paying inheritance tax. Everyone will understand that policy, but the question which I hope the Treasury Minister will address when winding up the debate is whether a farmer owning 50 hectares, or a couple owning 100 hectares, are, in the Government’s opinion, sufficiently wealthy to have to pay inheritance tax. By the way, the figures for the 50 and 100 hectares are calculated by the CLA.
During the passage of the Agriculture Bill in 2020, I and others expressed our concerns about the small family farms not receiving enough taxpayer support. Anyone knowing anything about agriculture in this country will understand that farms of 50 or 100 hectares, unless possibly they are horticultural holdings, are difficult to make a living from, although the underlying value of the asset may, on paper, be considerable. This new tax may have the effect of lowering the price of land—which, of course, would be a good thing—but the number of farms bought by investors wishing to reduce their inheritance tax liabilities is, according to the industry, a very small proportion indeed.
So, while the Government through this measure are aiming at relatively wealthy people trying to pay less inheritance tax, in fact they are catching in the net many small to medium-sized farmers who are “strivers”—to use the Chancellor’s word—and hard-working people who do not deserve to be treated in this way by the tax system. Perhaps I might gently suggest to the Minister that he and his colleagues in the Treasury should seriously consider raising the bar from £1 million to possibly £2 million or £3 million. This would, I respectfully advise the Minister, help to achieve greater growth in the rural economy. The removal of tax relief at so low a level can only discourage the investment that is a certain necessity to achieve growth.
To conclude, I hope that the Minister when he winds up can explain how putting a cap on business and agricultural property relief will encourage growth, and how this new tax is falling on the broadest shoulders.
Baroness Lister of Burtersett (Lab)
My Lords, this first Budget from a woman has some good news for women, as we have already heard, especially the investment in our much-depleted public services—though sadly not nearly enough in social care—the very welcome improvements to carer’s allowance and the increase in the national living wage. But, important as it is, a living wage has less effect on poverty than is often assumed. Women are the main shock absorbers of poverty, which has grown so much worse under the Conservatives. Yet it was mentioned only once in the Budget speech and there has been considerable disappointment among charities that the Budget did not promise more.
That is not to discount the positives. There is the new fair debt repayment rate for universal credit, although the money will still have to be repaid eventually and the five-week waiting period which accounts for many of those debts must be tackled. There is the extension of the household support fund, although there is no mention of work on a longer-term plan for local crisis support, and additional investment in free breakfasts, but nothing on free school meals.
We are told that these represent downpayments on the plan to drive down poverty being drawn up by the child poverty task force, whose work I warmly applaud. After 14 years of slash and burn policies, which have, according to CPAG—of which I am president—cut £50 billion a year from social security, experts agree that social security has to be central to such a plan. To quote Brian, a benefit claimant from the Changing Realities project, these
“positive steps … do not tackle the core issues of inadequacy within our social security system”.
Of course, rebuilding social security cannot be done overnight. But surely it was possible to address now the two interrelated key drivers of child poverty, including deep poverty—the two-child limit and the benefit cap—without awaiting the full strategy. There was not even a commitment to the inflation proofing of the cap to prevent it hitting harder and trapping more struggling families whenever benefits are uprated. Seven out of 10 of those caught are lone parents, mainly women. As the Resolution Foundation warns,
“leaving the two-child limit and the benefit cap intact even for the next five months prolongs the burden on low-income families … and intensifies the effect as new families are affected”.
And what a burden it is for mothers struggling daily to meet their children’s needs. The foundation estimates that 63,000 more children will be hit by the two-child limit by April, and there is no hint that it will even be scrapped then. That is 109 a day, according to CPAG. The continued freeze in the local housing allowance is also disappointing, given the extent to which private sector rents are contributing to high poverty levels. Instead of hope of future repair of the shredded social security system, those claiming disability and sickness-related benefits face possible further cuts, which is causing considerable anxiety. Yet, according to the Women’s Budget Group—of which I am a member and which has already been mentioned—disabled women are among those who have been hit hardest by Tory cuts.
The Chancellor is rightly asking those with the broadest shoulders—largely men—to forego some of their tax privileges, but many argue that she could have gone further and released the money needed to take more decisive action on poverty and inequality, in the interests of women and children. Without it, as Trussell warns, we will not end what the manifesto described as the “moral scar” of mass dependence on food banks. The case for transformative action is not only moral but economic, as it would bring cash into deprived communities and reduce pressure on services, and it is political, given inequality’s role in fuelling right-wing populism.
To conclude, in the Budget debate, the Work and Pensions Secretary promised a
“bold, ambitious, cross-Government strategy to tackle child poverty”
next spring, but that
“we will not wait to act, particularly for those facing the deepest poverty”.—[Official Report, Commons, 4/11/24; col. 68.]
These are encouraging words. All I ask is that we act more resolutely now.
The Lord Bishop of Newcastle
My Lords, I feel my B in GCSE maths is challenging my ability to speak with any fiscal authority in this debate, but I am glad of the opportunity to do so. I offer my congratulations to the noble Lord, Lord Booth-Smith, on his excellent maiden speech and I welcome him to your Lordships’ House.
I recognise that the decisions the Chancellor has made have not been easy, but balanced alongside the Government’s long-term priorities we must consider how this Budget will serve the needs of people who are struggling today, and affect what surely must be a significant long-term ambition—perhaps I can use the word “mission”—to improve social cohesion.
As I listened to the Chancellor’s Budget speech, I was struck by two things: first, the determination to grasp nettles; and, secondly, the resolute focus on investment. Increasing fiscal confidence creates the right conditions for growth. This has short, medium and long-term objectives and outcomes. People, communities, organisations, businesses and even this Chamber represent complex ecosystems. The granularity on the ground makes it harder to see this complexity, yet its effect locally can be keenly felt. For example, the decision not to proceed with dualling the section of the A1 that lies in the north of my diocese arguably makes that area and its connectivity routes less attractive to potential investors. The 50% increase in the bus fare cap will impact people who can least afford it, further disconnecting people from places and opportunities. The flipside is welcoming the alignment of Budget priorities with regional devolution. This is having a positive impact on the north-east region; increased voice, agency and confidence have the potential to raise aspirations.
Last week, I attended the Northern Farming Conference in Hexham. I commend attempts to address anomalies in the tax system, but I echo the apprehensions I heard at that conference and in this Chamber that this was not a Budget that really understands the needs of those in rural communities who have this year already faced huge challenges from the weather and flooding. I therefore add my voice to those of others urging the Government to rethink the APR decision. Farmers have a key role to play in assuring food security in an increasingly volatile global context. Can the Minister please assure me that the impact of the APR and BPS measures on farming will be assessed and reviewed?
I welcome the extension of the household support fund and the steps taken to reduce the impact of universal credit debt deductions, but we must address why these measures are necessary in the first place. With a disproportionately high number of children living in poverty in the north-east, I believe this Budget missed a crucial opportunity to lift children out of poverty by removing the two-child limit and benefit cap. Child poverty is a stain on our society and I urge the Government to take bolder action in addressing its causes and consequences.
There is much that I welcome in this Budget, but the decisions I have mentioned have consequences that must not be overlooked. I urge the Government to consider the impact of these decisions carefully, making sure that they truly uplift the most vulnerable to ensure the flourishing of all.
Lord Howell of Guildford (Con)
My Lords, like others, I welcome the maiden speech of my noble friend Lord Booth-Smith. It had the additional quality of supreme brevity, which is always welcome in these debates. I had hoped for a moment that we were going to get some extra titbits of life in Downing Street and his role as strategic director, but all we got was common sense. I recommend that he continues with common sense and leaves Downing Street out of it as far as possible.
You would not really sense from this relatively civilised debate that in fact this is a time of enormous danger, for the whole world and for us here. I do not mean danger just of an economic kind but of a physical kind. There is a real threat hanging over the world, vastly amplified by the silicon chip, which has altered and recreated almost every aspect of the modern world. Indeed, some would say that it is the chip and hyperconnectivity that are the major cause of the current tensions, instabilities, violence and evident collapse of the international rule of law.
Some of the most serious minds in today’s world—philosophers and others—tell us that we are on the edge of a precipice, that humankind is looking into the abyss, and many other terms of doom and gloom. This has duly fed through, via a cacophony of populist influences, to the forming of a vast new nexus in world finance, trade and investment, and spending and taxation, which completely changes the axis of political debate and economic policy priorities. That is what we are discussing now: whether this Budget and the thinking behind it responds to and picks up these new, rather frightening realities.
At the centre of it all is the need for a truly enormous increase in investment—both public and private—around the world, and certainly here, while remembering that when it comes to Governments trying to boost investment one needs to recall, as I fear some Ministers do not seem to, that the British economy, like a lot of advanced democratic economies, overwhelmingly, at some 99.2%, consists of small and medium enterprises. If you try to kill them off then the whole economic evolutionary process comes to a sickening halt and withers away. It may be said that small businesses rely on big business, but it is the other way round as well. The big businesses of tomorrow are somewhere in that smaller and medium-sized pattern and its source of innovation. If they are poisoned then the whole of our economic progress is brought to a halt.
This new scene has key components, which I will list not in any order but quickly in my last few minutes. First, the state has most of the infrastructure demands and the private sector has most of the money, so it is perfectly obvious that new ways have to be found for the state and private capital to work together. That is a sort of evolution of what we had at the end of the last century, with the private finance initiative—it failed, but it was the right idea.
Secondly, we need to attract a far bigger flow of foreign direct investment, not least to help with the energy transition which we are embarking on. Thirdly, the sovereign wealth funds long to invest but cannot find the right investment vehicles here in the UK. I declare an interest in that I advise one of them, and I know that that is exactly the position they face at meeting after meeting. Fourthly, there are the pension funds and insurance funds, said to be more than £2.5 trillion, from which the Chancellor says she is seeking to tap surpluses and encourage bolder equity investment. Some 20 years ago, 53% of those enormous funds used to go into the UK and now it is 6%; obviously, that has got to change.
Fifthly, we must greatly widen our own domestic sources of share capital and asset ownership in a way that, crucially, spreads the benefits of capital growth far more than at present to millions of households to enhance their dignity and security. I think that is the next stage in the development of popular liberal capitalism, which we do not seem to be addressing as vigorously as we should. There is certainly not much in the Budget for it.
Finally, there is the overdominance of our national investment allocation and strategy, which must be shifted away from the Treasury. This would not be very popular, certainly not with the Treasury, but it was recommended in the report by the noble Lord, Lord Maude—an excellent document—and in the Harrington report, and by some of us for the last 50 years. Until there is a key shift at the very centre of the government machine, nothing will go quite right on the investment front.
I see all this as common ground for the future. The party to realise that these are the new priorities will be the winner if it gets there first.
Lord Shipley (LD)
My Lords, the noble Lord, Lord Howell of Guildford, reminds us that we are living in very dangerous times, and I agree. I recall my noble friend Lord Fox saying in the early part of this debate that we want the Budget to succeed. I say clearly: I want the Budget to succeed, and for me the key reason is that it is important for the public’s confidence in their governance that the Budget should succeed. I am not looking at this Budget as a one-off; I see it as part of a number of Budgets and spending reviews.
I thank the noble Lord, Lord Burns, for reminding us of the level of UK debt. The noble Lord, Lord Booth-Smith, reminded us in his maiden speech that debt has to be paid for and paid back. I would have liked it a little more had Conservative Members speaking in this debate not been so reluctant to take responsibility for their role in increasing UK debt from 65% of GDP in 2010 to 97% today—almost 100%.
I welcome the Government’s determination to secure better value for money, particularly from infrastructure projects. One of the notable things about the previous Government is that they seem to have presided over cost overrun after cost overrun on major infrastructure projects. They also presided over Brexit, which has not really been mentioned but has had consequential damage on our investment and growth.
The jury is out on this Budget. Clearly, the increase in national insurance on employers will have some impact, but I hope very much that the Government will reflect on this and manage to seek ways out that drive growth, as they are trying to do. It might help the Government if they paid more attention to the importance of impact assessments. There was not one for the winter fuel allowance decision. On the matter of inheritance tax on farms, I heard on “Farming Today” that the Treasury is saying that only 27% of farms are affected, whereas the farmers and their professional bodies are saying that it is two-thirds. These facts matter to the general public.
I should remind the House of my entry in the register of interests, because I welcome the extra funds for housing, schools and the NHS. But as a number of speakers have said, this extra money for the NHS will not fix the crisis in social care. I suggest to the Minister that there has to be cross-party discussion about a way forward. The extra £600 million for social care is obviously welcome, but it is virtually wiped out by the rise in national insurance that those employers have to pay, as do GP surgeries. If they were not in the private sector, they would not have to pay it.
The Government should be trying to sort out social care, which should be seen in the context of spending to save. That is: fixing the social care crisis means that significant savings can accrue to the NHS if bed blocking is ended. Yet most councils with social care responsibilities are well on course to overspend in this and future years, and their position is not helped by the NI increase on employers in the care sector, as I said.
Two-thirds of revenue spending by many councils now goes on providing social care; it has simply got out of control. The reason is council tax—the failure of council tax reform, with no mention of the fact that it is a regressive tax and a means to increase taxes on households when the Government insist that they are not increasing taxation. They blame local government instead as, since 2016, the social care precept can be increased by up to 2% of the council tax bill each year. That has closed libraries and reduced services for young people; it has closed leisure facilities and worsened road safety—and, indeed, every non-statutory service that we can think of.
There is a lot to say about housing, but that is for another time. As I say, the jury is clearly out but I hope that the Government manage to get a spending review and a Budget next year that will actually address some of the problems that the public feel strongly about.
Lord Whitty (Lab)
My Lords, I am glad to follow the noble Lord, Lord Shipley, because he reminds us that solving the economic and fiscal problems of the country requires solving the economic and fiscal problems of local government and its services, of which social care is one of the biggest. That needs to be part of the Government’s economic strategy.
I congratulate the Minister on giving us such a coherent introduction; I add my congratulations to his boss, the Chancellor of the Exchequer, who gave a bravura speech, which I listened to in full the other day. She has given the country at least a sense of direction and hope, even though there are some details that the House has demanded.
I warn the Minister that I was going to focus entirely on the areas I disagree with or feel need revisiting. But I was so provoked by the lead spokesperson for the Opposition being so blind and in a sense of denial and misrepresentation about the inheritance we have received. There was the whole period of austerity, followed by ludicrous claims about Brexit and then serious increases in taxation for businesses and individuals. The legacy we have had is a very difficult one for Treasury Ministers and the Cabinet to deal with, and this Budget makes only a start on that. As the noble Lord, Lord Shipley, emphasised, it has to be paralleled with other key strategies, two of which I have a particular interest in. One of them is environmental and the other is on equality.
My noble friend Lady Lister talked about the equality impact of this Budget, particularly in the social security system. I agree with her about some of the measures that are implied in this Budget in relation to the winter fuel arrangements and the two-child limit. I feel those both need to be revisited by the Government at some time during the next few years, if not immediately in this Budget or the next.
On the environmental side, I welcome the allocations to what are basically green projects and support for green energy but, as the noble Lord, Lord Young, who is no longer in his place, and others have said, the interventions on transport seem completely wrong. The previous Government were completely wrong in freezing fuel duty when we have a problem. I was on the committee that recently reported to your Lordships on the difficulty of changing to electric vehicles; that is not helped by the freezing of fuel duty on fossil fuels. We need to do the opposite and raise fossil fuel duty while encouraging the uptake of electric cars to reduce congestion and the air quality effects of fossil fuel emissions.
If we are moving in the wrong direction on the environment in certain key aspects, we need to review the basis of taxation policy in transport as a whole, as others have referred to. That needs to be part of the project for the next five years.
We also need to look at the basis of local authority finance. There are local authorities up and down the land, of all political persuasions and sizes—from regional mayors down to local town councils and so forth—who get nothing from this Budget. We need a new, solid and growing basis for financing the services that are delivered through local authorities. Unless the Treasury is prepared to look at that in real detail over the next few years—starting with a spending review this year and hopefully subsequent Budgets—we will not be able to deliver not only social care but most of the services to which people have referred, including education, that are so vital to sustaining the growth strategy.
So, this is a good start on a growth strategy, but it needs a lot more solid allocations to other strategies. In particular, it requires us to address the growing inequality that has persisted in our land over the last few years, and at the same time to address the problems of the environment which are threatening our whole world.
Lord Gadhia (Non-Afl)
My Lords, I note my interests as a board member of the Bank of England and Taylor Wimpey, but speak in a personal capacity.
The inaugural Budget of any new Government is always a defining moment. I therefore joined a number of your Lordships, including the Minister, in listening to the Chancellor’s Statement live from the Gallery of the House of Commons.
As the Budget Statement unfolded, gilt yields started to widen, which brought a sense of foreboding. But, fortunately, bond markets have since settled down—or likely been distracted by more consequential events on the other side of the Atlantic. The immediate impression of the Budget was mild relief —not as bad as feared—but that was before reading the OBR report, which painted a different picture.
This disconnect between the Budget rhetoric of promoting business, investment and growth and the projected economic outcomes is stark and has been a recurring theme throughout today’s debate. Yes, our economy is set to experience a sugar rush next year, but the expansionary fiscal effects will fade rapidly and come at the expense of higher than expected inflation and, potentially, interest rates.
The increase in employers’ national insurance has multiple consequences, proving that the incidence of any tax is different from where it is originally levied. Businesses will mitigate the impact and we should therefore expect lower wage settlements, higher prices, less flexible working opportunities and reduced business investment. Hence, setting restrictive manifesto commitments on taxation which seek to protect certain groups is a red herring and unhelpful to the sound management of an economy.
A more straightforward and less distortionary method of raising £25 billion from businesses might have been to increase headline corporation tax—more so as the full expensing regime now helps to shield any impact on business investment.
For those of us keen on an economic course correction, the Budget almost felt like everything had changed, but nothing has changed. That is not to question the new Government’s intent—which is genuine—but reflects the herculean task of turning round the supertanker. If nothing else, this episode provides an early reality check for the new Administration, spanning both the handling of the pre-Budget hiatus period, when economic confidence was unnecessarily dampened, and the post-Budget mismatch between reality and expectations.
