Commons Chamber

Monday 12th January 2026

(began 3 weeks, 6 days ago)

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None Portrait Q6. What steps he is taking to build more social and affordable homes in Blaydon and Consett constituency. (907193)
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Liz Twist Preston six. Mr. speaker, Prime Minister.
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None Portrait Q9. What steps he is taking to build more social and affordable homes in Camborne and Redruth constituency. (907197)
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Minister.
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None Portrait Q11. If he will make an assessment with Cabinet colleagues of the potential merits of establishing a statutory national register of electricians. (907199)
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Sonia Kumar 11 Mr Speaker.
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None Portrait Q14. What steps his Department is taking to help tackle damp and mould in social housing. (907202)
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Mr. speaker.
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None Portrait Urgent question: To ask the Secretary of State for Defence if he will make a statement on the delays to the awarding of the New Medium Helicopter contract and potential closure of Leonardo’s helicopter site in Yeovil.
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Question Adam Dance.
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Luke Pollard Portrait Luke Pollard MP, The Minister of State, Ministry of Defence (Plymouth Sutton and Devonport, Labour )
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Lucy Powell Minister. >> Lucy Powell Minister. >> Thank you, Mr. Speaker. I'd like to thank the Member for Yeovil for his question. And to you, Mr. his question. And to you, Mr. Speaker, for allowing me to provide an update on the current status of the MoD's New Medium Helicopter procurement. Earlier this afternoon, I spoke with the CEO of Leonardo UK and the Managing Director of Leonardo Helicopters to continue our conversations around NMH exports as well NMH exports and autonomous helicopters, and stressed that Leonardo remains an important strategic partner for the Mod.

In fact, I had to leave that meeting early to get to this UQ. It is something that remains on my priority list. The NMH programme was first announced in March 2021 by the previous government, with competition opening nearly three years later. In February 2024. The government will make a final decision on the award of the contract for NMH through the wider Defence Investment Plan. And as the Defence Secretary has said, in this House, we are working flat out to deliver the dip, which will deliver the best kit and technology into the hands of our frontline forces and importantly, invest in and grow the UK economy.

It will be published as soon as possible and is backed by the government's largest sustained increase in defence investment since the end of the Cold War, spending £270 billion on defence in this Parliament alone.
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James Cartlidge Portrait James Cartlidge MP (South Suffolk, Conservative)
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Yes. >> Yes. >> Thank you, Mr. Speaker, and I congratulate the hon. Member for Yeovil for tabling this. Urgent question. It was a real pleasure to visit the Leonardo factory last September and witness how critical it is to employment in his constituency, visiting the factory, Mr. speaker, you get a powerful sense of Britain's rotary history, but we want it to have a brilliant future too. That's why it is so worrying that the CEO of Leonardo recently warned that at least 3300 jobs could be at risk if the NHS NMH procurement does not go ahead.

Indeed, it was with this those jobs in mind that when I announced the formal tender of the New Medium Helicopter as Defence Procurement Minister February 2024, I took the decision to give a much stronger weighting to two key areas of the tender. First, the commitment of bidders to delivering high skilled rotary work in the UK, and secondly, exportability so that the supply chain could endure. But all that will count for nothing. If the procurement is cancelled, so can the Minister confirm if there is still a military requirement for NMH? If so, is he still committed to procuring NMH after? When I asked the question last April, Mr.

Speaker, we were told we'd get the answer in the Strategic Defence Review, but the SDR document never mentioned NMH at all. Instead, when the Secretary of State announced the SDR to Parliament last June, he said the detailed decisions would be covered in the Defence Investment Plan, which he said then would be published in the autumn of 2025. Given it's now 2026 and that promise has clearly been broken, can he tell us in which month he will finally publish the dip? Can he confirm reports from multiple sources that the reason the dip is delayed is because there is now a £28 billion black hole in the Budget Finally, the Budget Red book shows exactly what Labour will spend on removing the two child benefit cap right up to 2031, but it doesn't say what the defence Budget will be that year.

Can he tell us? Isn't the reality, Mr. Speaker, that by prioritising welfare over going to 3% on defence, this Parliament, Labour are paralysing decision making in the Mod and putting thousands of jobs at risk in our defence industry at Yeovil and across the UK. Yes.
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Emma Hardy Portrait Emma Hardy MP, The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Kingston upon Hull West and Haltemprice, Labour)
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So Alec Shelbrooke.

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Thank you, Mr. Speaker. Not disregarding the Minister's comment that we have to wait for the that we have to wait for the investment plan. Most people in here know that's because the Treasury aren't letting him do it. And what I'm concerned about, further to the point from my hon. Friend for North Dorset and my Friend for North Dorset and my right hon. Friend for Gosport is supply chain security. We've seen, for example, China put America over for example, China put America over a barrel by dropping off renewables and making them reverse.