But enough of the post-mortem. Looking forward, the Chancellor has certainly grasped the crucial role of supply-side reforms in spurring economic growth, especially given the fiscal constraints and record size of the state and tax burden. The early announcements on planning reform are a positive first step and, importantly, not yet reflected in the OBR forecasts. The Prime Minister’s remarks at the International Investment Summit about ripping up bureaucracy that blocks investment and upgrading the regulatory regime to take account of the impact on economic growth were refreshing. We now need concrete follow-through on both counts.
More so as the world is not standing still, and doubly so following last week’s US presidential election. Elon Musk may not be the current Government’s favourite business leader, but his role and influence within the new Trump Administration will clearly be significant, including leading on a new US Department of Government Efficiency. That might sound like an oxymoron, but the intent is clear: to torch waste and bureaucracy and sharpen incentives for delivery and innovation. Our competition was already stiff but just got harder.
Finally, I will touch on investment allocation within the UK economy, a theme which the Chancellor is expected to address in her first Mansion House speech later this week. Many of us hope that she will accelerate and amplify the reforms already announced by the previous Government to address the under-allocation to UK assets. Introducing so-called “mandation”, requiring pension funds to allocate a specific percentage of their investments to UK assets to retain tax advantages, appears seductive but may be a step too far. However, there are other ways of pooling local authority pension funds and crowding in flows. Ultimately, however, there is a structural nexus around accounting treatment, pension regulation and risk incentives that needs to be broken. I hope the Chancellor will be bold.
In conclusion, we have been reminded in recent months that politicians campaign in poetry but govern in prose. Unfortunately, it has almost felt like the opposite since the election in July. I hope the Budget marks a turning point and the Government will now pivot to the hard yards of implementing the fundamental reform that our economy desperately needs and our fiscal straitjacket dictates.
Lord Hannett of Everton (Lab)
My Lords, I welcome the opportunity to speak in this extremely important Budget debate. I start by congratulating the Chancellor and her Treasury team on facing what is an extremely difficult situation, having inherited some very difficult fiscal realities. That should not be denied by anybody in this House. Of course, a Budget is about choices, and for every decision that is made there will be many critics and many opponents. This is the first Labour Budget against, as I say, a very difficult background.
Growth and productivity are crucial. I listened to the opening remarks of the noble Lord, Lord Johnson, and I would have given them more credence if there had been a degree of humility and a degree of acknowledgment of the inherited situation we have on these Benches. But of course I understand that there are different views.
What is important to me, as well as economic competence, is what values run through any Government. It has to be both. I am not an economist, but I would like to say that I am a fair-minded individual and I understand that what the Chancellor has done, ably abetted by her team, is address some of the big issues. Not everything can be addressed in one Budget. Why would we expect it to be?
I look at some of the policies in this Budget and will say this about the exam question. The exam question is whether this Budget delivers. It cannot be answered in a Budget debate; it will be assessed over time and, I am sure, in future Budgets as well.
In my previous incarnation as a trade union official we also faced the issue of productivity, and the noble Lord, Lord Monks, made a very compelling argument about skills. Productivity cannot be done on a short-term basis. I have been opposite many progressive employers who understood that it is not just about pay, it is about improving the skills of the individuals who work for them, and also retaining them. If you do not win the hearts and minds of your staff, they will take a short-term view of the workplace.
One of my roles was at the Low Pay Commission for 11 years. It was a great policy introduced by a previous Labour Government. Many of those years I shared with my noble friend Lady O’Grady. That a was great example of compromise and reaching an outcome when there were sometimes many frustrations at the level of the settlement. I welcome the increase to the minimum wage in this Budget, because we have to value some of the lowest paid in society if we are about anything.
The increase for carers is another significant policy. I have heard speeches in this Chamber about how much we value them and now, rightly, the Labour Party has put some finance behind that good will. These are unsung heroes who deserve full recognition. I am conscious of time and repetition. I have learned over many years that, when you start repeating too much, you lose the audience. So, I am not going to go over things, but I could—I could do a longer speech than this one.
I have to say to my friends on the other Benches that the one thing you cannot say is that we came into this Budget in the best position. I suppose for any Chancellor it is a bit like dancing on the head of a pin, making the choices that you hope will carry you forward and benefit the people of this country. I am confident that we have made a good start, but I am confident that it cannot be fixed in one Budget. I make this appeal to any employers listening: if you really want to do as my noble friend Lord Monks said, upskill the workforce, train them and pay them well and you will get a benefit on productivity.
Lord Berkeley of Knighton (CB)
My Lords, I start with a few notes of welcome to the noble Lord, Lord Booth-Smith.
On the Budget, I was very pleased that the Government have put aside money for the compensation of victims of those outrageous goings-on at the Post Office and to do with infected blood. In fact, to be honest, I felt ashamed to be part of, if you like, the establishment—an establishment that failed to pick up these bills while these poor people suffered so appallingly. I am very pleased that this will be put right.
I am pleased that there will be more teachers, and I hope that will be very much in the arts and music. I am delighted that the Prime Minister plays the flute. But—here is the first but—VAT on specialist schools is going to be a real problem. I ask the Government to look at that particular part of education again. If we have the teachers to create aspirations in things such as the arts, then we need to look to small venues and museums, which at the moment are about to fall by the wayside if they are outside London.
I agree with the Labour Party that the wealthy must do their bit to help those who are less fortunate, but sometimes I think there is a misunderstanding. I could not agree more with my noble friend the Duke of Wellington, who so pointedly showed how the Treasury has a fundamental misunderstanding about the economics of small and medium-sized agriculture. I declare an interest, as I have built up over 40 years, field by field, a farm with a local family, all of whom have to go out and do contract work to make ends meet.
Farms of the kind of size that my noble friend the Duke of Wellington mentioned do not make much money; they hardly make any. What I think has not been understood is that, if you have to sell something like 30 to 50 acres to pay the inheritance tax on a farm of 250 or 300 acres, you are making that farm less viable. It is impossible to make a living off, for example, 100 or 150 acres. You need these bigger farms. Therefore, my noble friend the Duke of Wellington is quite right to ask the Minister to think about raising that cap, because otherwise he will be punishing precisely those he wants to help—those who have less.
We have heard the Opposition Benches agreeing with the Government that it is people that create growth. If we want to help people to create growth, we must not cut the ground from under them. What could happen with this tax, unless this is changed, is that it could kick-start a vicious circle where, in order to pay inheritance tax, part of the farm is sold; the farm then becomes unviable and therefore bigger landowners will snap it up if they can. One farmer said to me, “How much is this going to raise?” I said, “On the Government’s figures, £500 million”. He said, “Well, why don’t they put a penny or two on petrol?” That would solve the problem, without completely ruining a whole level of farming in this country, which is vital.
I can understand why the Government would want to stop people putting millions into land to save inheritance tax. Like my noble friend the Duke of Wellington, I agree that you want to stop that. But surely, as with the winter fuel allowance, the Treasury must be able to come up with formulas that actually mean that the top strata pay but the lower strata do not. I cannot believe it is beyond the wit of man, or woman, in the Treasury to come up with a formula which would tax those who were seeking just to avoid inheritance tax, without punishing those who are working hard every day on the land to provide food for this country. Do we dare risk that?
Lord Shinkwin (Con)
My Lords, as my noble friend Lord Johnson of Lainston said in his opening remarks, this is, in its effect, an unkind Budget. Its consequences are punitive.
As we have just heard, if you identify as a farmer, be prepared to be punished for investing in your farm so that you can feed us. If you are a pensioner, be prepared to be punished for putting money aside so that you can live independently and leave a legacy to your loved ones. If you are a disabled child and your family have sacrificed everything to send you to an independent school with smaller class sizes, prepare to be punished for having special educational needs. The Minister said that these are difficult choices. I agree—just ask a disabled child, forced to leave their school and join the state system, which the National Audit Office said very recently is in urgent need of reform.
These choices do not make sense, particularly given that the splurge in public spending makes growth even more important and, at the same time, even less likely. This Budget will, I am afraid, stifle growth. It could put the very sustainability of the welfare state, on which I and so many other disabled people depend, at risk. We cannot afford to accept the status quo—the pervasive view that the state must grow inexorably, and that the Government have the right to spend an ever-increasing share of people’s hard-earned money in that quest. They do not; it is not their money to spend.
Disability policy, particularly relating to employment, is an area that has for too long been bedevilled by a blinkered belief in the status quo. All parties, including my own, need to look beyond its constraints if we are to tackle the completely unacceptable and expensive disability employment gap, which remains stubbornly at almost 30%.
The last thing one would assume that an employers association with “disability” in its title would do is perpetuate a failed status quo. Indeed, when I was chair of the Centre for Social Justice’s disability commission, I was delighted that the chief executive of the Business Disability Forum—BDF—signed up as a fellow commissioner to challenge the status quo by calling for mandatory disability employment and pay gap reporting to be introduced. So I was mystified when the BDF, without warning, then performed a U-turn on the basis of research that it has to this day declined to publish in full. Suffice to say that findings published at the weekend by Disability@Work on BDF’s effectiveness in improving the experiences of disabled people in its member organisations does not cast it in a positive light.
I close with a question for the Minister. Given rumours that the BDF’s chief executive will be joining your Lordships’ House in the near future—and mindful of the Nolan principles of public life, particularly those relating to integrity, accountability and openness—can he assure the House that, as part of their due diligence, No.10 and all appropriate bodies will ensure that, before her appointment is recommended to His Majesty, BDF publishes in full the methodology of the research underpinning its sudden policy change on mandatory reporting? Can he also say whether they will ensure that its chief executive will be required to explain why this policy change coincided with an increase in its membership income by almost 50% between 2021 and June 2023, and why a corresponding increase of over 45% in its membership has had no positive effect in challenging the status quo and in decreasing the disability employment gap? Disabled people deserve better.
Lord Bach (Lab)
My Lords, in many years as a Member of this House, I have never dreamed of speaking in a Budget debate. Why have I changed my mind today? I want to say a few words because this Budget springs from a view of the world—an approach, or a political philosophy, if that does not sound too grand—that, rightly or wrongly, happens to fit in with my own beliefs or, as some opposite might say, my prejudices.
I am particularly excited by its emphasis on stability, combined with its emphasis on investment and growth—getting that balance right is everything. I believe this Budget succeeds here. It does not revert to austerity but is determined to move forward while protecting those who have the least. Its insistence on improving our desperate public services is an essential part of that crucial balance, which has been found successfully by the Chancellor. That balance has been difficult this year, given the economic legacy bequeathed by the last Government. They will have to understand that that legacy is widely and correctly criticised, and it explains the general election result to an important extent. My gentle advice to the Opposition is to stop defending their record, stop beating their heads against a brick wall and move on as fast as they possibly can.
Austerity as a policy is, thankfully, dropped. It did untold harm. I was a police and crime commissioner for five years and, every working day, I saw the effect of austerity on police numbers and on an excellent force’s ability to do the job it wanted to do. Neighbourhood policing suffered badly, and it followed, like night follows day, that anti-social behaviour and other crimes flourished. Austerity was a disaster for the poorest and most vulnerable—not least for the young, with the inevitable closure of youth clubs and other provision.
I am delighted by the plan set out in the Red Book for visible neighbourhood policing to be boosted by 13,000 neighbourhood officers and PCSOs. My concern today—here I remind the House of my declared interest as the chair of the board of trustees of the Leicester law centre—is about law centres and advice centres generally, which give vital legal advice to those who need it at the time that they need it. Given the effective destruction of social welfare law legal aid over the last 14 years, they will struggle to find the increase in employers’ national insurance. That advice, if given, can save money for the state, as well as protecting people’s lives, of course. Although I personally understand the importance of, and support, raising employers’ national insurance as a way of moving forward, I invite my noble friend to look again, if possible, at the issue as it affects the people I have referred to.
I repeat how proud I am of this Budget. I congratulate the Government on having presented a Budget that is both sensible and radical, and that represents the best hope for the future of our country.
Lord Empey (UUP)
My Lords, I wish to identify with some of the comments of the noble Lord, Lord Monks, who is not in his place, that we were searching for the holy grail in economics—we have been at this for a long time. The noble Lord mentioned the Union Learning Fund. As a former Skills Minister in Northern Ireland, I worked with it and thought it was excellent. It gave confidence to workers and mentored people who would never have dreamed of improving their skills. It was an excellent organisation, and I hope we can get back to a sensible policy for skills, because we are very bad in this country at doing that.
Innovation can propel small business, growth and employment, but I am sorry to say that the Government have missed an opportunity here in going after large companies that have used the purchase of land and other assets to avoid tax, which we all understand. A number of Members—the noble Lord, Lord Berkeley, and the noble Duke, the Duke of Wellington—pointed out that farms are small family businesses. To give a local example, the average farm in Northern Ireland is below 100 acres, but the land price can be anything from £10,000 to an average of about £14,000, while good land can even get more, so a very small family-owned farm that is virtually economically unviable comes into this bracket at significant amounts. The average farm income is about £24,000 to £25,000. Even if you get 10 years to pay, how will you find any money to reinvest in the business? It is impossible. Although I understand the targeting of what the Government are attempting to do, the threshold is dangerously low and will have a very negative effect, damaging local businesses, schools, shops and all the rest.
The winter fuel payment decision is the most un-Labour decision I can imagine—it was the Labour Party that established it. We know there are people who do not need it, but we can find other ways of dealing with that. It could be taxed, but the threshold has to be raised, because, as the noble Lords, Lord Fox and Lord Oates, pointed out, we allow the gambling industry seemingly to have a free pass, yet we are taking a couple of hundred quid off a pensioner. I just cannot get my head around that—I do not understand it. We know from committee work that those companies have algorithms—they know who is watching the television at three in the morning and they know whom they can exploit, but we give them a bye ball. I do not understand that. So, although I understand the need to raise money, that is exactly the wrong place to look for it.
Social care is an issue that we as a country have dodged for years. Several attempts have been made to deal with it; Boris Johnson made an attempt, but that stalled. We need a political consensus across the country and across the political parties to deal with it. Some 10% to 14% of hospital beds are blocked because the social care is not there. We need to have a conversation about that.
The other thing the Minister did not mention was the costs of our failed immigration policy. We are paying probably £200 a day to put somebody up in a hotel, yet somebody can have £200 a year taken off them in winter fuel allowance. It does not make sense. I hope the Government will tell us the real costs we are facing with the immigration system—whether it is asylum seekers who come here legally or people who come here in boats as victims of criminal gangs. The Government must have at least an average figure of what this is costing per head. It has not been disclosed or taken into account.
I understand that the Government are in a tough position. The previous Government were faced with Covid and decided to borrow large amounts of money to keep the economy going; I think we all accept that that was the right thing to do. It has left us with a huge task. But to raise money, we are focusing on some of the wrong things while some of the people who can afford it, whether the gambling industry or others, are getting away in the smoke. That is not the right thing to face people with as they go into the very difficult winter ahead.
Baroness Wilcox of Newport (Lab)
I welcome this Budget, which represents a fundamental transformation in our nation’s fiscal priorities. After 14 years of Conservative government that has impacted profoundly negatively on our public services, this UK Labour Government’s first Budget marks a decisive shift towards rebuilding our society on foundations of fairness and social justice after over a decade of austerity. The evidence before us is unambiguous.
In the previous Administration’s last Budget, Wales received £1 million in capital funding. Under this Labour Administration, Wales is receiving £235 million, which is 235 times more investment in Welsh communities. It is not mere figures but tangible means to repair schools, construct hospitals and build the homes our communities so desperately need.
The Benches opposite may offer criticisms, as in that barnstorming opening speech by the noble Lord, Lord Johnson, but they surely must acknowledge in their quieter moments the profound impact that their approach to fiscal management has had on communities across the United Kingdom. When they question the decision to reform taxation of non-domiciled individuals and second homes, they reveal their priorities. This is fundamentally about fairness. Those who have benefited most from our society must contribute appropriately to its renewal.
Let us consider what this Budget offers for my home country of Wales: £774 million of additional revenue for this year, £695 million the following year, and £235 million in capital funding—a real-terms increase of 7% compared with the previous 0.5% annual average. These are not abstract numbers; they translate into meaningful change for communities in Wales.
I draw attention to the redressing of historic injustices. My dear late stepfather was a collier. He followed his own father underground aged 15 in the early 1950s. Unfortunately, the Labour Government’s decision has come far too late for him, but the transfer of £1.5 billion of the mineworkers’ pension scheme investment fund to its rightful beneficiaries demonstrates respect for our mining communities, who have waited far too long for such recognition. To those in the House who question the approach to taxation while our public services face such challenges, I ask: what interests do you serve? The Budget delivers an above-inflation 6.7% increase in the national living wage and reduces universal credit deductions from 25% to 15%, benefiting 1.2 million of our poorest households, and it secures a 4.1% increase in state pensions against 1.7% inflation.
Furthermore, the Labour Government are investing in Wales’s future through £25 million for essential coal-tip safety, new hydrogen projects in Bridgend and Milford Haven, and £80 million for the Port Talbot steelworkers—funding that was promised but not set aside and never delivered by the previous Tory Government. Under the leadership of my noble friend Lady Morgan of Ely in Wales, working in partnership with our UK Government, we can now advance a truly progressive agenda. Every pound will be directed where it delivers maximum benefit: our NHS, our schools, and supporting vulnerable families. The Treasury’s analysis, available to all, demonstrates that households in the lowest income brackets will benefit the most significantly, while necessary tax increases will affect only those with the highest incomes.
This is the hallmark of progressive governance, delivering for Wales and across the United Kingdom. This Budget represents not merely a series of fiscal decisions but a fundamental reset, moving beyond the policies of the past towards a fairer, more prosperous future for all our communities.
Baroness Tyler of Enfield (LD)
My Lords, my focus tonight is squarely on health and social care. As we have heard, the Chancellor announced £22.6 billion over two years in new day-to-day funding for the NHS, and £3.1 billion in capital funding. This funding boost is very welcome and long overdue. These are very large sums and must be spent both well and in the right places. She also announced an extra £600 million next year for social care, a very small amount given the acute challenges faced by the sector.
The recently published autumn survey of directors of adult social services shows that adult social care budgets are under acute strain, with many overspending their budgets. That £600 million, while welcome, is so very meagre, especially as it has to be shared between children’s and adult’s services; indeed, it has been described by some as a drop in the ocean. Yet again, social care is the Cinderella of the NHS. As my noble friend Lord Shipley explained, most of this funding is likely to be wiped out instantly by increases in the national minimum wage and employers’ national insurance contributions. This is simply giving with one hand and taking with the other. This tax rise could force care homes to close, and certainly will do very little for the stabilisation of the sector that is so badly needed. It is also inconsistent. The Chancellor is compensating the NHS and other public sector employers for the cost of the tax increases. However, given that GP surgeries and most care providers are private, they will not benefit from this help. This is simply counterproductive and—dare I say it—just has not been thought through. It has just been estimated that more than 2 million GP appointments per year could be at risk.