So having supply chains within the United Kingdom is vital. So may I ask the Minister to really emphasise that point to the Treasury, that it is a key strategic defence requirement that we are able to supply our military needs from within these borders, and maybe that will get the Treasury to sign off on what he

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clearly wants to tell us but can't. Yeah. He's absolutely right to talk about the supply chain and to talk about small businesses. And the about small businesses. And the wider supply chain is indeed there's a large component part of the Defence Industrial Strategy that talks about that as well. And that talks about that as well. And I'm sure he's he's read that strategy. So he'll be familiar with it. We want to see our suppliers in it. We want to see our suppliers in the UK expand.

We want to see more of them sell into the UK military. Indeed, there's lots of our supply, small companies that sell into foreign militaries don't yet buy into the UK military. It's one of the reason that we've will be launching the Office of Small Business Growth later this month. That will enable an easier route for UK SMEs to be able to sell their products and services into the UK military. Something that

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they've said time and time again has been hard in the past. We're making it easier for the future. Thank you, Mr.

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Thank you, Mr. Speaker, and I too am concerned about the potential loss of jobs at Yeovil in the wider South West. If Yeovil in the wider South West. If we don't see a positive decision on the production of the New Medium Helicopter at Yeovil late last year, Helicopter at Yeovil late last year, we learned that the government had failed to negotiate access on security action for Europe, a 150 billion defence fund. Leonardo is an Anglo-Italian company and that Leonardo was also supportive of UK access to safe.

Can the Minister reassure us that this lack of a decision on the New Medium Helicopter is completely divorced from access to safe?

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Yeah. Yes I can. We were very clear that we wanted to explore the that we wanted to explore the options of the UK participating in safe, but we also were clear that we would not join at any price and unfortunately we haven't. We unfortunately we haven't. We weren't able to make the value for the UK taxpayer. The value for UK industry match with those industry match with those discussions with Safe, we continue to cooperate very closely, not just with the European Union but with with the European Union but with our European allies.

And you can see that through the new agreements that we've signed, the Trinity

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House agreement with Germany, for instance, more collaboration and cooperation with Poland. There's more to come. Helen Maguire.

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Helen Maguire. Thank you, Mr. Speaker. I congratulate my hon. Friend for securing this important question today. There is a resounding threat today. There is a resounding threat on our doorstep from Russia. International order rests on a knife edge. So at this time, knife edge. So at this time, efficiency of the UK's defence procurement process must be a priority. Businesses simply can't afford to wait while the government afford to wait while the government dithers and delays on contracts, and now thousands of jobs are at risk.

This is the exact opposite of what this government said it wants to deliver. So can the Secretary of State provide confidence for UK business that the Defence

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Investment Plan will be announced this year? I thank her for her question and

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I thank her for her question and also the promotion as well that she has given me in her question there. Since the general election, we've signed over 1000 defence contracts, signed over 1000 defence contracts, over 80% of those going to UK companies, and we'll continue to procure using more of that increasing defence spending with UK firms wherever we possibly can. That is an important part of That is an important part of meeting the new threats that we're facing as a nation and as a NATO alliance.

As part of that, we need to renew our armed forces, retiring old capabilities and bringing on new capabilities. That's what the Defence Investment Plan will set out, and it will implement those approaches that were laid out so clearly in the Strategic Defence Review.

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Robin Swann. Thank you very much, Mr. Speaker. The 26th of March, last year, three RAF Pumas actually performed a fly-past of Aldergrove in my constituency. So can I just say constituency. So can I just say from the Minister what urgency there actually has to fill that capacity gap of medium lift helicopters and to secure a full utilisation of what used to be Joint Helicopter Command Aldergrove

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in my constituency. Can I thank you, ma'am? We've had a number of conversations around Aldergrove and I suspect that we will continue to do so. It is important that as part of the defence investment Plan that we continue to maintain lift capabilities across our armed forces. That will be a mix of

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crewed and uncrewed and leading to autonomous systems that will be laid out in the defence Investment plan when it's published. Chorley Jim Shannon.

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Chorley Jim Shannon. Thank you, Mr. Speaker. Can I thank the Minister, the Minister, a very honourable man. We Minister, a very honourable man. We all know that we like him for the answers he gives us. But today we need confirmation, Minister, of need confirmation, Minister, of those dates. And everybody has asked a similar question. I want to ask a question, if I can, that Minister will be aware that delays Minister will be aware that delays in UK Ministry of Defence Mod contracts primarily affect by creating cash flow challenges, forcing delays into their own operations.

And I know this from experience from Northern Ireland, 95% of the defence companies are small and medium sized enterprises, which are less equipped to absorb the financial strain of prolonged procurement cycles. So will the Minister please not agree to an overhaul of the contractual system, which acknowledges the dependence of contracts and which makes the right decision and a more efficient way? And will the Minister begin

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this overhaul with a decision that is clearly and very much demanded today? Thanks so much. Er.

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Er. Can I thank him and his advocacy for defence industries in Northern Ireland? He will know that this Ireland? He will know that this government placed a £1.6 billion order for new missiles from Northern Ireland, a really key Northern Ireland, a really key component of keeping our friends in Ukraine safe. We'll continue to procure from Northern Ireland businesses, and indeed, we're businesses, and indeed, we're looking forward to the development of the Defence Growth Deal for Northern Ireland, which I hope will

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be able to make a substantial step forward very shortly. Thank you. Right. That completes the urgent question. Mr. Is ongoing into interruption of water supplies and East Grinstead surrounding villages. What I'm saying is, it's the broader area of those affected. Please, this doesn't affect people in Northern Ireland. So can we just keep this to the members who are affected if it doesn't affect you? I don't want to speak because you've got six hours in the Finance Bill later, so I'm sure he could save yourself.