My central call today, along with other noble friends on these Benches, is that the Government exempt social care providers and GPs, along with NHS dentists, pharmacies and charitable providers of health and care, from the employers’ national insurance tax rise. In responding, can the Minister tell me what impact assessment the Government made when preparing the Budget of these additional costs to social care providers, and how they expect that money to be found? While all this is being picked over, the seemingly endless wait for the far-reaching fundamental reform of social care that is so badly needed goes on, which is heartbreaking for all the older and disabled people who need social care, and for their families.
As my noble friend Lord Fox said, unless the Government get a grip on social care, we will not be able to end the crisis in the NHS and patients will pay. I join the noble Lord, Lord Empey, in urging the Government to launch urgent cross-party talks so we can set social care on a sustainable footing. Frankly, the very last thing we need right now is a royal commission—we need a 10-year plan for social care sitting alongside the NHS 10-year plan, promised for the spring.
The decision to increase the earnings limit for carer’s allowance was very welcome and a good first step that Liberal Democrats have long campaigned on. The entire social care system depends on the good will and unpaid labour of millions of families and friends who are carers. Without them, the whole system would grind to a halt. However, on its own it will not end the repayments scandal or fix the system. The Government need to go further, get rid of the cliff edge altogether and launch a broader review to give carers the wider support they deserve, including increasing the rate of carer’s allowance. I am pleased that there will be further opportunities to look at this in forthcoming legislation.
Mental health has not really been covered so far. Along with many in the sector, I am waiting with bated breath to see what proportion of the £22.6 billion increase will be allocated to it. There must be a specific allocation. What assurances can the Minister give me on this point? At present, people with mental illness face some of the longest delays to care. The Chancellor has committed to providing specific funding for more hospital beds and to improving the health estate. This must be fairly distributed, so that mental health patients do not have to be seen in dilapidated buildings which predate the NHS or sent hundreds of miles away for care due to a lack of locally available beds. Good-quality mental health services in the right place will ultimately boost the nation’s productivity.
There is much more that I could say, but time is running out, so I will finish by reverting to my central theme and asking the Minister: what additional levels of service will be achieved by this extra NHS money in terms of timely GP appointments, cancer treatment targets and NHS dental services?
Lord Moynihan of Chelsea (Con)
My Lords, I refer to my entry in the register of interests.
This Government say that their first priority is to achieve economic growth, which, as the noble Baroness, Lady Neville-Rolfe, pointed out, must be in GDP PC—growth per capita, not just GDP. The money they are lavishing on the economy cannot be paid for unless the economy grows, and without growth they will not get elected in five years’ time. But for the economy to grow, they need to spend and tax less. Does this Budget do that? Not so much. Spend rises by £70 billion a year. Tax rates increase, with the dubious claim that they will pay for only half of the new spend. Borrowing increases dramatically. The OBR describes all this as
“one of the largest fiscal loosenings of any fiscal event in recent decades”.
We have not grown much for many years; real wages are still 5% lower than they were 17 years ago. Other countries have recovered economically from Covid and the great financial crisis, but we have not. The Budget will make things worse.
The Budget plays all sorts of jolly japes with the numbers. Spending is dubiously described as “investment” rather than what it is—cash out. National debt is redefined to be lower because of amounts that we expect to receive from future student loan repayments. This is meretricious when that debt calculation at the same time excludes our £2.6 trillion liability, growing every year, for future public sector pension payments, because of which our national debt is twice as large as we claim it to be.
Higher government expenditure causes lower growth because a larger, unproductive public sector squeezes out the growth-producing private sector. Increasing employers’ NIC and the minimum wage and putting VAT up on private schools means that businesses can neither afford to employ as many people nor grow their companies as they might otherwise have done. The reality of that is already coming home to the Government, with furious complaints from almost all business sectors: there will be lower receipts on corporation tax, income tax, employers’ and employees’ NIC and capital gains tax. Extra tax revenues will not be £36 billion; tax revenues will not rise to 38% of GDP.
There will be further diminution in economic growth from the flood of entrepreneurs, non-doms, young high achievers, millionaires, billionaires, people planning to sell their businesses and people avoiding inheritance tax all leaving the country. There will be the most astonishing level of departures, and so even less tax revenue and economic activity. HMRC could tell us and the Government how many people have left or become economically inactive, but why spoil a beautiful illusion about tax revenues going up by getting factual?
There is worse even beyond that, with disability and mental health numbers climbing, the slow-motion car crash of public sector pension payments, the triple lock on the state pension more and more out of control and the folly cost of net zero rapidly becoming clear. The deficit, already a disastrous 4.5% of GDP, will widen rather than decline. It is not sustainable.
Over the past two decades, we have joined ourselves to that class of social democrat economies in countries such as France and Germany where GDP PC growth is a thing of the past. Surely, we can do better. One pines in vain for our own Javier Milei or Elon Musk to chainsaw our bloated, inefficient, unproductive public sector. One pines in vain for a Margaret Thatcher to explain that, sooner or later, one runs out of other people’s money. One pines for politicians who will tell the truth to the people of this country: that there is no money; that we have brought this on ourselves in the past 20 years by overspending and overtaxing, making our country poorer and making it impossible to provide those things that we would like our citizens to have. A Budget that cut spend and taxes would be a great start to solving this dilemma.
Baroness Mallalieu (Lab)
My Lords, I congratulate the Minister on his clarity and stamina and the noble Lord, Lord Booth-Smith, on his noteless and apt maiden speech. My five minutes will be devoted to farming and inheritance tax changes. I declare my interests as president of the Countryside Alliance and as having a small livestock farm on Exmoor. It is so small that I do not believe the APR changes will affect me, although they certainly affect a great many in the very rural community from which I come—and will affect all of us, not for the better, if they go through in this form.
On general election day, there was real good will towards the forthcoming Labour Government. Results showed that “It’s time for a change” was a universal feeling throughout the country, including in rural areas. Where there had been only 17 Labour MPs in rural seats during some of the 14 years of the Conservative Administration, there are now more than 100. That good will has, sadly, evaporated very fast. It is hard to be a Labour MP in a farming area right now. There is certainly anger but, perhaps even more, anxiety and a very real fear for the future.
My local livestock market at Cutcombe now has a drop-in centre for mental illness. Before the election, Steve Reed, then the shadow Minister, now the Environment Minister, publicly and privately assured the farming industry that this policy was not even in contemplation. I believe he was honourable in what he said, but that is an indication of how hasty and inadequate the preparation has been for this policy. Since then, there has been no consultation or impact assessment and, as we have heard, there is great confusion over the number of people who will be affected.
I understand why the Chancellor might wish to bring those who had bought farmland to shelter funds from tax with no intention of farming it themselves within the tax threshold; they pushed land prices sky-high. However, this measure pushes the genuine farming family into a position where they will have to sell land, and presumably—I ask the Minister to clarify—in addition to paying inheritance tax, pay capital gains tax on top of that.
This has simply been pitched far too low, and there are many other ways in which those investors could have contributed to the Treasury without pitchforking the very people the Prime Minister promised to protect from tax: working people. It is not just the farmers themselves; it is their employees, contractors, suppliers and customers, and even the local community, of which family farms are so often the cornerstone, who will be affected.
The word “unkind” was used. It is unkind, but I do not think it was deliberate. I think it was inadvertent, because the research had not been done, clearly the consultation had not taken place, and the results of this policy—if it were to go through—were not appreciated. Do we really want to see productive farmland transferred to companies and large-scale agri-businesses, probably to be used for carbon off-setting, greenwashing or large-scale industrial livestock production, or do we want to see that land farmed by people who know it and love it, who produce high-quality local food, and whose work has made our countryside one of our greatest assets?
Henry Dimbleby, in producing the National Food Strategy, said we need to be resilient to withstand global shocks. The next food crisis may well be one not of distribution but supply, and if we reduce our home production, we will all have very good reason to regret this proposal. From every side of the House in this debate so far, there have been calls for the Government to look at this again. How do you increase productivity by forcing people to sell off their means of production? I ask the Minister to take this back and look at it again.
Baroness Lea of Lymm (Con)
I begin by noting the economic background to the Budget. The economy is growing, albeit modestly. Unemployment is around 4% and CPI inflation fell below the 2% target in September. Public sector borrowing, though still too high, has fallen from pandemic levels and is lower than during the financial crisis of the late 2000s. Speaking as a veteran economy watcher, I would not describe this as the
“worst set of economic circumstances since World War II”
—far from it. What about the £22 billion black hole in the public finances? Granted, the OBR in its recent review of departmental expenditure limits criticised the Treasury over the March Budget, but the OBR’s chair, Richard Hughes, concluded that:
“Nothing in our review was a legitimisation of that £22 billion”.
Moreover, I cannot emphasise too often that the economy has had two major shocks in recent years. First, there was the pandemic and the associated lockdown, which was enthusiastically supported by the then Opposition. It cost the Exchequer £380 billion and has weakened the labour market. According to the ONS’s latest numbers, the number of economically inactive people aged 16 to 64 is still over 700,000 higher than prior to lockdown. Secondly, the Russian invasion of Ukraine in February 2022 resulted in a major inflationary shock and a significant increase in the Bank rate.
I turn to the Budget itself. The OBR concluded that Budget policies will increase spending by almost £70 billion a year over the next five years. As a result, total managed expenditure will be around 44% to 45% of GDP, from around 40% prior to the pandemic. Note that this spending will be on an unreformed public sector, where productivity was around 6% lower at the beginning of this year than it was in Q4 of 2019 prior to the pandemic. Productivity in the public sector has fallen.
Higher taxes will fund about half of this increase in spending. They will raise about £36 billion a year and push the tax to GDP ratio to an historic high of about 38% by the financial year 2029. The rest of the increase will be funded by a £32 billion a year increase in borrowing. According to the OBR, as has already been noted, this is one of the largest fiscal loosenings of any fiscal event in recent decades. Such borrowing, of course, has to be financed, irrespective of any tweaks to the fiscal targets.
Unfortunately, the financial markets have already shown some concern. Unsurprisingly, the debt to GDP ratio remains close to 100%, at around 97% over the forecast period. In this context it is instructive to note that the OBR warned in September that the longer-term pressures on the public finances, including the ageing population, would eventually put the public finances on an unsustainable path. This was before the Autumn Statement, with its large and sustained increase in spending, taxation and borrowing.
Concerning the OBR’s economic forecasts, it was decidedly downbeat, suggesting little by way of an overall boost to growth. Granted, Budget policies would temporarily boost output in the near-term, but they would leave GDP largely unchanged in five years’ time, at the end of its forecasting period. Moreover, the OBR increased its forecast for CPI inflation and interest rates, with all the implications therein, which the Bank of England echoed last week. Disappointingly, it suggested that business investment, so vital for growth, could be partly crowded out by the increase in government spending and net fiscal loosening.
What about the impact on business, that vital engine for growth? Businesses will face sizeable increases in employer national insurance contributions, though it is possible that some of the higher costs will push through to lower wages. This is at a time when they will face the sizeable increase in the minimum wage from next April and the costs resulting from the implementation of the Employment Rights Bill, which could be up to £5 billion a year. In the meantime, they have to cope with the highest industrial electricity prices of any industrial economy, including those in the EU and the G7.
Lord Bradley (Lab)
My Lords, I declare my interests as in the register.
I broadly and warmly welcome this first Labour Budget for 14 years, presented so clearly by my noble friend Lord Livermore, particularly the changes to fiscal rules relating to capital investment, which should help drive up growth, prosperity and productivity.
I would like to comment today on two specific issues relating to social care, the first of which is the North Manchester General Hospital redevelopment in my city. This was one of the 40 new hospitals promised but not delivered by the last Conservative Government, and understandably called in for review by the current Government. This redevelopment is a perfect example of how capital investment can be a driver for economic recovery.
The 15 to 20-year £4.5 billion investment programme presents a once-in-a-generation opportunity to mobilise at pace a health-led regeneration, alongside the local authority, other housing providers, industry, and academic and community partners, both public and private sector, and to use investment in key services to stimulate civic renewal in an area that experiences some of the highest socioeconomic disadvantage and health inequalities in the whole country. I believe that this hospital-led project should now be approved. It provides a rich opportunity to tangibly demonstrate a successful Labour Government’s first term by 2029. I hope the Minister will support this at the conclusion of the debate.
Secondly, I will briefly make two points on social care. The Adult Social Care Committee, of which I was a member, published a report entitled A “Gloriously Ordinary Life”, which focused on unpaid carers. It made a number of recommendations about financial support for carers. They were not progressed by the Conservative Government, but I am pleased that this Government have made a start in this Budget by increasing the earnings limit for carers to the equivalent of 16 hours per week by April 2025, and future increases will be in line with national living wage increases. However, the carer’s allowance itself is, in essence, the lowest benefit of its kind, at a mere £81.90 a week—an amount that bears no relationship to the extraordinary work undertaken by the millions of carers across the country. I understand that next April it will be increased by 1.7%, or £1.40 a week, which I am sure the House will agree is a dreadfully small amount. Will this Government look again at the committee’s recommendations that the Department for Work and Pensions must review the carer’s allowance in order to value our tremendous carers properly, and bring forward proposals in next year’s spending round?
Finally, I am pleased that the Chancellor has injected additional resources into both health and social care, but as the excellent report by the noble Lord, Lord Darzi, recognised, the health and social care system must be reformed in an integrated way. The Government have accepted that premise. I welcome the intention to produce a 10-year plan for the NHS by next spring, but social care must also be reformed at the same time—not separately and not in a silo, but as an integrated system. I urge the Government to bring forward plans for social care reform when the NHS 10-year plan is published, so that the ambition to shift fundamentally from ill health to well health, and from hospital to local communities, can be successfully achieved. I certainly look forward to the Minister’s views on these matters.
Lord Altrincham (Con)
I thank the Minister for hosting this debate, for listening so carefully to so many speakers one by one, and for his good grace. I also thank the Treasury officials who have pulled together this Budget in extremely difficult circumstances, and the many other officials who contributed, including at the OBR. They managed to produce, yet again, an extremely good report, written in that almost unknown language of plain English and the related dialect of plain maths that we can all understand.
The OBR—to which the Government tied themselves very tightly, as we know, in their very first Bill of this Parliament—has been somewhat unhelpful to the Government. The Chancellor’s Statement was well received by the markets in the opening minutes, until the OBR report landed, when there was a sell-off in the 10-year rates almost immediately because its statements were quite strong. Maybe the Minister can comment on whether the Government will review the overall financial framework in which they are operating, some of which was set up long ago in different times. The Bank of England was made independent when tax to GDP was fully 10 points lower than it is today, and the OBR was set up in 2012, when debt to GDP was around 70%. In fact, debt to GDP has been moving up 2% a year since our Office for Budget Responsibility was set up, so, as we have discussed before, it is a rather unaffordable kind of budget responsibility.
The overarching framework is not that ideal, and other agencies, such as the financial agencies, are also somewhat autonomous of the Treasury. The noble Lord, Lord Eatwell, referenced bank investment, but of course, that is under the PRA and the FCA, and is again at one remove from the Government. Can the Minister comment on the overarching framework in which the Government are currently operating as they pull this Budget together?
The extraordinarily sensitive number in the Budget is the 38% of tax to GDP. The noble Lord, Lord Desai, believes that it could go to 44%. Just for a moment, let us hope that it gets to 38%, as it is extraordinarily important that we can fund the state on the basis of these forecasts. Getting to 38% is sort of unknowable; that is one year sooner than the previous forecast. The reason it is unknowable—to challenge what the noble Lord, Lord Desai, said—goes back to a comment made by the noble Lord, Lord Lamont: the tax system in this country is remarkably concentrated. We are resting our tax system on around 3 million people, and they are doing half of all income tax and a good deal of the rest of the tax raised by HMRC. This tax concentration has come about because our economy has changed so much, and we are now an economy of services. Britain was the world’s first industrial nation, and we are becoming the world’s first services nation. That concentration into high-value services is creating quite a bit of difficulty with our public finances. We need those services and employees in this country to keep going to support the kind of state we have—which has not been ideal even recently, as we have heard during the debate.
There is a good deal of evidence that those jobs are moving. For example, thousands of jobs have gone from the London Insurance Market, which were high-paid jobs in the economy. The commonplace observation that the graduate entry of big accounting firms has been restricted means that it is limiting high-paid jobs in 10 or 15 years’ time in accounting services. They are jobs that will not happen in this country; they may be in Atlanta or somewhere else.
The Government are quite rightly focusing on life sciences, which I will pause on for a moment. AstraZeneca has four worldwide research bases; it has only one in the UK. GSK has five worldwide research bases; it has one in the UK. Both companies employ fewer than 20,000 people in the UK; AstraZeneca employs below 10,000. The noble Lord, Lord O’Neill, referenced obesity. There has been an enormous miss in obesity wonder drugs in life sciences, which are accruing tremendous value creation in the US, Denmark and elsewhere, but not in the UK.
Then, there is the issue of tax migration. We hope that tax migration is not going on. It is very hard to measure, because sometimes the person moves and sometimes the person does not. The US is seeing tremendous internal tax migration, and that could easily come to us. One of the reasons why the US matters so much is that we have so many citizens already in the US, making it easy for people to travel. Maybe we should take a look at that.
I will turn briefly to one other point. We should thank Jessica Pulay at the Debt Management Office, who has done such a superb job in raising debt for the Government so consistently in all markets—but the DMO could also do with a little help. Pension funds have been buying gilts because they have been de-risking, and, as noble Lords know, foreign investors buy 30% of the market. Maybe this Government should look at incentivising domestic savers to hold gilts. Can the Minister comment on that too?
Baroness Ramsey of Wall Heath (Lab)
My Lords, it is a pleasure to take part in this Budget debate with so many distinguished speakers across the House.