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Right. Let us go forward with the Urgent Question Mims Davies. To ask the Secretary of State

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To ask the Secretary of State for environment, Food and Rural Affairs. She will make a statement on the ongoing interruption to on the ongoing interruption to water supplies in East Grinstead and the surrounding villages, and and the surrounding villages, and what support will be made available for those affected. Yeah. Thank you, for those affected. Yeah. Thank you, Mr. Speaker, and I'd like to update the House on the ongoing water supply disruption across southern England. But before I do that, I would like to pay tribute to my dad, David Mattinson, who passed away last Monday at Dove House hospice, and to thank everybody at the hospice for the wonderful care they gave him as a primary head teacher.

He inspired so many people and was truly loved. He will be deeply missed by my sisters, my mum and myself and all who knew him. Thank you. And I would also like to thank the Minister for covering me during my leave, and my friends and colleagues across DEFRA who met with the chief executive of South East Water and numerous MPs last week and several times over the weekend. I really appreciate the the teamwork and solidarity. So thank you. And this is an unacceptable supply failure, particularly for residents in Tunbridge Wells, who face significant disruption for the second time in as many months.

We are holding South East Water to account as the company responsible for the areas most affected. We have been clear in our daily meetings with the company that restoring supply must be the company's absolute priority, that every possible measure must be taken to protect vulnerable customers, and that those affected must receive proper compensation for the disruption they have experienced. Far too many people are unable to wash safely or have adequate sanitation in their homes. Far too many businesses are being affected.

The supply issues in Kent and Sussex have been caused by several short term factors, including a period of prolonged cold weather, which led to a large number of burst pipes and water mains across the network, and operational issues at water treatment sites caused by Storm Goretti. However, the disruption in south east comes against a backdrop of previous outages and continued poor performance by South East Water in maintaining a reliable service for its customers. It is yet further evidence that the water system is broken for too long.

Water companies have failed to maintain their infrastructure and build the resilience needed to withstand events like this. Customers are paying the price for years of underinvestment, and this government will fix this through our wholesale water reforms. This includes stronger rules on maintenance and resilience, backed by £104 billion of private investment for infrastructure upgrades and the creation of a new

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single, powerful regulator. Thank you. Mims Davies Minister.

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My condolences. Thank you, Mr. Speaker. I am grateful again, no water across parts of Sussex and water across parts of Sussex and Kent that is expected to continue, at the very least until tomorrow at the very least until tomorrow for my area. Again, a shambolic response affecting over 16,000 households in East Grinstead, households in East Grinstead, Sorcha Eastwood and some of my Wealden villages. Again, constituents left with poor, misleading or no communication from South East water, leaving too many vulnerable people even on the priority services register.

Waiting again. Livestock owners struggling to get water for their animals. Many businesses have shut and many schools and nurseries too. Again met again. Water bottle stations have been poorly organised. Little or no clear provision for hard hit rural village areas, forcing residents into long drives with failures to open or running dry far too quickly, creating huge gridlocks, frustration and anger. Mr. speaker, all unbelievably coinciding with East Grinstead train station as the terminus will Gatwick Airport rail replacement buses showing a complete lack of joined up planning.

The Lfrs Mr Speaker in place, but the logistics are failing. I ask the Minister what penalties or sanctions will the water company face? What level of compensation which my constituents and many constituents deserve will they actually get? And with multiple and repeated South East Water serious failings in just the last five years, does the Minister agree with me and many? This water company needs urgent new leadership capable of properly addressing emergency situations and, crucially, restoring much needed confidence in South East Water's ability to manage its systems, its infrastructure and water supplies, and ultimately give the service now

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and in the future. Thank you. Mr. I thank the hon. Lady, and I completely am with her wholeheartedly in the anger and frustration that she feels on behalf of her residents for once behalf of her residents for once again having problems with this company. As I've said, yes, the short term factors were the three short term factors were the three is for, but the longer term factors are the lack of resilience there is with this company and the fundamental problems it has, which fundamental problems it has, which is why one of the things that we need to address this more systemically is looking at setting those resilience standards.

So you move from a maintenance system which is fixed on on failure to a proactive, proactive system. But she's quite right in also raising problems around this company. They're already under investigation from the Drinking Water Inspectorate because of the previous issues in Tunbridge Wells. The DWI will be doing further investigations and I've already met with Ofwat to discuss performance, my concerns around performance issues at the company, and I've asked them to investigate whether or not South East Water is meeting

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its obligations in serving its customers. I'll just reiterate, for those who weren't in, only those who were who weren't in, only those who were affected. Thank you. Only those constituencies that are affected were the water has been cut off. This isn't about the storm. We'll come back to the storm, possibly tomorrow. But I just want to make tomorrow. But I just want to make sure it's these constituencies that are affected by this Urgent Question. Right. Who wants to stand

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Question. Right. Who wants to stand now? That basis Helena Dollimore. Mr. speaker, my constituency was affected over the Christmas period by the water outage and I wanted to thank the Minister for her support over the Christmas period, keeping me updated and briefing the water company. I really feel for the people who are experiencing these water outages. We have looked at this as part of the Environment Select Committee and trying to learn the lessons from the incidents we've had in Hastings and Rye, and it seems like those mistakes are still being repeated.