I will address the topic of the NHS. I was so pleased—and, frankly, relieved—when the Chancellor announced more than £25 billion extra funding for the NHS in the Budget. After all, the last 14 years have been so very hard on the NHS, in stark contrast to the previous three Labour Governments, which provided unprecedented levels of investment. That enabled the increased numbers of doctors, nurses and other health professionals who delivered those since undreamed of maximum four-hour waits in A&E, cancer referrals in two weeks and being able to see a GP so promptly that I recall a patient on “Question Time” complaining that their appointment was offered too soon.
Everything was not perfect, of course. The importance of the social care system and its role in keeping patients from unnecessary hospital admissions and, vitally, in helping those clinically ready to leave to do so promptly, remains an as yet unachieved holy grail. However, those resources, and our health professionals delivering those services expertly and with great dedication in the vast majority of cases, are the reasons why patients were repeatedly hugely positive about GPs, hospital treatment and healthcare in general when surveyed during those years.
Sadly, that is not so much the case now. Years of underfunding since 2010, the pandemic, patient demographics increasing need, and social care on its knees have all contributed to huge strains on NHS services. A huge effort will be required to tackle this, and it will inevitably take time. However, the increased resource funding announced by the Chancellor last month—3.4% per year, compared with only 2.2% on average over the last 14 years—will provide a great start, as will the £10.9 billion of capital investment to support new ways of working in the NHS through better use of IT and improved premises. These increases will make a concrete difference to so many people’s lives, as NHS waiting times start to improve as a result of the 40,000 extra elective appointments a week funded by the Budget. Under the previous Labour Government, the NHS aimed to treat patients within 18 weeks of their referral; it will be such a positive step forward for the NHS to start making progress towards this once again.
The new capital funding will enable more than £2 billion to be invested in NHS technology and digital to run essential services and drive productivity improvements; free up staff time; ensure all trusts have electronic patient records; and enhance patient access through the NHS app. It will also provide vital capacity to be built for more than 30,000 additional procedures and over 1 million diagnostic tests, alongside additional beds to help reduce waiting times. Now that this Budget has provided the funding which demonstrates the Government’s unwavering commitment to supporting the NHS, it will be for doctors, nurses, other health professionals and administrators to use this opportunity to start to transform patient care. My experience of working with so many of them gives me the confidence that they will respond brilliantly, as they have so often before.
I have been privileged to be a non-exec board member of primary, community, secondary, tertiary, regional and national health organisations over 22 years, including as vice-chair of UCLH in London and then chair of Cambridge University Hospitals trust. As Lambeth PCT chair over the river, I was hugely impressed by the innovation, energy and community focus of the GPs I worked with both to improve patient access and to tackle complex social challenges. Over the years, I have had the honour of chairing innumerable consultant appointment panels, as well as those for senior nurses, and was always struck by the professionalism and expertise of those we appointed. I know each one of those doctors and nurses will have been looking and praying for a financial settlement that would allow them to start turning around the quality of patient care once more. Working in partnership right across the NHS, as well as beyond, through integrated care boards and partners in public health and local government—and with the managers too, who are often externally maligned but are important to the effective running of services—there is so much to be done, and the Government’s first Budget can only get the task under way. We should all welcome this vital first step and give our full support to those we rely on day in, day out to deliver the best possible health services and outcomes for their patients.
The Earl of Clancarty (CB)
My Lords, I, too, congratulate the noble Lord, Lord Booth-Smith, on his excellent maiden speech. I will speak on the arts and creative industries. I thank the Campaign for the Arts and the Authors’ Licensing and Collecting Society for their briefings. There is, of course, a one-hour debate on the effect of the Budget on this sector on Thursday, but this area is certainly important enough that both the Treasury and the DCMS should be addressed on the concerns that this sector has, not least because the Budget is a mixed bag for the arts and creative industries. Perhaps worse than that, the areas where funding is most urgently needed after so many years of underfunding have not been addressed and indeed could go backwards, which is disappointing for a Government who say they will support the arts.
There is good news, hopefully, for the national museums and galleries, but questions remain: how much additional funding will be made available and when will this happen? Will the Government further help other struggling arts and cultural organisations— the plight of Welsh National Opera immediately springs to mind—through the Arts Council and other funding bodies? I thank the Government for listening to concerns about VAT on specialist performing arts schools and confirming that courses covering the Music and Dance Scheme and the Dance and Drama Awards scheme will not attract VAT. I think that will be music to the ears of the noble Lord, Lord Berkeley.
The Earl of Clancarty (CB)
Literally—yes, indeed. However, as the Campaign for the Arts says:
“Realising the full ambition and potential of”
Labour’s growth plan, including for the creative industries,
“will take a level of resourcing and commitment beyond that which we have seen at this Budget”.
Starting with the noble Lord, Lord Fox, earlier in this debate, we have had numerous references to concerns about the survival of SMEs. Will the Government promise to keep an eye on, or even formally assess, the effects of their measures on SMEs? This is hugely important for the creative industries after being hit so hard by both Brexit and Covid.
The director of the Museums Association, Sharon Heal, said that
“the urgent needs of local and regional museums and galleries have not been addressed in this budget”,
and the Minister should be aware that the situation for civic museums is sufficiently urgent that a programme of emergency funding was asked for before the Budget. Birmingham Museums Trust said that
“this budget leaves us worse off and we are already in a dire financial situation in Birmingham”.
Similar arguments can be made about our libraries across the country, as the noble Lord, Lord Shipley, referred to, and I agree with everything that the noble Lord, Lord Whitty, said about a new basis for local authority funding. For authors, there is disappointment that the public lending right has not been addressed, seeing that there has been no increase in PLR in the last 10 years. Our own £6 million fund pales in comparison to Germany’s £14 million annual pot. Will the Government increase the fund to ameliorate these significant discrepancies?
The Government intend to cancel levelling up culture projects affecting the International Slavery Museum, the National Railway Museum, V&A Dundee and Venue Cymru. Why do the Government not consider these investments to be sufficiently, in their own words, “focused on the growth mission”? Have they assessed the impact of cancelling these investments?
The reduction in business rates relief will adversely affect the arts. The Music Venue Trust has calculated that this reduction will place an additional £7 million burden on 350 grass-roots music venues, put at risk more than 12,000 jobs and cost more than £250 million in economic activity. I understand there will be a consultation on business rates reform in 2026, but this will not help the hundreds of already struggling music venues that will undoubtedly be lost unless the Government rethink their decision or intervene with a ticket levy on big arena gigs that can help the small venues. While of course it is good news that the arts tax reliefs remain unchanged, it is disappointing that this has not been extended to choirs. Will the Government look again at this?
Finally, Creative Europe was a huge help to our arts and culture, yet we have never had any proper replacement for that funding; indeed, we ought to rejoin Creative Europe, which the rules allow us to do. On top of that, we now hear that the UK shared prosperity fund is to be reduced and phased out. Have the Government assessed the impact of this? Why is it happening before reforms have been completed?
Lord Sharkey (LD)
My Lords, I will speak briefly about alternative finance. The Treasury defines alternative finance as
“a method of raising finance that characteristically involves the sale, purchase and renting of assets in circumstances where ‘conventional’ financing would involve lending at interest”.
It goes on to say that alternative finance products are
“based on Islamic financing but can be used by both followers and non-followers of the Islamic faith”.
Islamic financing has long been seen as important to the United Kingdom. In October 2013, the World Islamic Economic Forum was held in London. It was the first time the forum had ever been held outside the Islamic world. At this forum, Prime Minister Cameron said:
“I don’t just want London to be a great capital of Islamic finance in the Western world. I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world”.
We have not quite achieved that yet.
One of the barriers to the growth of this market has been the CGT treatment of alternative finance mortgages. Those who opted for these Islamic-style mortgages found themselves in difficulty when it came to remortgaging. Capital gains became an issue because of the structure of the finance, under which customers sell a beneficial interest to the bank for the term of the finance. This contrasts with conventional finance, where no CGT is triggered on remortgaging. This discrepancy in treatment causes serious difficulties.
I know of one Islamic finance case that is appealing a CGT assessment of £600,000, which would not arise if there was an equal treatment of alternative and conventional finance. So I am very pleased that the Government have committed, on page 231 of the Red Book, to introducing new tax rules which will level the playing field, at least prospectively, from last 30 October. This is a good resolution of a problem that has unnecessarily hampered the growth of Islamic finance in the UK and has needlessly disadvantaged those whose faith prevents them from taking out interest-bearing loans. Unfortunately, it is not clear if this levelling up of the CGT tax rules is to be applied retrospectively as well as prospectively. What is the Government’s position on this? I think I can probably guess.
There is a broader point here. Islamic finance must continue to be considered in the formation of policy, certainly with the aim of preventing unintended consequences such as the CGT issue, but with the larger aim of increasing London’s share of the Islamic finance market.
There are two further issues to do with Islamic finance, which may be impeding growth. The first is the Bank of England’s alternative liquidity facility—the ALF—which is an important and innovative element in Islamic bank finance and which is not replicated anywhere else in the western world. The current limit is £200 million across Islamic institutions and there is a strong appetite for increasing that. The Bank of London & The Middle East said that
“we hope that the Bank will extend the size of the facility in due course, enabling banks to place even more money into the facility as they grow and further secure the future of Sharia’a finance in the UK”.
Is this something on which the Government would look favourably?
There is also an issue with settlements. HMRC has said that it does not consider that a diminishing shared ownership arrangement, as is typical in sharia finance, should be a settlement for income tax, CGT or inheritance tax. If this is a correct interpretation of the rules, then HMT should issue binding guidance. Otherwise, rating agencies will continue to take the opposite view, making securitisation very problematic.
I look forward to making further progress against David Cameron’s now 10 year-old growth objective, and I look forward to the Minister’s reply.
Lord Sahota (Lab)
My Lords, I will focus my comments about the Budget on local government funding. I served as a unitary councillor on Telford and Wrekin Council for 22 years, holding many positions in that time, including leader of the council. So I know very well how important local government service is to our citizens. In fact, at times, I felt that council services were even more important to people than central government, because they provided them with day-to-day needs such as housing, emptying bins, road repairs, adult social care, safeguarding vulnerable children, mental health provision and so on. All these services are the hallmark of our civilised society.
Councils can provide all these services only if they are properly funded. I am saddened to say that, when the previous Government were in charge from 2010 until now, we had nothing but cuts to our budget. This all started with George Osborne’s Budget of 2010. He did not value local government and the services it provided. Sadly, his legacy continued right up until the last election. This is typical of Conservative political ideology—not listening or caring for people’s everyday needs.
From 2010 to 2021, according to the National Audit Office, the average real-term spending power of every council has been reduced by over 27%. Spending power from central government funding in the same period went down by over 50%. Some services were cut by 70%, with cultural services cut by 43%, roads and transport by 40%, housing by 35% and trading standards by 50%. All these cuts are in real terms. Councils up and the down the country struggled and some even went bankrupt, unable to provide proper social care for vulnerable adults and children, fix potholes, provide homes for families or help rough sleepers.
I know how bad it was because I lived through it as a council leader and I still have the scars on my back from that time. That is why I wholeheartedly welcome the Chancellor’s Budget. I fully welcome the extra funding from our new Labour Government—a real-term increase of 3.2%, with £1.3 billion new grant funding, including over £600 million for social care. Earlier in this debate, the noble Lord, Lord Forsyth, who is not in his place now, suggested that the Budget did not include anything for special needs services. The Budget includes an extra £1 billion for children with special educational needs. It includes £233 million for families in temporary accommodation and to prevent homelessness; more to improve local bus services and to fix potholes; extra kinship allowance; and so on and so forth.
This is a typical Labour Government Budget: caring, sharing and listening to the people who really matter. It is, as the chair of the Local Government Association, Councillor Louise Gittins, said,
“a step in the right direction”.
I wholeheartedly agree with her. However, the damage that the previous Government has done to local government funding and its infrastructure will take a long time to rectify. I congratulate the new Chancellor on listening to the Local Government Association and acting upon its advice, but the black hole that the Conservative Government have left will take many years to fill.
Lord Lexden (Con)
My Lords, this Budget makes history for the wrong reason. It is the first ever Budget to place a tax on education in our country.
Over the years, all Governments have regarded education as being so invaluable to individuals and society alike that nothing should ever be done to obstruct its success and growth in all the varied forms that it takes. Other countries agree. Greece briefly thought otherwise but quickly recognised its mistake. The Government are now breaking a universal golden rule by slapping VAT on independent school fees, not at a fairly modest rate to ease the process of adjustment but at a whopping 20% from 1 January, just a few weeks from now, during the course of a school year, which is the worst possible time.
Far from taking money from independent schools, Tony Blair’s Government provided a little—just a little—in order to get more state and independent schools working together in the interests of all their children. Modest government funding in 1998 for a joint state/independent partnership group helped stimulate all manner of hugely successful projects. There are now thousands of them up and down our country. Last week, inspiring teachers and other representatives from both sectors came to Parliament to celebrate their latest achievements. They are helping many independent schools to thrive, which is what the Prime Minister said in September last year that he wanted to see, telling the publication Jewish News:
“We have got fantastic independent schools”.
How can these words be squared with his VAT levy, which reverses the policy of the last Labour Government and jeopardises the partnership work that is one of their legacies?
I was able to give that work a small helping hand as general secretary of the Independent Schools Council—that gives me an interest in this subject, which I declare along with my current position as president of one of the council’s constituent bodies, the Independent Schools Association, which works on behalf of some 670 schools, most of them small in size and widely cherished, often because they provide with great care and warmth for special needs, different religious faiths, the performing arts and other specialisms.
That leads me to a crucially important point. The kind of independent schools I have mentioned are far more numerous than the large schools with their well-known names that attract so much media attention. It cannot be said too often that 40% of independent schools have under 100 pupils. Enormous value is placed on them by their local communities. Who will be most seriously and widely affected by the VAT levy? Not the rich, who are the Government’s target in this Budget. Their children go to a small minority of independent schools, which can certainly be expected to go on thriving. The education tax will fall mainly on working families of limited means—just the kind of families the Government say they want to protect. They cannot rely on the Government’s assurances that they will escape most of the tax because schools will be able to absorb it. Small schools have no handy financial reserves into which they can dip. Absorbing a proportion or all of the VAT levy—which the Minister says he expects—would mean cuts, above all to staff, who account for some 70% of school costs.
What have the teacher unions got to say about this? They have called for the tax to be delayed until the start of the new school year so that its impact can be properly assessed first. Amazingly, the Government think that there is no need for a proper and full impact assessment before inflicting this unprecedented tax on our country.
So the Treasury and the Government sail complacently on, insisting that the many worries that are driving thousands of parents to distraction will evaporate when education VAT comes in a few weeks’ time. They say there will be no large, involuntary movement of children to state schools, some of which will be unable to provide the courses that such children have been studying. They say that irreplaceable little faith schools for Jewish and Muslim children will not fold. They say that service families will not be driven from boarding schools, and that some 100,000 special needs children without EHC plans will not suffer. These are mere hopes.
A policy that breaks all precedent ought not to proceed on the basis of mere hope and a single report from the Institute for Fiscal Studies that other experts dispute. Above all, it ought not to come into effect on 1 January, just five months after independent schools, then on their summer holidays, were told that their plans and budgets for the next school year would have to be redone. Was that not utterly unforgivable? Can there be a single teacher who believes it is right to upset and distress children during the course of a school year?
Baroness Crawley (Lab)
My Lords, I congratulate the noble Lord, Lord Booth-Smith, on an absolute humdinger of a maiden speech. I predict standing room only for his next contribution.
No Budget pleases everyone, and there has certainly been plenty of criticism in this debate. It is only right that the Government listen to those who believe that they have been unfairly treated, but at least serious people such as my noble friend the Minister are now in charge. We have come a long way from the bizarre and dangerous days of Liz Truss, and gone are the days of inflation at more than 11%. To boot, we have a woman Chancellor, the first ever, which is a cause for celebration. It is good that the Government are now looking forward and are focused on both economic growth and economic stability. Inevitably, with these goals in view, hard choices have to be made. Those hard choices are made in order to fix the foundations, and goodness did they need fixing.
It is good that the Chancellor has made the commitment not to borrow to fund day-to-day spending, for that way lies disaster. It is good that there is a timetable, perhaps far too long for some, for the elimination of the national deficit and a reduction in government spending. It is good that there is a Covid corruption commission at last set up,
“to uncover those companies that used a national emergency to line their own pockets”.—[Official Report, Commons, 30/10/24; col. 815.]
I hope that the leadership of those companies, wherever they are, are listening.
It is good that the national living wage is rising. It is good that the triple lock is to be maintained, despite—and we have to acknowledge this—the very real disappointment among pensioners about losing the winter fuel allowance. It is good that there are going to be more teachers and more money for schools and breakfast clubs. It is good that there is a crackdown on fraud from the DWP, for that fraud takes money from people who need support the most.
It is good that the carer’s allowance is to be increased, albeit from a very low base. That increase in the carer’s allowance has been a long-time campaign in this House; I am particularly thinking of my noble friend Lady Pitkeathley. It is good that the non-dom tax regime is to be abolished. It is good that NHS day-to-day and capital budgets are to rise while waiting lists fall. It is good that support for Ukraine is to be maintained, in the Chancellor’s own words,
“for as long as it takes”.—[Official Report, Commons, 30/10/24; col. 822.]
despite the new foreign policy being written on coasters in the dining rooms of Mar-a-Lago at this very moment.
It is good that billions in compensation are to be set aside for the two greatest scandals of our time: infected blood and the Post Office—about time too. All these things are to be done in spite of the black hole left unseen by the previous Administration.
It is a bit rich for sometime Conservative Ministers to pour scorn on a Treasury team that is finally trying to put things right in a way that does not threaten stability or lead to raging inflation. For the first time in 14 years I can say, “I support this Budget”.
Lord Razzall (LD)
My Lords, to follow on from that remark, Budgets normally have a pattern. On the day they come out there is one reaction and then, after a while and some reflection, there is a different reaction. In this case, the reaction was the same: disappointment and criticism.
I do not want to go into the issue of the £22 billion black hole, not only because there are not enough Tories to boo if I do but because it seems entirely irrelevant. I do not think anyone can doubt that taxes had to rise as a result of what had happened in the past. To maintain even our existing level of public services, taxes clearly had to go up.