The report outlined the need for more water stations, the need to consider the weight of six two litre bottles for people who are disabled on the priority list. The fact that these learnings are not being taken into account by the water companies, and also the need for hygiene. Once we get several days into a water outage, people can't wash their hands, they can't clean and prepare food, they can't have a shower. So could the Minister tell me what the government is doing to put pressure on the water companies to heed the findings and the learnings from each of these outages in our constituency that don't the lessons

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don't seem to be being learned every time. Minister. I thank my hon. Friend and again

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I thank my hon. Friend and again for the leadership she's shown in her constituency during the Christmas period. And we'd all Christmas period. And we'd all hoped to have some time off, and she was having to reopen her office to communicate with residents. And she's quite right. We need to be she's quite right. We need to be learning lessons we cannot have. And this is the thing that frustrates me, I think, more than many other things. Mr. Speaker, the many other things.

Mr. Speaker, the same problems being made by the same companies when it comes to communicating clearly and adequately with residents, making sure they know who their vulnerable customers are. And I think this is something I want to look at in our forthcoming white paper, whether or not we have all of the powers that we need. But of course, as I say, the drinking water inspector, I don't want to get ahead of that. We'll be doing our own investigation into the situation

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over Christmas at Tunbridge Wells and into the current recent one as well. Come to Shadow Minister, Doctor Neil Hudson.

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Neil Hudson. Yes. Thank you, Mr. Speaker. Mr. speaker, can I, from this side of the House, offer my sincere the House, offer my sincere condolences to the Minister and her family for their sad loss at this time? Thank you, Mr. Speaker, for time? Thank you, Mr. Speaker, for granting this question urgently tabled by my hon. Friend the Member for East Grinstead and Ashfield. for East Grinstead and Ashfield. The shortage of water supply in Sussex and Kent continues to have terrible impacts on local
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Sarah Dyke Portrait Sarah Dyke MP (Glastonbury and Somerton, Liberal Democrat)
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communities. Tens of thousands of homes have been without water supply. Schools and libraries shut. supply. Schools and libraries shut. Businesses, and in particular hospitality businesses have had to close their doors. Farmers and close their doors. Farmers and horse owners Mr Speaker fear not having enough water for their livestock, and some hospital appointments are being moved online. appointments are being moved online. This is simply not good enough from South East Water, especially with repeated failures by the company repeated failures by the company and being the second major incident in a matter of weeks.

I understand the distress, anger and frankly, exhaustion. Many in the local area feel they need clear communication, rapid action now, and reassurance for the future. Yet we have heard from my conservative colleagues in Kent and Sussex repeated accounts about poor communication and logistics from South East Water, including bulk sharing issues with Southern Water. This has also included announcements that vital bottle collection points will open only for constituents to travel, queue and then find out no water has been delivered.

Can the Minister confirm when the thousands of homes affected by this shortage can express this? Expect this service to restore to normal, and can she provide guidance on what is being done to ensure that homes can access adequate supply, particularly vulnerable households, particularly in more isolated areas in which travelling to bottle collection points is not feasible when when the schools can reopen, and what is being done to ensure GP surgeries and hospitals can can deliver their appointments and care? And what measures have been put in place so that farmers and horse owners have enough water for their animals.

Finally, considering the Cunliffe Review's focus on ensuring water supply, can the government confirm what they will take forward from that review to address this as a structural issue to ensure supply and consumer confidence for the

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long term? Thank you Minister. Thank you, Madam Deputy Speaker,

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Thank you, Madam Deputy Speaker, and I thank the hon. Gentleman for his kind comments regarding my father. So in terms of compensation, father. So in terms of compensation, we've doubled the amount of compensation available. And this has had a huge impact, particularly in Tunbridge Wells, where people, in Tunbridge Wells, where people, for the first time will be compensated for being on a boil notice. We are looking at introducing new standards, tightening resilience standards. As I mentioned earlier, this is moving from the system we have at the moment, which is fix on failure to proactive maintenance, because part of the reason we have this problem in this area.

Yes, short term impact threes and four but longer term impact there is not enough resilience in in the system. There are too many points at which it can easily easily fail. And it was also raised by one of the colleagues around making sure we have bottled water in villages in more rural areas. And this is something I've raised directly with the company because, as you quite rightly pointed out, for some people it's quite difficult getting to some of these bottled water stations, which you want to look at.

We're making sure we're having them in the right place, and I have sold South East Water to expect them to be communicating regularly with their members of Parliament, to make sure that they are in the right place and sharing that intelligence. And we completely agree on the communication. There hasn't been enough use of social media. The website's been too slow to update. You know, there should be much more communication and clear communication going to members of Parliament. I mean, in terms of when we expect the situation to return to normal.