As we know, the major tax increase was the increase in national insurance contributions for employers; from these Benches we think that was a mistake. As a number of speakers said earlier, we think it was a mistake because of the damage done to charities. We think it was a mistake because of the damage done to care homes. As Warwick University said, many care homes will go bankrupt faced with the slightest mild economic shock. We think it was a mistake because of the damage done to the catering industry. Pubs and restaurants are faced with a triple whammy of the national insurance contribution increase, the minimum wage and living wage increases and the possibility of an end to effective zero-hours contracts, which they rely on for their employees. It raised £25 billion but it was a mistake.
Unlike the Tory party, we are prepared to say what we would have done as an alternative. We would have ensured that large corporations bore that burden. We would have reversed the bank levy. We would have had a proper windfall tax on the oil and gas companies. We would have increased the tax on online gambling companies. We would have had a better reform of capital gains tax. We would have had an attack on the social media companies, which have huge revenues in the UK but do not pay their fair proportion of tax.
As people have said, the one thing missing from this Budget debate was the issue of growth. The Chancellor realised that and gave interviews after the event, saying that she was relying on other factors to produce growth, such as the reform of planning controls and the promise of private investment. The elephant in the room that she did not mention, and that noble Lords will not be surprised to hear me raise from these Benches, is Europe.
The Office for Budget Responsibility has confirmed the ongoing damaging effect of Brexit, so what should we do now? We are not demanding an immediate return to the European Union, but we must do a number of things. We must develop closer links with Europe. We must develop a better relationship with the EU agencies, on issues from the restriction of Erasmus to help with the asylum process. We must deepen our trade discussions, giving access for food and animal products. We must negotiate work visas, particularly for the creative industries, and we must obtain a mutual recognition of professional standards. When all that has been done, in due course, we must apply to rejoin the single market.
I turn for a moment to the Tories. They have attacked this Budget but have not said in any way what they would have done instead. Indeed, the noble Lord, Lord Johnson, who I have always rather respected, but who unfortunately is not in his place, said the Budget was unkind, dishonest and incompetent. I find that extraordinarily hypocritical from that former Government. Let us take unkindness. Was ignoring care for the elderly during their years in government kind or unkind? They say the Budget was dishonest. Was saying there were no parties in Downing Street honest or dishonest? They say it was incompetent. Was the behaviour of the noble Baroness, Lady Truss—no, sorry, not a Baroness yet—and Kwasi Kwarteng incompetent? On the basis of their unkindness, dishonesty and incompetence, the Tories deserved to lose the last election, and if they do not provide better opposition they will lose the next one.
Lord Davies of Brixton (Lab)
I thank the noble Lord, Lord Booth-Smith, for his maiden speech; I welcome him to the House, and I am sure he will be an asset. I also thank my noble friend Lord Livermore for his comprehensive report to this House on the contents of the Budget, as is entirely appropriate.
There is much that is good in the Budget. My noble friend Lady Crawley identified and summarised the good things in it, so I hope I will be forgiven for mentioning my major point of concern, which is the promise, made by the Chancellor in introducing the Budget, to make welfare spending more affordable. That causes me considerable concern. Of course, we will not know the details until we get the “Get Britain Working” White Paper, and I wonder whether my noble friend is able to provide us with a date. Perhaps the White Paper has been delayed because the Government are trying to learn lessons from the winter fuel payment problems. There are lessons there that I hope they have drawn.
There were two specific references in the Chancellor’s speech that caused me particular concern. When we talk about a crackdown on fraud, as she did, we have to ensure that it is done in a way that does not create collateral damage for people who are fully entitled to the benefits. The problem with crackdowns is that they can affect innocent bystanders unless massive efforts are made to ensure that does not happen. I hope my noble friend will be able to assure us that everything will be done to avoid the downside of crackdowns.
I have a particular concern, and we debated this in the last Parliament, about direct access to bank accounts. The Government seem to be stressing the influence of criminal gangs. My guess is that you cannot access the bank accounts of criminal gangs. Accessing bank accounts without probable cause seems a growth of the power of the Government. Again, if that is introduced in legislation, it needs to be done with considerable care.
I am very pleased with what the Budget said about pensions, which was very little. Pensions are an area where stability is essential because people are making long-term plans, so I am glad that the number of changes in the area of pensions was limited.
The changes to the Mineworkers’ Pension Scheme were very welcome. I need to say here that I was the actuarial advisor to the National Union of Mineworkers at one stage so I am familiar with the issues here. The mineworkers fully deserve what they are now being given.
The major change affecting pensions was charging inheritance tax on unused pension. Unused pension is a new concept. If you accumulate a pension fund and it has not been used in order to provide you or your dependants with an income, from 2027 that will form part of your estate and be subject to inheritance tax. I think that is entirely reasonable. I welcome the change. The money was put in the pension fund tax free and it seems eminently reasonable that, when the money is taken out, it should be subject to tax. Pension funds are for the purpose of providing pensions; they are not for the purpose of inheritance tax planning or tax avoidance.
We have a technical consultation going on that raises particular issues. I have some concerns that the proposals in the document go beyond technical issues and raise issues of principle. Of course, anyone who has dealt with a will knows that the problems of probate are profound and, when you put pensions into that mix, it is going to create considerable difficulties. I hope these issues will come out in the consultation.
Baroness Bull (CB)
My Lords, I want to start by welcoming measures in the Budget that support the vulnerable in our society—those on lower incomes, those with special needs or disabilities, carers, and households facing hardship—as well as the investment in the NHS. I also welcome additional support for local authorities, which will help them meet ever-growing demand and may, I hope, enable them to reinstate funding for local arts and culture. As we have heard, so many were forced to reduce and even cut it as pressure on statutory services increased.
I intend to focus on the Budget’s impact on the cultural and creative industries and I note my interests as set out in the register. The industrial strategy Green Paper named the creative industries among eight growth sectors. But the term “creative industries” encompasses multiple subsectors and this Budget is largely targeted at those perceived to have greatest potential for growth. There is a new tax relief for visual effects, £3 million for promoting creative careers and the continuation of tax relief for film, high-end TV, animation and video games.
There was some good news for other parts of the sector, with a renewed commitment to tax relief for orchestras, theatres, museums and galleries, and even higher rates of relief from next year. National museums and galleries won increases in both grant in aid and capital funding, but there was no parallel support for local authority-funded museums and galleries, many of which face closure through lack of funds.
By and large, the package of support for the creative industries does not provide the same relief for arts and culture as it does for those subsectors described as “growth driving”. Documents published alongside the Budget revealed that £100 million of local cultural projects allocated funding through the levelling-up fund will likely be scrapped, with spend “reprioritised towards growth”. The UK shared prosperity fund, established to offset the loss of valuable EU place-based funds, will reduce from £1.5 billion to £900 million next year and then be phased out completely.
Of course, difficult choices had to be made, but this is notably at odds with the emphasis of the DCMS Secretary of State on place and the regional agenda, both in the content of her sector speeches and the locations she has chosen to deliver them. Last week, she wrote that
“for millions of people, geography has become destiny … This Budget has put the Creative Industries front and centre of how we write those people back into our national story and drive opportunity, jobs and prosperity into every community, in every region”.
That is a great ambition, but it will be achieved only if investment takes into account the complex interdependencies between the creative industries’ subsectors and the role of arts and culture in nurturing the creativity that underpins the ecosystem as a whole. The Budget overlooks this. It also overlooks the contribution of cultural organisations to local infrastructure and their importance in multiagency place-based partnerships that help raise aspirations, build skills, generate growth and create liveable places in which people can have pride.
Arts and culture have so much to contribute to the growth and opportunities mission, but it is a sector that has been underfunded over the last decade and is struggling to recover from the crises of the last five years. Increases to employer NIC and the minimum wage will pile more pressure on organisations already operating on the edge. Job reductions and scaled-back services will surely follow.
Some 7,500 charities, cultural and voluntary organisations have written to the Chancellor calling for exemption from the increase in employer NIC. They are essential partners in the delivery of public services, yet they will not enjoy the same exemption as public sector bodies. Independent trusts that spun out from local authority control over the last decade to ensure continued provision of services in the face of council cuts, will pay the increased rate, while the same services that remained in the public sector will not.
I conclude by asking the Minister two questions. Have the Government undertaken an impact assessment of the increase in employer national insurance contributions on these organisations and the communities they support? Will the Government commit to working with the ACEVO and NCVO to reduce the burden on their members at a time when their contribution to public services is needed more than ever?
Lord Northbrook (Con)
First, I declare my property and land interests, as per the register.
When voters returned a Labour Government, they may have believed they were electing a party with similar views to the Blair Administration in 1997. Then, business capital gains tax was lowered to 10%, £10 million entrepreneurs’ relief was introduced and there were no capital tax increases. Instead, we are heading back to the 1970s. We are going to be suffering the highest tax rates since the Second World War, unions are demanding ever higher wage settlements, and businesses are being used as cash cows rather than being encouraged to grow.
The main area of growth will be public sector spending. Handing £22.5 billion to the National Health Service is a measure that many voters would instinctively agree with, but, if it is not followed by a rigorous programme of reform, increased productivity and falling waiting lists, that money may well be wasted, like other funding settlements announced in the past. As the Times pointed out:
“What a familiar definition of Labour in power it is … and a Bill underwritten by employers and the asset rich”.
The Chancellor would argue that her Budget fulfils Labour’s promises of protecting the income of working people. It is clear at least who these working people are: those who work for other, richer people who now face an unappetising menu of fiscal disincentives to business expansion and job creation. Whatever she claims, the Chancellor did not once indicate that she planned to raise an additional £25 billion from higher rates of national insurance on employers.
Of the claimed £22 billion black hole in the nation’s finances, £9 billion is public sector employee pay, but can the Minister explain the mystery figure of “normal reserves claims” of £8.6 billion? I am not quite sure what that represents. What is bad for bosses in this instance will ultimately be bad for the workers the Chancellor is seeking to protect. Firms could well invest and hire less. According to the OBR, some 60% of additional costs will be passed on to employees. None of this is good news for Labour’s working people.
To continue on the tax theme, Labour have failed to explain how its tax hikes are anything but prejudicial to small businesses—enterprises that ought to form the backbone of its growth strategy. It is hard to avoid the conclusion that Labour does not understand how growth is generated. The Chancellor seems to lack an instinct for timing. Over the four months before she delivered her Budget, she encouraged negativity to drive capital out of the country, particularly with regard to non-domiciled individuals who, contrary to the Treasury’s belief, contribute hugely valued tax revenue.
Speculation also depressed consumer expenditure and unsettled private sector confidence. In the days since the Budget, the Treasury’s reaction has been ponderous and largely defensive. It was not until five days after the election that the Chancellor grudgingly conceded the obvious truth that Labour had erred in promising voters that there would be no need to raise taxes in government.
More disappointing, however, than that broken but largely unconvincing promise, has been the Chancellor’s failure to live up to another pre-election pledge: that of running the
“most pro-business Treasury our country has ever seen”.
None of the Government’s fiscal measures suggests they are serious about creating the conditions necessary for private sector growth. The employers’ national insurance increase will especially penalise small businesses wishing to expand. Added to this anti-employer agenda, Labour’s package of strengthening working rights is expected to cost firms some £5 billion a year. This is a recipe for smothering growth.
Less defensible still are Labour’s punitive reforms to business and agricultural property relief. The Government’s proposed 20% hit at the point of inheriting a company will be sufficient to force the selling of many smaller companies’ businesses, yet the UK’s 5 million family firms provide some 14 million jobs, generating billions in tax revenues. Discouraging this wealth creation is a transparent act of economic self-harm. The end of inheritance exemptions for farmland will hugely damage the smaller family farm, particularly as the farmhouse and machinery element will quickly eat into the £1 million exemption. Such policies damage enterprise for meagre gains to the Treasury.
In contrast to the previous Government, notably few of Labour’s Front Bench have experience of building a firm or even working in the private sector. Their misjudgments manifest this lack of experience. The Chancellor seems not to appreciate that it is the industry of private citizens within a favourable regulatory environment that acts as the engine of growth and, eventually, of enhanced living standards and public services. In opposition, she paid lip service to such ideals; now, she must get down to business and deliver. In summary, this is an old-fashioned Labour Budget of the 1970s, and we know what happened to the country’s finances then.
Lord Sikka (Lab)
My Lords, poverty and inequalities hold back economic development and prevent people living fulfilling lives. Our political system is now disconnected from the masses, as evidenced by the 59.7% turnout at the last general election. Many are drifting to the far right, which scapegoats minorities and threatens social stability. Against that background, the Budget is a missed opportunity to reshape the social landscape. No one can build a sustainable economy unless the masses have good purchasing power.
The Budget could have alleviated poverty by abolishing VAT on domestic fuel and reducing the standard rate of VAT, but the Chancellor followed Conservative policies and did not do that. The Budget could have abolished the two-child benefit cap, restored winter fuel payments to pensioners trapped below the poverty line and put a triple lock on benefits. It did not do that. The Budget could have increased personal allowances by at least £1,000 and lifted millions out of poverty. It could have provided free school meals for all children to reduce hunger, but the Chancellor followed the Conservative policies.
In 2021-22, 31 million people paid income tax; that number is set to rise to 40 million by 2028-29. The result of following Tory policies is that the average family will be £770 worse off in real terms by October 2029. Progressive taxation can reduce inequalities, but the Chancellor seems reluctant to embrace it. Despite promises, the carried interest of private equity managers will be taxed at rates lower than wages. Despite some tweaks, capital gains will also continue to be taxed at rates lower than wages and its recipients will pay no national insurance. Dividends will continue to be taxed at lower rates. The result is that there will be plenty of tax avoidance opportunities for the rich—the very thing the Chancellor wants to stamp out.
There is no justification for taxing rentiers at a lower rate than workers. That is unfair and fuels inequalities. For example, capital gains per capita are four times higher in London than in less prosperous parts of the UK, so somebody living in Kensington receives a lot of benefit from that compared to somebody living in Wales. The richest fifth pay 31% of their gross household income in direct taxes and the poorest fifth pay 14%. The richest fifth pay 9% of their disposable income in indirect taxes and the poorest fifth pay 28%. Altogether, the poorest pay a higher proportion of their income in taxes and the Budget does not actually change that. The richest 1% have more wealth than 70% of the population combined. These inequalities in the distribution of wealth and income will continue.
The revival of PFI for infrastructure investment is a matter of concern. Previously, every £1 of private investment resulted in £6 of repayment. The £13 billion NHS investment resulted in a commitment to repay £80 billion. This is poor value for money, as the Government can borrow at a lower cost than the private sector.
Previous Governments found £895 billion of quantitative easing to support capital markets. Can the Minister explain why the same has not been done to support infrastructure investment? The Budget is a missed opportunity to reduce poverty and facilitate economic prosperity.
Finally, the fake anger of the Conservatives over changes to inheritance tax and VAT on private school fees is nauseating. They showed no empathy for the people when they froze personal allowances and benefits, cut real wages of workers, imposed the two-child benefit cap and increased the standard rate of VAT to make the poor even poorer.
I fully appreciate the dire financial position inherited by the Government and hope the next Budget will be more adventurous and redistributive.
Lord Borwick (Con)
My Lords, in 1961 Viv Nicholson won £152,319—the equivalent of about £4.3 million today. She, or rather her husband Keith, won it on the Littlewoods football pools. It was unimaginable wealth, but she spent it in a few months. She gained flashy furs and a few cars but also widespread criticism and contempt. She announced that she was going to “spend, spend, spend”.
Rachel Reeves opened her maiden Budget speech with the ringing cry of “invest, invest, invest”, but what did she mean by that? There are many definitions of investment, but all of them try to draw the distinction with expenditure. I know that Whitehall would love to blur that difference, and I have heard that several Ministers in the last Government prohibited the use of the word “investment” when “expenditure” was meant.
Among the rotten ideas produced by the Chancellor is the imposition of VAT on school fees. Taxing behaviour that saves the state from spending money is daft. This particular change would have been impossible without Brexit, but that does not make me content. Children will be moved to state schools, increasing pressure on the best schools because those parents will be extra demanding by demanding that their child gets an education equivalent to that provided by a private school. Just recently, I was told by a headmaster of an excellent state school that his school has six teachers seconded from a private school, and there was no guarantee that generous gift will continue by the charitable arm of the private school.
We congratulate the right honourable Lady on being the first female Chancellor, even though there have been four female leaders of the Conservative Party and two or more of ethnic minority background, but none in Labour history. But “spend, spend, spend”—or “invest, invest, invest” is Rachel’s motto. It was remarkable how quickly the public in 1961 saw that Viv Nicholson was a spendthrift. However, it was Viv’s own money, not taxpayers’ money.
The Chancellor will increase the national debt by a huge amount. Borrowing money to spend it is not wisdom. I am sure that it is possible to borrow it in the short term, but is it wise? I am sure it is not. It is just deferred taxation. Increasing the national debt is not free money. It will have to be repaid eventually, and the interest on it will have to be paid continuously, by us, our children and our grandchildren.
It might be okay for companies to borrow to invest, but there is a stream of accounting standards defining investment. Those business standards are unknown to government and there does not appear to be much spending which does not get included in the phrase “invest, invest, invest”. Training schemes of remarkable idiocy will doubtless be included. Will we see training schemes to allow overpaid train drivers to work from home?
Any independent financial adviser who advised a client to borrow money to pay for day-to-day spending would lose their authorisation—a sad end for both adviser and client. What was the sad end for Viv Nicholson in the 1960s? Her last job was in a nightclub, singing “Big Spender”.
Baroness Wheatcroft (CB)
My Lords, the UK economy has been in structural decline for many years; that analysis is absolutely true. My only surprise on hearing it delivered during this debate was that it came from a leading economist sitting on the Conservative Benches. The noble Baroness, Lady Moyo, at least had the decency to acknowledge the state of this economy—an economy that has been run for 14 years in a way that has left it, as she said, in structural decline. So it is very difficult for anybody to come up with a Budget that will put things right overnight.
Things were made worse, of course, by Liz Truss. Just two years ago, inflation in this country was running at more than 11%. We have not heard much about that from the Benches opposite this evening. Nevertheless, the ramifications of that continue to be felt by people up and down this country. The Resolution Foundation reckons that Liz Truss alone cost the country £30 billion. That is a significant contribution to anybody’s black hole. No Chancellor would want to start from here—but Rachel Reeves had no choice.
She made things even harder for herself by making a series of promises that I am sure she has already come to regret. As an editor, I would have had some difficulty justifying them as having been kept, in the light of what she has done during the Budget. National insurance by any other name is a tax, and increasing employers’ national insurance ends up being a tax on working people—and let us not get into a semantics debate about what constitutes a working person. I think it is probably rather wider than the definition Ms Reeves has ended up with. Nevertheless, this is where she had to start from. It was not a great hand and it could probably have been better addressed.