I said the latest sitrep out to all of the MPs affected, and I will continue to do so. And we're having another strategic group meeting tomorrow with everybody to see where the situation is in the next 24 hours. I don't expect this to all be resolved in the next 24 hours, which is why I'm holding another meeting again tomorrow. And I've said as well, South West Wiltshire should be phoning each individual member of Parliament impacted and updating them on the situation and what's happening.

And then finally on livestock, because that was mentioned by a number of colleagues on the call yesterday, they are supporting 11 farms with bottled water, and they've made some deliveries of alternative water to farms across the region. But he's quite right to mention that this is a huge this is having a huge impact on the welfare of animals. So it needs to be taken as seriously by the water company. And I hope that following this, they are intending

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to do so. Liberal Democrat spokesperson Sarah Madam Deputy Speaker. Around 16,500 residents have been impacted as a result of the latest water as a result of the latest water outage. In addition, GPS and schools have shut vulnerable people, including those in care homes, are unable to access water and people unable to access water and people have been forced to queue for hours at water distribution sites. Unfortunately for customers for Unfortunately for customers for South East Water, this has become a trend over the last five years.

The company ranks within the bottom three for water supply interruptions. Madam Deputy Speaker experts have stated the potential for water shortages in the area has long been known but terrible strategic planning, a failure to cut leakage and decisions to divert money towards dividends have distracted from improving infrastructure that should have been prioritised. So does the Minister agree with the Liberal Democrats that the continued tenure of Southeast Water's CEO is untenable given the scale, duration and repetition of these serious failures? And will the government commit to a full, independent investigation to Southeast Water's operation or resilience, governance and crisis management? And Madam Deputy Speaker, if I may offer my condolences to the Minister on behalf of myself and my Liberal Democrat colleagues on the terrible and sad loss of her father.
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Liz Kendall Portrait Rt Hon Liz Kendall MP, The Secretary of State for Science, Innovation and Technology (Leicester West, Labour)
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With permission, madam Deputy Speaker, I'd like to make a statement on AI, social media and online safety. No woman or child should live in fear of having their image sexually manipulated by technology. Yet in recent days, the Grok AI tool on the social media platform X has been used to create and share degrading, non-consensual intimate deepfakes. The content content which has circulated on X is vile. It's not just an affront to decent society, it is illegal.

The Internet Watch Foundation reports criminal imagery of children as young as 11, including girls sexualised and topless. This is child sexual abuse. We've seen reports of photos being shared of women in bikinis tied up and gagged, with bruises covered in blood and much, much more lives can and have been devastated by this content, which is designed to harass, torment and violate people's

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dignity. Yeah. They are not harmless images. They're weapons of abuse, disproportionately aimed at women and girls, and they are illegal. and girls, and they are illegal. Last week, X limited the the image creation function to paid creation function to paid subscribers. This does not go anywhere near far enough. It is anywhere near far enough. It is insulting to victims to say you can still have this service if you're willing to pay, and it is monetising abuse.

Yeah. So let me be crystal clear. Under the Online Safety Act, sharing intimate images without someone's consent or threatening to share them, including images of people in their underwear, is a criminal offence for individuals and for platforms. My predecessor, the right hon. Member for Hove and Portslade, rightly made this a priority offence. So services have to take proactive action to stop this content from appearing in the first place. The Data Act, passed last year made it a criminal offence to create or request the creation of non-consensual intimate images, and today I can announce to the House that this offence will be brought into force this week.

Yes, and that I will make it a priority offence in the Online Safety Act to. This means individuals are committing a criminal offence if they create or seek to create such content, including on X, and anyone who does

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this should expect to face the full extent of the law. Here. But the responsibilities do not

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But the responsibilities do not just lie with individuals for their own behaviour. The platforms that host such material must be held accountable, including X. Madam Deputy Speaker, Ofcom this morning confirmed that they have opened a formal investigation into X and will assess their compliance with the Online Safety Act. The government expects Ofcom to set out a timeline for the investigation as soon as possible. The public and, most importantly, the victims of Grok activities expect swift and decisive action, so this must not take months and months.

But X does not have to wait for the Ofcom investigation to conclude they can choose to act sooner to ensure this abhorrent and illegal material cannot be shared on their platform. If they do not, Ofcom will have the backing of this government to use the full powers which Parliament has given them. And I would remind Max X and all other platforms that this includes the power to issue fines of up to 10% of a company's worldwide qualifying revenue, and in the most serious cases, Ofcom can apply for a court order to stop UK users accessing the site.

Madam Deputy Speaker, this government will do everything in our power to keep women and especially children, safe online, so I can today confirm that we will build on all the measures I have already outlined and legislate in the Crime and Policing Bill, which is currently going through Parliament, to criminalise new Defaecation acts. This new criminal offence will make it make it illegal for companies to supply tools designed to create non-consensual intimate images targeting the problem at its source.