But there are some things in this Budget which I really do applaud, including the change in the fiscal rules. Despite what we just heard from the noble Lord, Lord Borwick, it is sensible to borrow for investment. It is what households do and it is what a Government could and should do. We need investment, we need big projects—but we do not need to overspend, so the monitoring of those projects has to be absolutely watertight. It has to be constant and it has to be totally transparent. We cannot find ourselves in the sort of mess that HS2 has got into, where nobody really seemed to have a handle on what was being committed. So let us invest, but invest carefully.
Let us not go anywhere near PFI, which was disastrous. As others have said, we are still paying the price. I would like to see the Government look at what is left of those PFI contracts and, if they cannot renegotiate—in most cases, they cannot—they need to find a way to simply break the contract. There are PFI hospitals which have to spend ludicrous amounts on changing a lightbulb, when what they need to do is spend money on patients. So, if you cannot renegotiate, find a means of either putting the health authority into bankruptcy or walking away from the contract. We cannot afford them any longer.
I was pleased to hear, in the Budget, that we are going to spend more on trying to find the tax that people should have paid. An estimated £5 billion a year goes on tax evasion—let us have some, or all, of that back in the Government’s coffers. Investing in more inspectors will be a great way of making a start on that, but we also need much more investment in technology and we need to be tougher on finding where this money is.
We need to make sure that we actually tax what needs taxing, and we need to simplify the tax system. It is crazy having a tax guide that now runs to more than 1,000 pages—the last Tolley’s guide was 1,020. But we have done away with the Office of Tax Simplification. So let us see the Government pledge to simplify the tax system and begin looking at how to do that. It is crazy: people do not understand it and those who do, pay expensive advisers to avoid or evade tax. We need to change it.
The main thing we need to—in the short term, and easily—is simplify the system of property tax. I urge the Government to do that.
Viscount Hanworth (Lab)
My Lords, the economic nostrums of the Thatcher era still dominate the minds of many politicians and civil servants. The Conservative ideology of the time proposed that public enterprise was everywhere economically inefficient, and it was remarked that it was primarily devoted to protecting lame-duck industries and protecting the interests of the workers at the expense of the industries.
Private enterprise was expected to respond to incentives offered by the markets, and it was believed that it could be relied on to maintain the economic infrastructure of the nation. This was the rationale for the privatisation of public enterprises. The public utilities of power and transport were privatised, and inroads were eventually made into the health service and public education. The present Government are devoting their attention to the restoration of the health service and public education, but, for the present, they have set aside the task of reviving the nation’s industries, which also suffered grievously under the previous Government.
It ought to be more widely acknowledged that, when private enterprise fails to generate sufficient investment, the Government must undertake to do so, either directly or by some other means. A litany of examples can be provided to show how Conservative Governments failed to sustain our industrial enterprises, but only the most prominent examples need to be offered. Their greatest failure affects the electricity generating industry, which once operated under the Central Electricity Generating Board. The privatisation of the industry plays into the hands of large foreign multinational corporations, and it was expected that these could be relied on to maintain the electricity generating capacity. In consequence of the plentiful and cheap supplies of North Sea gas, they reacted with alacrity by investing in combined-cycle gas turbine generating plant, which rapidly replaced the previous coal-fired power stations that they had inherited. On the basis of this experience, it was expected that they could be relied on to invest in nuclear power stations—but they failed to do so, and we are left with a dearth of generating capacity.
If the nation is to achieve its targets for reducing the emissions of carbon dioxide, gas-fired power stations must be replaced. But the privatised industry lacks the means to do so, or is unwilling to find the means. The Government persist in believing that nuclear power can be provided by drawing on private investors. It is expected that this can be achieved under a regime of a regulated asset base, which will allow the costs to be imposed on consumers during the time it takes to construct the power stations. However, it appears that the investors are not responding sufficiently to this inducement, and a final investment decision for the Sizewell C power station has had to be postponed. The Government must emulate the Governments of the early post-war years by using public funds to re-establish the nuclear power industry, and they must also use public funds to sustain the necessary research and development into nuclear technology, as happened in those early years.
The second example concerns the failure of the previous Government to provide sufficient support for the nascent industry for manufacturing the lithium-ion batteries that power electric vehicles. They allowed the collapse of the Britishvolt enterprise, which aimed at establishing a so-called gigafactory for producing the batteries. The fact that the enterprise failed to raise sufficient capital from private investors was seen by the Conservative Government as proof of the non-viability of the project. The absence of the proposed gigafactory, and of others to accompany it, almost certainly spells the demise of our native automobile industry.
I conclude by addressing the notion that the lack of investment in our industries can be redressed by encouraging inward financial investment. A report by the noble Lord, Lord Harrington, which was commissioned by the previous Government, strongly advocated inward investment as a cure for our ills. Our present Government, who recently hosted an international investment summit, appear to have adopted this nostrum. Inward investment entails the sale of our industrial and other assets to foreign owners. The dividends and interest payments that are remitted abroad are an almost incalculable drain on our economy. Our lax system of corporate government facilitates the acquisition by foreign parties of many of our small high-tech industries which offer the prospect of our economic revival. It allows foreign enterprises to purchase and control British companies that would otherwise be their economic competitors. The depredations of foreign financial conglomerates that have ownership of British assets have been amply illustrated in recent weeks during our consideration of the water companies and rolling stock leasing companies that have paid vast dividends to their foreign owners.
Lord Elliott of Mickle Fell (Con)
My Lords, this is the first speech I have made in your Lordships’ House in the presence of the professor who taught me economics 101 at the London School of Economics. I suspect that the noble Lord, Lord Desai, will disagree with what I am about to say, but I put on record my profound regard and gratitude for his excellent teaching at the LSE. To coin a phrase, all errors are my own.
I want to address the number of wealth creators living here in the UK and the number choosing to move overseas. In recent years, there has been an exodus of wealth creators from the UK. Undoubtedly, the Budget will accelerate this trend. The figures are stark. The latest UBS global wealth report forecast that 17% of UK millionaires will leave the country by 2028. That is a conservative estimate. Given the Budget, especially the changes to capital gains tax, inheritance tax and stamp duty, the final figure will surely be higher than 17%. We should not kid ourselves that this is a problem facing all western economies. The UK is unique in this respect. Every other G7 country is forecast to have more millionaires in 2028 than they have today.
Why does this matter? It matters for two reasons—the amount of tax they pay and the number of jobs they create. They provide a huge tax contribution. For every top 1% taxpayer who leaves, 26 additional median taxpayers are needed to plug the gap. According to the IFS, the top 1% of earners pay around a third of income tax and the top 5% pay half of income tax. The exodus of wealth creators from the UK is generating a tax bill that will fall on the rest of us. The Government may strive to stop the additional taxes falling on working people, but who else will foot the bill?
Secondly, it matters because the individuals and families who are leaving the country create so many jobs in our economy. If the Government are serious about the laudable objective of increasing employment to 80% by helping 2 million people from welfare into work, they need entrepreneurs and investors to create those jobs. The problem is that wealth creators are heading for the exit. I am not talking hypothetically. It is happening as we speak. A recent Startup Coalition survey found that 72% of entrepreneurs are exploring leaving the UK and many have already done so.
I recently attended the GITEX conference in Dubai with more than 6,500 entrepreneurs from more than 180 countries. It was inspiring to see so many innovators enacting their ideas and creating the world of tomorrow. However, something was painfully striking: the number of young, British-born entrepreneurs who had left the UK to pursue their dreams. I asked them why they had chosen to do this, and a consistent theme was the UK’s business environment, including the level of taxation. These entrepreneurs, with their start-ups, create the vast majority of new jobs in the economy.
These are just two benefits that wealth creators bring to the country. I could list many more. There has been a spate of articles, for example, highlighting the impact of recent tax changes on the world of art, with many galleries losing some of their most generous benefactors. We should never forget the inscription at the entrance to Birmingham’s art gallery:
“By the gains of Industry we promote Art”.
I make all these points not to be a shill for millionaires but because the exodus of wealth creators will devastate ordinary working people across the UK. Entrepreneurs and investors lay the foundations for economic growth and the prosperity we all enjoy.
Two days after the general election a former Prime Minister wrote that
“we have reached the limits of traditional tax and spend to solve our problems”.
Those were not the words of Rishi Sunak or even a recycled quote from Margaret Thatcher. It was the advice given to the Government by Tony Blair. As another former Prime Minister, Winston Churchill, reputedly said: “You can’t make the poor richer by making the rich poorer”. By hitting wealth creators, entrepreneurs and family businesses, this Budget risks decimating the very people we need to create jobs and pay tax for generations to come. All our livelihoods, especially those of working people, depend on them.
Baroness Humphreys (LD)
My Lords, I make no apology for dedicating my allotted five minutes to the situation facing farmers in Wales. I associate myself with all noble Lords who have spoken on APR and thank them for their insightful comments.
The president of NFU Cymru has called the reforms to agricultural property relief and business property relief announced in the Budget “misguided” and “ill thought out” and described the impact of the reforms as “feeling like a betrayal” to the farming and food and drink industry, a sector worth £9.3 billion to the Welsh economy. Until a couple of months before the Autumn Budget, farming unions had been assured by the Prime Minister and the Treasury that there would be no changes to inheritance tax. Doubts began to surface, and then Budget Day confirmed farmers’ worst fears.
A paper from the Farmers’ Union of Wales explains how inheritance tax relief, through APR, has helped and incentivised Welsh family farms to pass from one generation to another by ensuring that those who inherit the farms are not crippled by taxes. Previous Governments have all recognised the need to safeguard our Welsh food production and food security by avoiding the adverse effects on rural businesses and employment that a heavy tax burden would bring. The FUW points out:
“Whilst a million pounds may appear to be a huge sum for those outside the industry, for many Welsh farmsteads, even a conservative estimate of the value of accumulated land and infrastructure could see the £1m threshold easily breached”.
What many outside the industry do not recognise is that a farmer’s wealth lies in his or her property and land. In reality, farms are small businesses operating on slim financial margins, and many are struggling. Having to meet such death duties as the Government are imposing could lead to the break-up of family farms.
Over the weekend, I was contacted by two farmers from mid-Wales through my researcher. The first one, the mother of a farmer, told me about her family who have farmed their land in mid-Wales for nine generations. She explained that her son, who runs their large farm full-time, will have to sell the farm when he inherits it to pay the inheritance tax bill. She says that even though they have diversified and converted derelict barns into holiday lets, it is a struggle to make ends meet. The second was a farmer whose parents came to mid-Wales to be tenant farmers in 1950. The family then bought a farm, but the issue is the same: they would have to sell because of the inheritance tax burden. Their stories are heartbreaking.
Farmers are rightly proud of what they have achieved. They see themselves as custodians of the land, as their families were before them, and their ambition is to hand on the farm to the next generation as a viable business so that they can continue their prime function: to use the land to feed the nation. On top of the challenges of Brexit, an unfavourable trade deal with Australia that saw Australian sheepmeat exports to the UK surge by 85%, the impact of Covid and the pressure of reforestation, this new threat has added another dimension of worry to an already pressured workforce.
A briefing by PD Tax Consultants explains why APR was introduced in 1984. It was implemented
“because the tax charges that would arise without the reliefs were viewed as having a ‘damaging effect on risk taking and enterprise within a particularly important sector of the economy’”.
Could the Minister please explain at what point during the couple of months before the APR and BPR U-turn in the Budget did the Government decide that removing the reliefs would not have a damaging effect on risk-taking and enterprise? What evidence influenced that decision? Why do the Government no longer see the farming industry as a particularly important sector of the economy, as other Governments have done up to now?
Lord Murphy of Torfaen (Lab)
My Lords, the noble Lord, Lord Northbrook, referred to a recent article in the Times. Yesterday, in the editorial of its sister paper, the Sunday Times, was this sentence:
“Whoever won in July was going to need billions of pounds more for public services”.
That is not from a newspaper which normally supports my party, but it went to the heart of it. Over the last 14 years, public services in the United Kingdom have declined to an intolerable degree; we are in an awful state. Public services in health, education, our railways and local government have all suffered in that period.
No one wants to spend money for the sake of spending, but many of the speeches I heard today talked about spending, spending, spending. I have been involved in Budgets in public life for nearly 51 years, and never on one occasion did I want to spend for the sake of spending. You spend because you improve the quality of life of the people you represent, and that is why spending is important. You spend wisely, of course—that is a different issue altogether—but the fact that we need it is so very important.
Of course, the money has to come from somewhere—from taxation or from borrowing. If you borrow then you should only borrow for investment; if you raise taxation then you should ensure that those who can afford it most will pay most. That is why, personally, I believe income tax is the best tax of all, and other taxes, important as they are, are not as fair or transparent. Earlier, the noble Lord, Lord Young of Cookham, gave us a number of examples of taxes which could be looked at, and I hope that both the Minister and the opposition spokesperson will do so.
I turn the House’s attention to the situation in Wales. The Welsh Government have received this week the best financial settlement since devolution began in 1999—even better than the settlements that Gordon Brown and I gave them back in the 1990s and 2000s. It is a brilliant settlement, with £2 billion more of new money going into Wales. There is more money for our public services, £100 million for our steel communities, £25 million to ensure our coal tips are safe and much-needed money for local government, which has been underfunded for so many years.
I make a plea to the Welsh Government. When they receive, as they will, many millions to be spent on the Welsh health service, can they ensure that they spend it with reform in mind? The money on its own is not right or sufficient for improvements to take place; it must be matched by reform in the health service.
I will refer to something that is the responsibility of both the United Kingdom and the Welsh Governments: the position of the Welsh National Opera. It might not appear huge in the shape of things, but it was referred to by the noble Earl, Lord Clancarty. The arts and opera have suffered dramatically over the last number of years. I see no immediate prospect that they will improve, and I see the Welsh National Opera possibly disappearing unless the financial situation it faces is addressed. Arts Council England is responsible for greater funding of the Welsh National Opera than the Arts Council of Wales. I ask the Financial Secretary whether he will have a chat with the Secretary of State for Wales, who in turn can speak to the First Minister of Wales, to ensure that both Governments have a very serious look at the prospect facing one of our great national institutions in Wales.
To conclude, the Budget is right in addressing the deficit in our public services. Education, health, the railways and all the other public services in Wales and the United Kingdom will benefit as a result of a Budget that is significant in its contribution and wide-ranging in its effect.
Lord Skidelsky (CB)
My Lords, there are many things to welcome in this Budget, particularly on the spending side. I am less keen on some of the tax proposals, which seem to be mean-minded and counterproductive, such as the tax on knowledge.
The spending commitments are important because they reverse the disastrous policy of austerity, which has brought our public services and infrastructure close to collapse. Even the IMF, originally a champion of austerity, admitted that it had underestimated what it called austerity’s negative multipliers, which is simply code for it having been disastrously wrong in estimating the negative effects of austerity.
The cost of austerity has been severe. Median per capita income is lower than it was in 2010. The public debt to GDP ratio has gone up from 70% to 100%. By far the most important reason for this has been weak economic growth. This means that the Chancellor gets less help from the denominator in the debt to GDP ratio. Austerity has been a crucial cause of low economic growth. It is a vicious circle: cuts in public spending reduce the growth rate, which raises the debt to GDP ratio, which raises the interest rate on government debt, which requires austerity to counter it, and so on. We have to get out of this.
The Chancellor has tried heroically to escape this trap by tweaking the fiscal rules; for example, by reclassifying public sector debt as public sector net financial liabilities. I think that the Government hope to squeeze an extra £50 billion spending headroom from these and other measures. Perhaps one should welcome any sleight of hand which loosens the iron grip of the Treasury.
However, honesty compels me to say that current capital account distinctions in the public sector are full of holes. Are student loans to be counted as assets, even though most of them will never be repaid? There are other questions such as that. The Chancellor will also need to persuade sceptical businessmen that the publicly owned national wealth fund will produce, over the years, net assets rather than net debts. I understand all those things, but economic orthodoxy forces the Chancellor to tell an incomplete story. In her narrative, there is no mention of demand, only supply.
The sagacious Paul Johnson of the IFS warns that if you really want to spend more, you will have to tax more; that is right, but as any economist will tell you, how much more depends on how much spare capacity there is in the economy. Bringing idle plant and labour into use gives you a free lunch. How much spare capacity is there in the British economy? If we add up the inactivity rate and part-time working, it is at least double the headline unemployment rate of 4% or so that we read about, so there is scope to boost demand as well as to improve supply.
For those who want to increase public spending while maintaining fiscal probity, I recommend an ancient piece of fiscal machinery known as the balanced budget multiplier. The idea behind it is that an increase in government spending balanced by an equal increase in taxes yields a positive multiplier—I would be happy to explain why to any noble Lords who find this puzzling. But the last thing the Conservative Party wants to do is to balance the budget by raising taxes; its fiscal zeal is concentrated on austerity. The Labour Party is more open-minded and generous; that is why it is a good thing that Rachel Reeves, and not Jeremy Hunt, is in charge of the Treasury.
Lord Wrottesley (Con)
My Lords, I would like to address the issue of sport and the recent Budget. I declare my interests as set out in the register. The funding that has been earmarked for the Department for Culture, Media and Sport is welcome. However, my concerns are that there is only a brief mention of sport in the Budget document, and there was also a lack of support for sport and physical activity in the Government’s manifesto and in the King’s Speech.
As an Olympian and someone who is now involved in sport governance, I may be somewhat biased, but I believe to my very core that, while sport is recreational, it also can and should be aspirational and inspirational. It can keep people on the straight and narrow, giving meaning to purpose and purpose to life. As Nelson Mandela once said:
“Sport has the power to change the world. It has the power to inspire. It has the power to unite people in a way that little else does. It speaks to youth in a language they understand. Sport can create hope where once there was only despair”.
Previously, His Majesty’s Government and stakeholders across the sector in the UK pledged to make this nation the most active nation in Europe. Today, within the main European economies, the UK ranks 11th out of 15 in terms of having an active population, with around 36% inactive—only Italy, Germany and Portugal are behind us. This ranked list can be compared and seems to correlate with per capita healthcare spend related to inactivity. The UK has the third highest spend, with only Germany and Portugal ahead of us. This is not a podium, medal-winning result we should be proud of.