And in addition to all of these actions, we expect technology companies to introduce the steps recommended by Ofcom's guidance on how to make platforms safer for women and girls without delay. And if they do not, I am prepared to go further because this Labour government believes tackling violence against women and girls is as important online as it is in the real world. Now. Madam Deputy Speaker, this is not, as some would claim, about restricting freedom of speech. That's something that I and the whole government hold very dear.

It is about tackling violence against women and girls. It's about upholding basic British values of decency and respect and ensuring the standards we expect offline are upheld online, and it is about exercising our sovereign power and responsibility to uphold the laws of this land. I hope this is a time when MPs on all sides of the House will stand up for British laws and British values, and call out the platforms that allow explicit, degrading and illegal content. It is time to choose a side.

Opposition MPs can either support the legislative action we are taking under the Online Safety Act, or they can ally themselves with those who think the creation and publication of sexually manipulated images of women and children is acceptable, acceptable and I say in particular to the one reform MP sitting in this House that if they continue to call for Online Safety Act to be repealed, they are shamefully supporting scrapping

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protections that keep women and children safe. Yes.

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If I may, Madam Deputy Speaker, briefly, I'd like to address calls from many MPs and others from many MPs and others understandable cause for the government to end its participation on X. I really do understand why on X. I really do understand why many colleagues have come to this conclusion when X seems so conclusion when X seems so unwilling to clean up its act. The government will, of course, keep our participation on X under review. But our job is to protect women and girls from illegal and harmful content wherever it is found.

And I think it's also worth bearing in mind with 19 million people on X in this country and more than a quarter of them saying that they use it as their primary source of news, that our views, and often simply the facts, need to be heard wherever possible. Madam Deputy Speaker, let me conclude by saying this I believe and the government believes AI is a transformative technology which has the power and potential to bring around extraordinary and welcome change, creating jobs and growth.

Diagnosing and treating diseases. Helping children learn at school, tackling climate change and so much more besides. But in order to seize these opportunities, people must feel confident that they and their children are safe online and that AI is not used for destructive and abusive ends. Many tech companies want to and are acting responsibly, but where they do not, we must and we will act. Innovation should serve humanity, not degrade it. So we'll leave no stone unturned in our determination to stamp out these demeaning, degrading and legal images.

If that means strengthening the existing laws, we are prepared to do so because this government stands on the side of decency. We stand on the side of law. We stand for basic British values that are supported by the vast majority of people in this country. And I commend this statement to the House.
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Julia Lopez Portrait Julia Lopez MP (Hornchurch and Upminster, Conservative)
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Shadow Secretary of State Julia Lopez. Lopez. >> Thank you, Madam. >> Deputy Speaker, and to the Secretary of State for advance notice of her statement. Last week, notice of her statement. Last week, the public outrage was rightly expressed about the use of artificial intelligence to undress women and children in photographs by XS AI assistant Grok. The use of AI in this way without consent is wrong. It is disturbing and in many cases it is illegal. We support Ofcom taking enforcement action where an AI tool is used to generate illegal content, especially that of children.

We support the government's stance on notification tools. Exeter has warned of consequences for anyone prompting Grok to make illegal content. The tools in question have been put behind a paywall for the easy identification by a name and bank details of anyone misusing them beyond the platform. However, the Internet Watch Foundation has identified cases where perpetrators have used Grok in tandem with other AI tools to generate category A material, as the chairman of the Culture Select Committee has rightly said, such mainstream AI tools must not become an enabling step in the child abuse production pipeline.

Madam Deputy Speaker, law already exists to deal with much of this. The Protection of Children Act, the Criminal Justice Act, the Sexual Offences Act, the Data Act. When the government voted against Baroness Owen's tougher amendments, the Online Safety Act. These laws should be enforced and we now await Ofcom setting out its next steps as an independent regulator. Regardless of the law, it is right to expect AI companies to anticipate and prevent misuse of products before their deployment through rigorous red teaming for a law to deter.

I accept the enforcement threat must be credible, but its use must also be proportionate. Notwithstanding the soft back pedalling of the Secretary of State today. The government's appendage swinging over the weekend was extremely serious. Ministers mooted as an urgent remedy the banning of a site of 21 million monthly users in this country, despite another Minister guffawing that banning ICS was conspiracy theory number 3627. Madam Deputy Speaker, since its invention, the internet and social media have been misused, often criminally, by people traffickers, paedophiles, fraudsters, the gutter dwellers of our society.

Nobody is on their side. But government has never before proposed to wholesale block TikTok, Google or Facebook for the frequent and often flagrant misuse of their sites. It is an extraordinarily serious move against a platform that can be used for good for uncovering scandals, sparking democratic revolution and allowing day to day the free exchange of ideas, including ideas we don't like. It is that very power for good that sees Iran's mullahs reach to block the internet in the face of courageous protesters.

This episode poses legitimate questions about who holds power in the internet age. Many worry about the crude influence, the accrued influence of big tech titans, myself included the Madam Deputy Speaker. They worry, too, about the power of government to divert hide and duck accountability. They worry about this government. The uncomfortable truth for all of us is that some of this imagery sits in a legal grey area. What Grok produced at scale in 2026 is a modern day iteration of an old problem.