Recent data shows that, while the gross value added of the sports sector into the UK’s economy ranked third in Europe behind Austria and Germany, government investment into sport and recreation and physical activity in the UK sits bottom of the table, along with Ireland, with a 0.4% spend of general government expenditure, which is 70% lower than the highest-placed nations and less than half the average spend of the 15 main nations of Europe.
By becoming the most physically active nation in Europe, the UK could save over £1 billion in healthcare costs alone and increase productivity, adding £3.65 billion to our GDP every year. The clincher is that, according to the Sport and Recreation Alliance, £70 billion could be gained in uplifting our nation’s well-being. Other less tangible, but none the less crucial, benefits of sport and increased physical activity are: decreased work absenteeism; increased educational attainment levels; reduced crime and anti-social behaviour; improved social capital; and increased employment levels, when we assume that there will be an increased demand within the sector.
Put simply, if we get investment into sport and physical education at the right levels, and going into the right places, all children and adults will be given the best chance to live well for longer; communities will be safer, greener, healthier, and everyone will feel more connected; prevention will lead to significantly less pressure on the NHS and other key public services, currently saving the NHS £9.5 billion per year by preventing illness; and our economy would be boosted by a healthier and more productive workforce.
On that last point, as the economy evolves into one where manual labour is increasingly automated, more people will have significantly more leisure time, we will need to find employment for those leaving the workforce into areas where automation cannot replace human capital, and sport and recreation will have a huge part to play in this transition.
I therefore ask the Minister what plans His Majesty’s Government have for increasing funding into sport and physical activity. Please can he provide specific details? Without that increased funding, the commitment made to make the UK the most active nation in Europe will be an empty promise, and the nation’s health and the wellbeing of our citizens will suffer.
Can the Minister tell the House what measures and financial support—in other words, investment—will be given to forward-looking competitive bids for sporting events to be held in the UK? This is the most sustainable way that UK plc can provide the nation with inspiration to get into sport, attract significant amounts of inward investment, and have the chance to provide a sustainable future for individual sports. Give us the resources to learn how to fish; do not just give us fish. We should not be missing out on these opportunities.
Can the Minister also tell the House what part of the committed DCMS funds will be ring-fenced to help the most disadvantaged children get into sports and physical activity? Lastly, what part of the DCMS budget will be invested on ensuring equal access between the sexes across all sports?
Baroness Kramer (LD)
My Lords, let me begin by congratulating the noble Lord, Lord Booth-Smith, on his maiden speech in which I think he warned us to be alert for the unknown unknowns. We should take note of that, and I hope to pick it up later in my speech. I also have to apologise to the House: this has been a brilliant, incredibly varied debate, so this will be a very limited summation on my part.
I do not dispute the tough situation faced by the new Labour Government. Noble Lords heard that same tone and concern from these Benches, and it was very much picked up on the Labour Benches. I noted that the noble Lords, Lord Hannett and Lord Bach, and many others raised that issue. Public services are, frankly, in a dire state, both through the lack of funding and the lack of meaningful reform, as we heard from the noble Lord, Lord Murphy of Torfaen, and quite a variety of speakers on both sides of the House. We also heard discussion of an economy that has been, at best, stagnant for years. I too, like the noble Baroness, Lady Wheatcroft, commend the speech of the noble Baroness, Lady Moyo, who grasped a very difficult nettle and expressed it well for the House as a whole. There have been dismal levels of investment, persistently low productivity, as the noble Baroness, Lady Neville-Rolfe picked up and elaborated on, and workforce and skill shortages, as the noble Lords, Lord Fox, Lord Liddle, Lord Monks, and others addressed.
I noticed that, when speakers on the Conservative Benches talked about economic hard times, they were keen to focus on the impact of Covid and the consequences of the Russian invasion of Ukraine, but they were remarkably silent on the impact of Brexit—the hardest blow, the deepest scar and the most persistent to our economy. I say that to the noble Lord, Lord Johnson, and the noble Baroness, Lady Lea, who both addressed those issues and carefully ignored the B-word. This House will not be fooled by that omission.
I recognise that we have to move on from the past. My party recognised in its manifesto—I am picking up the words of my noble friend Lord Razzall—that taxes would have to be raised in the circumstances that we face, but we chose a different taxation approach to that chosen by the Government. I think the noble Lord, Lord Young, also proposed a different range of taxes. Let me repeat that we were looking at the oil and gas companies, the banks, social media companies, online banking companies, share buybacks and reform of capital gains. Let me suggest to the Government that they look very closely at the package that we proposed. It comes to some £7 billion to £10 billion per year. I suggest they might want to use it not to increase the overall tax take but to allow them to remove elements of the tax rises they have announced that, on reflection, they find are perverse or are hitting groups unable to cope. I will elaborate a little.
We have become, in many ways, the voice of the social care sector. I know others have long been engaged, but that is the way it is breaking today. We welcome in the Budget the increase in the earnings threshold for those on carer’s allowance, as did many others throughout the debate, but we, like many others, are utterly dismayed that the Budget had so little to offer—some £600 million—for social care services, some of which are very precarious. I join others—I think this was mentioned by the noble Lord, Lord Empey, by my noble friends Lord Fox, Lady Tyler and Lord Shipley, and on the Labour Benches by the noble Lord, Lord Whitty, and the noble Baroness, Lady Lister—who called for the Government at the very least to give this sector an exemption from the increase in employers’ NICs to remove the precarious situation in which it sits and to recognise that GPs need the same exemption just to meet the need for appointments. That group should be treated like the public part of the public sector of the NHS. We in this House widely recognise that without a major step change in social care and primary care, much of the money going into the NHS will simply be swallowed up.
My party has also found itself, in the most extraordinary way, becoming the voice of small business. Micro businesses receive some protection from tax increases through the higher employment allowance, but the increase in employers’ NICs and especially the lower starting threshold directly worsen one of the UK’s major economic problems: the failure of firms to scale up from micro. We are very good at starting businesses, but they fail to scale up to small and medium. This new tax burden is simply going to make that problem worse. Will the Government look again? Upscaling is vital to achieve growth.
I want to put in a particular plea for the 700,000 working people who are contractors working through umbrella companies and who pay their own employers’ NICs. Very few will be in a position to renegotiate their contracts to cover the increased cost. The noble Earl, Lord Clancarty, talked about the creative industries in this context. The noble Lords, Lord Bilimoria, Lord Londesborough and Lord Howell, addressed the issues of small firms, and we ask the Government to look again.
I think more people in this debate spoke on the future of family farms than on any other issue. We join in those deep concerns that many families will be forced to sell. Those families are the backbone of our rural communities and our agriculture industry. The noble Earl, Lord Devon, made a tour de force speech in describing the issue, and he was joined by many others including the noble Lords, Lord de Clifford, Lord Berkeley of Knighton, Lord Shinkwin and Lord Empey, the noble Duke, the Duke of Wellington, my noble friend Lady Humphreys, who spoke clearly from these Benches about the problem in Wales, and the right reverend Prelate the Bishop of Newcastle. They were the kind of speeches that we have to ask the Government to take notice of. Again, let us remember that our party has offered a different tax route that could enable the Government to have the flexibility to make a change.
Only the noble Lord, Lord Oates, mentioned the 50% rise in the cap on bus fares for many young and minimum-wage workers. This could be extraordinary; it could cost them £500 a year. I will not have another discussion on the winter fuel allowance. It was a mistake; I have said it before and I will not go through it again. But my party also believes very strongly that independent schools should not face VAT; education is an investment in our future. I join the noble Lord, Lord Lexden, in the comments that he made.
Somebody talked extensively about business rate reform, but I forgot to note whom. It should have gone much further than just the sticking plasters in this Budget, and even the sticking plasters exclude many types of small businesses.
On our Benches, my noble friend Lord Fox expressed great support for the industrial strategy, except to say that the question is: how do you deliver it? We will be watching that.
Many people also addressed the change in the fiscal rules. I want to say something to the noble Lord, Lord Lamont. He is possibly one of the most literate in economics and finance in our House, but he did not seem to grasp that the new fiscal rule deals with net financial liabilities. A new hospital building, or a new school, does not fall into that set of definitions; it is investments that yield a financial return. I feel that I am coming to the rescue of the Government on this one. We seem to have extraordinary confusion.
I will say to the Government, as I have said it before, that it will be important to see how those guardrails work. There is an extraordinary capacity for additional borrowing that I suspect the Government will not take advantage of if they use their guardrails properly, but we will have to observe those guardrails and make sure. This is not an issue raised just by my party. It was raised also by the noble Lords, Lord Burns, Lord O’Neill, Lord Young, Lord Altrincham, Lord Monks and Lord Empey—my apologies, some of those remarks were on skills, but a whole range of people discussed that set of issues.
The Government have tied their colours to the mast and will be judged on improvements in public services, especially the NHS, and growing the economy. I want to finish by going back to the point raised by the noble Lord, Lord Booth-Smith, about the unknown unknowns. We are in very turbulent times, and global events matter. If we find ourselves facing a protectionist trade war, the shock will hit UK growth by more than 0.5% each year. If the US abandons Ukraine, leaving the Baltics and Poland exposed to Putin, or if Taiwan is seized by China, the consequences will more than reverberate here. They will affect everything in our lives, including the economy.
US disengagement from countering climate change would destabilise the world, not only immediately in the economy but in driving many new waves of migration. I join the noble Lord, Lord Razzall, and others in saying that this is the time to build alliances with those with whom we have common cause. That means getting closer to Europe far more rapidly than the Government have previously anticipated. We need to rebuild our economic ties to the EU and remove the trade barriers raised by the Tories; it is an obvious route. It was an issue raised by others, but I want to stress it from these Benches: this is an issue that has gone from a nice-to-have to urgent.
Baroness Penn (Con)
My Lords, we have had a long debate today, where, as usual, your Lordships’ House has brought its considerable expertise to bear, dissecting last month’s Budget. Not least, the eloquent maiden speech by my noble friend Lord Booth-Smith demonstrated the value that he will undoubtedly bring to this House. I shall try not to delay us much further, but the large number of speakers that we have had is befitting of a Budget with such large sums involved.
It has been the largest tax-raising Budget in history, with the tax burden now at a historic high. There will be an additional £142 billion of borrowing over the forecast, with debt interest payments of £100 billion every single year—all to fund an additional £70 billion of spending, on average, every year.
The Minister has tried to claim that Labour has a mandate for this Budget, but it does not. And what is the result of these decisions? Lower wages and lower living standards, lower growth and lower private investment, and higher inflation and higher interest rates. People’s bills will go up and their wages will go down.
I turn first to tax. Before the election, the Chancellor promised people that Labour’s policies would be
“fully funded and fully costed—no ifs, no ands, no buts”.
Just last month, the Prime Minister made an absolute commitment to not raise taxes on working people. When the former Prime Minister, my right honourable friend Rishi Sunak, told people that Labour would raise their taxes by £2,000 over the next Parliament, Rachel Reeves and Keir Starmer said he was lying. To be fair, he did get the figure wrong: it was not £2,000 over the course of the next Parliament but £2,000 every single year.
The Government continue to not be straight with people now, claiming that the £25 billion rise in national insurance is not a tax on working people. National insurance is literally the only major tax that exclusively hits working people. If noble Lords do not believe me, ask the Chancellor, who said the problem with national insurance was that
“it is a tax purely on people who go to work and those who employ them”.
If, understandably, noble Lords do not quite trust the Chancellor on this after October’s Budget, how about the Resolution Foundation, which has said that national insurance is a tax on jobs? Meanwhile, the IFS has described it as a straightforward breach of a manifesto commitment. I know that those in the party opposite will not take any advice from these Benches, but perhaps they will listen to Paul Johnson of the IFS, who said:
“The continued pretence that these changes will not affect working people risks further undermining trust”.
However, the problem with this Budget is not just the scale of the tax rises but the choices they have made. By reducing the threshold at which employers pay national insurance, they have increased proportionately the cost of employers employing workers at lower wages the most, making it more expensive to take on entry-level workers and to employ people part time. The noble Lord, Lord Londesborough, set out eloquently the wider impacts of this change. Can it really be the right decision at a time when one of the biggest challenges for this Government is to support people off benefits and into work?
As many noble Lords have pointed out—including the noble Baronesses, Lady Warwick, Lady Thornton, Lady Tyler and Lady Bull, the noble Lord, Lord Shipley, and my noble friend Lord Dobbs, among others—nor does it seem that the Government have thought through the impact of an increase on this scale when it comes to their other policy commitments. GPs, care homes, nurseries: the Government are asking them all to deliver more, but with the national insurance rise they are making it harder and more expensive for them to employ the people they need to do it.
Combined with Labour’s £5 billion bill for its employment rights legislation, the change further increases the incentive for self-employment, distorting people’s decisions in the labour market and taking them out of employee protections, employee benefits and the pensions system, and I am not sure that is something that people on the Benches opposite want to see.
What about other taxes? The tax on family farms makes it impossible for family farms to be passed on to the next generation and threatens the position of tenant farmers. I hope the Minister will listen carefully to the strength of feeling, and the strength of the arguments made, in this House today on that issue.
A tax on family businesses, just at a time when Labour claims it wants to encourage investment and long-term stewardship, means it is making it harder for the very kinds of businesses that often take this the most seriously. There are higher taxes specifically for first-time buyers, who find it hardest to move on to the housing ladder, and further increases in stamp duty, which the IFS has warned will drive up rents. There are taxes on education and on savings. As the former Prime Minister said during the election campaign, “You name it, they’ll tax it”.
The noble Lord, Lord Desai, had some ideas to add to this further and, with the Labour Party’s new approach to taxation, maybe he will be welcomed back on to its Benches some time soon.
I turn next to borrowing. Before the election, the Chancellor promised she would not
“fiddle the figures or make something different to get better results. We will use the same models the government uses”—
referring to public sector net debt. But changing the measure of debt used in the new fiscal rules is a multibillion-pound fiddle.
We have heard in the debate today, from both sides, the case for more investment in our economy. I agree, but there are still choices to be made in where that investment comes from and how to make sure that it delivers growth. On the first point, the last Government took action to promote higher investment from the private sector, for example through the introduction of full expensing. Under this Government, the OBR predicts not only that private sector investment will fall over the forecast period but that it will fall by even more than the amount of extra investment caused by public investment going up.
This brings me to my second point. As my noble friend Lord Lamont and others pointed out, we need to be really clear-sighted that investment is not an end in itself. The test is: does it lead to greater economic growth? There is very little in this Budget to give us confidence that it does. Indeed, as my noble friend Lady Finn pointed out, areas such as transport are being cut, where you would expect to see higher levels of investment if you were focused on growth.
The scope for waste and inefficiency with this additional spending is significant. The Government have reassured us that this will not happen because they are establishing a new office for value for money. As my right honourable friend the leader of the Opposition has said, if you need an office for value for money, what is happening across the rest of government? Surely, value for money needs to be built in to how all public money is spent.
This brings us to another challenge that the Chancellor may face with her new measure of debt: its volatility. With such little headroom against her fiscal rules already, small changes such as increases in borrowing costs or the threat of tariffs from a major trading partner could easily blow her off course. That would lead us back to the worst of all worlds of stop-start investment, driving up costs and undermining confidence from private investment.
Record taxes and record borrowing lead us to record levels of spending. The challenge is to make sure that additional spending is not simply going to be absorbed by higher wages but drives reform in the public sector. But I am afraid that, after less than 20 weeks in office, we have already seen Labour’s tax record and it does not look good. It has cancelled plans to reduce the Civil Service to pre-pandemic levels, increased the salaries of train drivers by £10,000 and given junior doctors a 22% pay rise, all without asking for a single productivity improvement in return, and all while removing the winter fuel payment from three-quarters of a million pensioners on low incomes.
The incredible front-loading of the additional planned spending will make it incredibly difficult for the Government to spend effectively, but the Chancellor has promised that she is not coming back for more. But what about the commitment to grow defence spending to 2.5% of GDP? As we have heard in this debate, we live in a more dangerous and uncertain world than ever. What about the commitment to restore aid spending to 0.7% of GNI? This was called for by the noble Lords, Lord McConnell and Lord Oates, and also committed to in the manifesto of the party opposite. What about the commitment to fully decarbonise the grid in just six years’ time—a commitment that has been estimated as needing £40 billion of investment a year to deliver? Perhaps the Chancellor is keeping her fingers crossed that improved economic growth will ride to the rescue. I hope, for not just the Chancellor but the country, that this will be the case. But the OBR is not so sure. It forecasts growth down, investment down, inflation up, interest rates up and living standards down.
The Minister will doubtless say in his winding-up speech that these are Labour’s choices and it stands by them. But I would say to the noble Lord, and to all noble Lords opposite, that these were not Labour’s choices to make. They were choices that it should have put to people at the general election. But Labour did not trust people to make up their own minds and, in return, I doubt, after this Budget, that the public will put their trust in this Government for very much longer.
Lord Livermore (Lab)
My Lords, it is a privilege to close today’s debate on the Budget. I am grateful to all 75 noble Lords for their insights, differing perspectives and expertise. I join others in congratulating the noble Lord, Lord Booth-Smith, on his excellent maiden speech, bringing his valuable first-hand experience of government and policy-making to your Lordships’ House. I look forward to his further contributions in debates such as this.
This was a Budget to fix the foundations; to restore stability by repairing the public finances; to rebuild our public services after years of neglect; to choose investment, rather than decline; and to keep our promises to working people. It was a Budget notable in scale, but commensurate with the challenging inheritance that we faced.
The noble Lord, Lord Johnson of Lainston, in his opening speech for the Opposition, began by denying the need to rebuild the public finances and the need to restore stability to our economy. He failed yet again to say sorry for the past 14 years, in particular for the disastrous Liz Truss mini-Budget. What he went on to defend was, in itself, very revealing. He defended second homes being bought up by foreign owners, pushing up prices for first-time buyers. He opposed reintroducing a reduced rate of inheritance tax above £3 million. He opposed VAT on private school fees, cutting £1.7 billion from state schools. He defended tax-relief pensions being used not as a retirement vehicle but as a tax-planning tool. It was very clear where the party opposite’s priorities lie, and the choices that it would make, and they would certainly not be for working people or public services.