From crude drawings to Photoshop, Grok is not the only tool capable of generating false or offensive imagery, and not all of this content will cross the threshold into illegality. Plenty of it is sick, degrading, morally repugnant. But it does not cross the criminal threshold. What, then, is the Secretary of State proposing to do about the difficult enforcement choices that a regulator or police force must make? Because the risk is that with finite resource in a highly politically sensitive environment, regulators could be diverted from pursuing the most abhorrent and dangerous crimes.

Further, if we wish to mitigate the risk to children, one simple intervention may help stop from sharing their own image too freely. That's raising the digital age of consent for social media to 16. The mayor of Manchester, Andy Burnham Fulsomely, agrees as the cross-party consensus grows. Does the Secretary of State, Madam Deputy Speaker, the Secretary of State knows that there are geopolitical consequences to her rhetoric. Figures close to President Trump have already threatened sanctions. Has the Secretary of State engaged with the US government? Has she been advised on the nature of any retaliation? Were the UK government to block X? The US, UK tech deal has already been paused.

We need clarity on what else is at stake. To conclude, Madam Deputy Speaker, the Secretary has said this government is as determined to ensure women and girls are safe online as we are to ensure they are safe in the real world. To this end, will she be ensuring the government enforces against itself for its failure to advance the rape gang inquiry, its failure to stop puberty blocking trials, its failure to implement guidance on single sex spaces, its inability to deport illegal migrants who have committed sex offences? For while this government rightly worries about the online sphere and we support them, there is plenty to be getting on with in the real world.

Thank you.
16:56
Liz Kendall Portrait Rt Hon Liz Kendall MP, The Secretary of State for Science, Innovation and Technology (Leicester West, Labour)
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Secretary of State.

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Conservative Party. Now. I was going to say at the beginning, I was grateful to the beginning, I was grateful to the hon. Lady for her support for action from Ofcom, for its investigation, their support for investigation, their support for our action on banning new apps, and that I hope she and her party actually vote for the Crime and actually vote for the Crime and Policing Bill at the final stages. But may I just say here that she But may I just say here that she then began her own campaign of misinformation in the House? I merely stated the facts about the Online Safety Act, which that there is a backstop power in the OSA, which I remind the online.

I remind the hon. Lady her previous government and her party voted for a backstop power. If Ofcom, in the most serious cases, believes that companies refuse to comply with the law, they have the power to apply to a court for serious business disruption measures to stop people from accessing it. And if she disagrees with her own government's legislation, she should make it clear to the House the legislation is actually extremely clear that it is a criminal offence to share or attempt to share intimate, non-consensual, intimate images.

It's going to be illegal to actually create or ask to create those images. And then with the ban on notification apps, that will make a really important change to this is not, as I've said, about anything to do with freedom of speech. It's about upholding British values and the British law. And I would also gently point out to the hon. Lady who mentioned our allies in the United States that the president actually signed the Take it Down Act, which is precisely on non consensual intimate images.

So maybe she should do a little bit more actual research than just reading headlines online or in newspapers. I think the public looking at this will be clear about what they want to see change. I genuinely hope that this is something across the house that we can work on. You know, I actually believe that it is because I'm such a champion of freedom of speech that I want women to not feel that they are bullied, harassed of any platform, so their views and voices can be heard.

And I can see by her colleagues faces. They may wish that the hon. Lady took the same approach to.
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17:01
Victoria Collins Portrait Victoria Collins MP (Harpenden and Berkhamsted, Liberal Democrat)
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Liberal Democrat spokesperson Victoria Collins. Victoria Collins. >> Thank you, Madam Deputy Speaker. >> For over a week, Grok has generated illegal sexual abuse generated illegal sexual abuse material, non-consensual images of women and children and about the disgraceful step of putting it behind a paywall without restraint on X. This is abhorrent and these images are illegal. And unlike the conservatives, we very much welcome the action that is being taken and absolutely want to work together to stop this illegal foreign use of AI technology.

This is why the Liberal Democrats have called on the National Crime Agency to launch a criminal investigation into X, and for Ofcom to restrict access immediately. We also called for MPs from reform to donate their earnings to X, to those charities that are working on those for those victims of sexual exploitation. So where there are loopholes around AI creation of these horrific images, we are very pleased to hear the Secretary of State announcing the establishment that it's a criminal offence to create or seek to create such horrific content and the work to criminalise notification apps.

Regulatory regulatory gaps, however, are not the only problem. Enforcement is failing to. While other countries have acted decisively to ban X, Ofcom has taken over a week to start an investigation and lacks the resources to take on these tech giants. What has become clear is that with the pace of technology, the government must look to future proof online safety from new harms and harmful features. And so the Liberal Democrats have long been raising the alarm. We tabled amendments to raise the Age of Data consent proposal, Doomscroll cap to kerb addiction, and calls for public health warnings on social media.