Several noble Lords spoke in positive terms about this Government’s economic inheritance, including the noble Lord, Lord Lamont of Lerwick, and the noble Baronesses, Lady Finn and Lady Lea of Lymm. The reality is that, over the past 14 years, the UK’s economic performance was poor, as my noble friends Lord Hannett of Everton and Lord Bach, and the noble Baronesses, Lady Wheatcroft and Lady Kramer, said. Had the UK economy grown at the average rate of other OECD economies, our economy would have been £171 billion larger. Inflation peaked under the previous Government at 11.1%, as my noble friend Lady Crawley said, and was above target for 33 months in a row. It was the worst Parliament for living standards ever recorded. The UK was the only country in the G7 to have a lower employment rate and a higher inactivity rate than before Covid. As my noble friend Lord Eatwell said, public services were pushed to breaking point, with sewage in our rivers and our schools literally crumbling.
Some noble Lords focused on this Government’s fiscal inheritance and the £22 billion black hole, including the noble Lord, Lord Johnson of Lainston, who seemed to be confused by the fact that the numbers went up over time. It was mentioned also by the noble Lord, Lord Lamont of Lerwick, and the noble Baronesses, Lady Finn and Lady Lea of Lymm. The Treasury has provided to the OBR a line-by-line breakdown of the previous Government’s unfunded commitments—260 separate pressures. Noble Lords need not just listen to the OBR and the Treasury; they need look only at the outturn data. Central government current expenditure published by the ONS shows that, for the six months since March, the outturn is £11.8 billion higher than forecast. That is £11.8 billion over six months, well on course for £22 billion over the year.
This Government’s number one commitment is to economic and fiscal stability. That is why we support the fiscal framework, the OBR and the independence of the Bank of England, which the noble Lord, Lord Altrincham asked about. It is also why we have established robust fiscal rules, which put the public finances on a sustainable path while allowing a step change in investment to drive long-term growth. The stability rule brings the current Budget into balance so that we do not borrow to fund day-to-day spending, as my noble friends Lady Crawley and Lord Murphy of Torfaen said.
The noble Baroness, Lady Penn, mentioned borrowing. Borrowing as a share of GDP falls over this Parliament, from 4.5% to 2.1%, as we achieve the biggest current Budget surplus in over 20 years. Over the past 14 years, borrowing averaged 5.6% of GDP. Over this Parliament, it will average 2.6% of GDP. However, while being tough on spending, we must create the space for investment.
As the IMF has said, more public investment is badly needed in the UK, so the investment rule, as set out in our manifesto—despite the claim made by the noble Lords, Lord Lamont and Lord Bridges of Headley—will target debt falling as a share of the economy. It will be defined as net financial debt. I am grateful to the noble Lord, Lord O’Neill of Gatley, for his welcome of this move. He stressed the need for the guard-rails we have set out and the importance of what this investment is spent on. I am grateful, too, for the support of my noble friends Lord Liddle and Lord Chandos, the noble Lord, Lord Young of Cookham, and the noble Baroness, Lady Wheatcroft. As my noble friend Lady O’Grady of Upper Holloway pointed out, the previous Government planned to cut public investment, a recipe for continued decline.
To address the points made by the noble Lord, Lord Johnson of Lainston, and the noble Baroness, Lady Penn, these rules are actually tougher than those of the previous Government. To stop fiscal commitments being endlessly deferred for five years, this is the last year when the fiscal rules will target the fifth and final year of the forecast. The rules must be met by 2029-30 at this Budget, and until 2029-30 becomes the third year of the forecast, at which point both rules will target the third year of the rolling forecast period. This is a much tougher constraint than the previous Government’s borrowing rule: to borrow up to 3% of GDP by the fifth year of the forecast.
To repair our public finances and rebuild our public services, the Budget raised taxes by £40 billion. It was therefore a very significant Budget, as the noble Baroness, Lady Penn, set out. It was, though, commensurate with the challenges that we faced. The noble Lord, Lord Lamont of Lerwick, described it as bold; it was of course the most fiscally significant Budget since his Spring Budget of 1993. The Budget meant taking difficult decisions, to address the point made by the noble Lords, Lord Burns and Lord Lamont. As a result of those decisions, we have now wiped the slate clean, meaning that we never have to do a Budget like this again. We have set tough fiscal rules, which we meet two years early, and set the envelope for the second phase of the spending review, which we will stick to.
The noble Lord, Lord Johnson of Lainston, helpfully quoted our manifesto, as mentioned also by the noble Baroness, Lady Penn. Let me be clear: this Budget keeps every single manifesto commitment we made to working people—to not increase their income tax, their national insurance or VAT. We went further by freezing fuel duty, on which I disagree with the noble Lords, Lord Londesborough and Lord Young of Cookham, and my noble friend Lord Whitty, who said that it should have been raised during a time of cost of living pressures. I also disagree with the noble Lord, Lord Londesborough, who said that we should have increased employees’ national insurance.
The choice made by the previous Government was to freeze income tax thresholds, costing working people nearly £30 billion. We could have extended that freeze but instead, from 2028-29, personal tax thresholds will be uprated in line with inflation once again. The noble Lord, Lord Sherbourne of Didsbury, mentioned how many more people had been pulled into tax.
This Budget does, though, involve some very tough decisions. Several noble Lords, including the noble Lords, Lord Burns, Lord Bilimoria, Lord Londesborough, Lord Oates, Lord Shipley, Lord Gadhia, Lord Razzall and Lord Northbrook, and the noble Baronesses, Lady Wheatcroft and Lady Penn, focused on the increase in employers’ national insurance contributions by 1.2 percentage points to 15% from April 2025. We of course recognise that this involves asking businesses to contribute more. We have acknowledged that the impacts of this measure will be felt beyond businesses too, as set out by the OBR.
The noble Lords, Lord Fox and Lord Northbrook, the noble Earl, Lord Devon, and the noble Baroness, Lady Kramer, mentioned small businesses and their importance to the economy. We are protecting the smallest companies by increasing the employment allowance from £5,000 to £10,500, meaning that 865,000 employers will not pay any national insurance at all, and that more than 1 million employers will now pay the same or less than they did before. The Federation of Small Businesses said in its Budget response:
“Against a challenging backdrop, today’s Budget shows a clear direction in business policy now for the whole of this Parliament to target support at small businesses … prioritising everyday entrepreneurs working in local communities in all parts of the country”.
Some noble Lords raised the issue of compensation, including the noble Lord, Lord Fox, and the noble Baronesses, Lady Tyler of Enfield and Lady Kramer. The Government have chosen to compensate the public sector with £5.1 billion to ensure there is sufficient funding to support our vital public services, including the NHS. We will work with departments to ensure that the funding set aside is allocated appropriately. The Department of Health will confirm funding for GPs for 2025-26 as part of the usual GP contract process later in the year, including through consultation with the sector. The spending review includes an investment of £100 million. The Government also provided a significant funding top-up to local government, which can be used for pressures including adult social care.
The Government of course recognise the need to protect the smallest charities. Like any other eligible business, they will benefit from the significant changes to the employment allowance, which mean more than half of businesses with NICs liabilities either gain or see no change next year. Charities will still be able to claim employer NICs reliefs, including those for under 21s and under 25 apprentices, where eligible.
The noble Lord, Lord Dobbs, asked about the impact on employment. Following the Budget, the Bank of England now expects that rather than unemployment increasing, as it had previously forecast, unemployment will now fall. According to the OBR, employment will grow over the forecast period by 1.2 million.
The noble Lord, Lord Bilimoria, and the noble Baroness, Lady Penn, asked about the impact on living standards. The last Parliament saw living standards stagnate and was the worst Parliament for living standards ever recorded. The OBR forecast shows that real household disposable income will increase by an average of 0.5% in real terms each year. That is a world away from the stagnating living standards we saw under the last Government, and in the context of a Budget where we had to take some very difficult decisions to clean up the mess that we inherited.
Many noble Lords focused their contributions on economic growth. As several noble Lords mentioned, there was no bigger failure of the previous Government than their failure on growth. My noble friend Lord Whitty and the noble Lord, Lord Skidelsky, mentioned their austerity, their Brexit deal—which permanently reduced growth by 4%—and their disastrous mini-Budget, which, as my noble friend Lady Liddell rightly said, crashed the economy.
My noble friend Lord Liddle, the noble Lords, Lord Fox, Lord Razzall and Lord Shipley, and the noble Baroness, Lady Kramer, were right to reinforce the importance of this Government’s European reset to address the trade barriers that businesses now face.
When last week the Bank of England cut interest rates, it forecast that the Budget would add 0.75% to growth next year. Over the course of this Parliament, the OBR says growth is largely unchanged. The noble Lord, Lord Johnson of Lainston, said this Budget did nothing for growth, but over the longer term the OBR says that this Budget will permanently increase GDP by 1.4% due to the investment that his party is opposing. The noble Lord, Lord Lamont, also opposed that investment but called for more growth.
As the noble Lords, Lord Burns and Lord Young of Cookham, and my noble friend Lord Liddle said, we need to go further and we need to go faster. That is why economic growth remains this Government’s central mission.
The noble Baroness, Lady Neville-Rolfe, rightly focused on GDP per head and productivity. She raised an interesting suggestion which I will happily look at.
The noble Lord, Lord Bridges of Headley, mentioned debt. The OBR shows that the best way to make debt sustainable is to increase productivity.
As my noble friend Lord Eatwell set out, long-term reforms are vital. We have set out extensive planning reforms, a new national wealth fund and a modern industrial strategy, and created Skills England. I totally agree with my noble friends Lord Liddle and Lord Monks on skills and that we must go further.
We will shortly publish the “Get Britain Working” White Paper to tackle inactivity, and the Chancellor will set out pension reforms—which the noble Lord, Lord Howell of Guildford, asked about, and the noble Lord, Lord Gadhia, commented on—in her Mansion House speech later this week. All of these things will significantly boost growth, and none of them, as the noble Lord, Lord Gadhia, observed, are yet included in the OBR’s forecast.
The right reverend Prelate the Bishop of Newcastle and my noble friend Lord Sahota spoke about the importance of regional growth. In the Budget we set out the first steps in our approach to spreading growth across the country through devolution, investment and reform. We gave mayors greater control of their budgets by announcing the first integrated settlements for the West Midlands and Greater Manchester from 2025-26. We invested in major railway projects, and we confirmed funding for investment zones and freeports.
The noble Lords, Lord Fox, Lord Gadhia and Lord Forsyth, spoke about inflation and interest rates. The OBR is forecasting that inflation and interest rates will fall over the course of this Parliament. That is very different from the previous Parliament, when inflation peaked at 11.1% and was above target for 33 consecutive months, and when mortgages rose by an average of £300 a month following the Liz Truss mini-Budget.
My noble friend Lord Bradley spoke about the importance of growth to investment, and I agree with the points that he made. As several noble Lords set out, including the noble Lord, Lord Bilimoria, and the noble Baronesses, Lady Finn and Lady Moyo, private investment is a vital part of addressing the growth challenge. That is why this Budget delivers stability by putting on a sustainable path the public finances, which are an essential foundation for growth and investment. To ensure certainty, in the Budget we published a Corporate Tax Roadmap, which confirms our commitment to cap the rate of corporation tax at 25%, the lowest in the G7.
The noble Lord, Lord Londesborough, asked about enterprise. We have extended the enterprise investment and venture capital trust schemes until 2035. We have also taken action on late payments and non-financial reporting burdens. As my noble friend Lady Liddell said, at the recent international investment summit we saw over £60 billion of new investment creating nearly 40,000 new jobs.
I was surprised that the noble Lord, Lord Fox, spoke against the increase in the national living wage.
Lord Fox (LD)
I did not speak against the rise in the living wage. If the Minister goes through Hansard, he will find that to be the case.
Lord Livermore (Lab)
I will check, but it did sound very much like it to me.
The noble Baroness, Lady Neville-Rolfe, spoke against the plan to make work pay. But, as my noble friends Lady O’Grady of Upper Holloway, Lord Monks and Lord Hallett of Everton pointed out, there is now a wealth of evidence that greater in-work security, better pay, more skills and more autonomy in the workplace have substantial economic benefits. A more secure and productive workforce is good for business and good for working people, because each depends on the success of the other.
Many noble Lords focused on some of the other tax measures contained in the Budget. The noble Lord, Lord Londesborough, asked about stamp duty, which was also mentioned by the noble Lord, Lord Elliott of Mickle Fell. We are reforming stamp duty land tax so that those who buy second homes pay two percentage points more than before. This will support an estimated 130,000 additional people to buy their first home.
Many noble Lords mentioned agricultural property relief. They included the noble Lords, Lord Fox, Lord Forsyth, Lord Bilimoria, Lord Dobbs, Lord de Clifford, Lord Young of Cookham, Lord Empey, Lord Berkeley of Knighton, Lord Northbrook and Lord Shipley, the noble Earl, Lord Devon, the noble Duke, the Duke of Wellington, the noble Baronesses, Lady Mallalieu and Lady Humphreys, and the right reverend Prelate the Bishop of Newcastle. In terms of inheritance tax, currently the largest estates pay a lower effective tax rate than smaller estates. That cannot be right, so we are reforming agricultural property relief and business property relief to reduce this unfairness, while protecting small family farms. Almost three-quarters of estates claiming the relief will be unaffected. It is expected to affect around 500 claims next year.
We should be clear that agricultural property relief is given on top of the normal inheritance tax thresholds. Individuals can pass up to £500,000 to a direct descendant, and then agricultural property relief will provide another £1 million tax-free allowance. This means a couple can pass up to £3 million tax free. Above that, there is a 50% discount on inheritance tax, so it is a rate of only 20% and any liability can be paid in 10 yearly instalments which, to answer the noble Earl, Lord Devon, will be interest free.
The noble Lord, Lord Fox, asked about valuing property for business property relief. There is an established process for valuing business property, which will continue to apply.
On inheritance tax on pensions, the noble Lord, Lord Johnson of Lainston, seemed unsure whether pensions are a savings vehicle or a tax planning vehicle. The fact is, as my noble friend Lord Davies of Brixton said, that these reforms remove distortions resulting from pensions tax policy over the past decade, which have led to pensions being openly used and marketed as a tax planning vehicle to transfer wealth rather than to fund retirement.
Several noble Lords raised the issue of VAT on private schools, including the noble Lords, Lord Johnson of Lainston, Lord Forsyth, Lord Berkeley of Knighton, Lord Moynihan of Chelsea, Lord Lexden and Lord Borwick. This raises £1.7 billion a year—money to benefit the 94% of pupils who attend state schools. The new leader of the Opposition has that said she will reverse this measure, so she will of course need to say where her cuts to state schools will fall. The impact assessment, published alongside the Budget, shows that 35,000 pupils will move to state schools—less than 0.5% of the state school population and lower than previous estimates had suggested.
The noble Lord, Lord Shinkwin, asked about children with special educational needs. Children with the most acute needs, whose places in a private school have been deemed necessary by local authorities, are protected from the VAT impacts because local authorities can reclaim VAT. To improve outcomes for the most vulnerable children and to ensure that the system is financially sustainable, the Budget provided a £1 billion uplift in funding for special educational needs—a 6% real-terms increase.
The difficult decisions this Budget takes are for a purpose—not just to repair our public finances but to rebuild our public services, as my noble friend Lord Bach observed. I happily join my noble friend Lady Thornton in welcoming the work of the Women’s Budget Group.
We have set the envelope for the second phase of the spending review, which we will stick to. That will involve some tough choices on spending. Several noble Lords asked about reform, including the noble Baronesses, Lady Finn and Lady Neville-Rolfe, and the noble Lord, Lord Young of Cookham. Our reform agenda will be central to improving services going forward, including our 2% efficiency target for all government departments.
My noble friend Lady Ramsey of Wall Heath set out the increased funding that the Budget provides to the NHS. The noble Baroness, Lady Tyler of Enfield, asked what the NHS funding pays for—it is for 40,000 more appointments a week, £1.5 billion for new diagnostic scanners and new surgical hubs, and an expansion of mental health support, to name just a few. I think I heard the noble Baroness saying that more should be spent while opposing the increase in employer national insurance contributions that pays for it.
As the noble Baroness, Lady Lea of Lymm, observed, and the noble Baroness, Lady Penn, mentioned, the situation we inherited from the previous Government—the only major economy where inactivity has not returned to pre-pandemic levels—is completely unacceptable. We will publish a White Paper to get Britain working; my noble friend Lord Davies of Brixton asked for a date, and I tell him that it will be later this month. Next year, we will publish a White Paper on sickness benefit reform.
The noble Lord, Lord Desai, spoke about the importance of the welfare state. My noble friends Lady Lister of Burtersett and Lady Wilcox of Newport mentioned that we provided £1 billion to extend the household support fund and discretionary housing payments to help those facing financial hardship with the cost of essentials. We have reduced the level of debt repayments that can be taken from a household’s universal credit payment each month, meaning that 1.2 million of the poorest households will keep more of their award each month, lifting children out of poverty.
As my noble friends Lord McConnell, Lady Liddell, Lady Wilcox of Newport and Lord Murphy of Torfaen said, we are providing funding to support public services and drive growth across Scotland, Wales and Northern Ireland, with the largest real-terms funding since devolution.
My noble friend Lord McConnell and the noble Lord, Lord Oates, spoke about spending on overseas development assistance. ODA budgets have been set for the next two years to enable the UK to spend 0.5% of GNI. I reassure them that the Government remain committed to restoring development spending to 0.7% of GNI as soon as the fiscal circumstances allow.
My noble friend Lord McConnell also asked about the Integrated Security Fund. The ODA programme budget, including the Integrated Security Fund, will increase by 2025-26 to £9.2 million.
I am short of time, so I shall write to my noble friend Lady Warwick of Undercliffe about her housebuilding and social housing questions.
The difficult decisions that we made in this Budget, which have been debated here today, were made for a purpose—to repair the public finances, restore stability, rebuild our NHS, invest in the national interest and protect working people. It was, of course, possible to make different choices, to ignore the problems in our public finances, to not rebuild public services or invest in the fabric of our nation and to fail to protect working people. But we should remember that, at the last election, the country voted for change. As many of my noble friends have pointed out, the British people did not overwhelmingly reject the previous Government because they thought the choices they had made were the right ones. They gave this Government a mandate to fix the foundations of our economy and to deliver change. That is exactly the mandate that this Budget delivers on.
We have made our choices. They are the only responsible choices—to protect working people, restore stability and invest in Britain’s future.