So will the government support our calls on these actions? Because protecting women and children from online abuse cannot wait. And this matters in real life. To my constituent, who is harmed by strangulation in a nightclub following online video to the victims of sexual abuse and violence, which often starts online, so does the Secretary of State have full faith in Ofcom's ability to enforce the Online Safety Act? Given the pace of change? And will she meet with me? Because, unlike the conservatives, I would like us to work together on this issue, which is so important to discuss the action needed to tackle this AI, chatbots and emerging technologies.

This is a moment for the House to act together in action, sends a message that abuse online is acceptable and we must prove otherwise.
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17:46
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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Madam chair, it is a pleasure to open this first day of committee debate on the finance Bill. Madam chair, this was set to be the biggest economic moment of the day, but my moment in the limelight has sadly been blown off course by the riveting news. With regards to the former member for Stratford upon Avon's defection to reform UK. This star signing is clearly a great loss to the Conservative Party. Members opposite may hope that this will allow them to start to expunge the history of the Truss mini Budget from the nation's collective memory, although I can't help feel it's a case of shutting the heated stable door after the horse has bolted.

He said he wanted to join reform UK to fix a broken system, but just like the party opposite, no one will believe that he can do it. In fact, Madam Chair, he ran the system, he broke the system and he left us all sorting out with the taxman how to pay for the mess he left behind. Returning to the topic at hand, Madam Chair, my right hon. Friend the Chancellor delivered her second Budget at this Dispatch Box a few weeks ago. This was a Budget to build strong foundations and a secure future for our country, reflecting historical underperformance, the office for Budget Responsibility has revised down its productivity forecast in isolation.

This reduces the amount of revenue that the OBR expects the government to collect by around £16 billion in 20 2930. The government is determined to outperform this forecast by continuing its plans to grow the economy, protecting public services and cutting borrowing. But it is right to plan on the independent forecasters judgement, meaning, despite Britain's progress, the government does need to strengthen the public finances. The choice at the Budget was austerity and decline or investment in renewal, and this Labour government has rejected austerity and repeating the mistakes of the opposition.

All those opposite who are quick to promise cutting taxes must set out where they would credibly raise the money from elsewhere, what they would actually cut, or how much they would increase borrowing by as they enjoyed doing so much. In recent years, the Budget delivered fair and necessary choices that deliver on the public's priorities and choices that bring about the change that this government promised. The government has chosen to cut the cost of living, delivering £150 off energy bills, freezing train fares and prescription charges.

The government has chosen to focus on cutting waiting lists, delivering 5.2 million more appointments and opening 250 new neighbourhood health centres. All this would be threatened by those opposite who don't support the taxes, including those debated in these clauses that are needed to fund decent public

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services. This government has. I will. Julian Lewis I'm very impressed with the Minister's opening speech with the Minister's opening speech and his lightness of touch, but can he but can he explain to the House he but can he explain to the House how he reconciles this litany of good effects with the number of good effects with the number of U-turns carried out since the

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Budget was put forward? Thank you, Madam Chair, and I thank the member opposite for giving me time to top up my water and for his intervention. The government has been very clear in its approach since we took office. We needed to raise revenue to fund public services. We've been consistent in our objectives in that regard and we need to get borrowing down. Borrowing is falling in every single year of this forecast because of the decisions that we have taken.

I believe Madam Chair it's the fastest reduction in borrowing in the G7, bringing that economic stability back and allowing the Bank of England the space to be able to cut interest rates. Madam chair, as they have already done six times since the general election, the finance Bill will deliver on the choices that the government has made and we will renew public services. We have taken the decision to lift hundreds of thousands of children. Madam chair, out of poverty, getting more people into work and crucially for our long term growth prospects, maintaining the highest level of public investment for 40 years, all while keeping borrowing this year to its lowest level in six years as a share of GDP and doubling.

Madam chair, our headroom against our fiscal rules. I will give way.

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Can I thank the Minister very much for for what he's putting forward? The OBR have indicated forward? The OBR have indicated some £55.5 billion will be raised. But the money's not coming from millionaires. It's coming from from those who are in the lower and middle income families. And that means that some 4.8 million more means that some 4.8 million more will be paying the higher rate. Some 600,000 more individuals will have moved to the additional rate band. Can I ask the Minister, in band.

Can I ask the Minister, in all honesty, how can we help those in the lower and the middle bracket? Those who are millionaires, they

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can afford it. The other ones can't. One of the ways that we are

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One of the ways that we are seeking to support everyday working people and families across the country is by making the decisions, country is by making the decisions, many that have been opposed by members on the benches opposite, I must say, to raise taxes on those must say, to raise taxes on those with the very largest estates and with the very highest amount of wealth. In fact, over this wealth. In fact, over this Parliament, as a result of the decisions made at the Budget in 2025 and the Budget in 2024 will be raising an additional £10 billion of revenue from wealth and from those with the greatest wealth which which which enables us to minimise the ask that we're making of everyday families.

When it comes to the topic that we'll be debating later in this session, Madam Chair, turning now to the clauses in detail that we're debating in this session. Firstly, clauses 1 to 3 are on income tax. Income tax is the largest source of government revenue and helps to fund the UK's schools, hospitals and other essential services that we rely on. In the coming year. It's expected to raise £359 billion each year. The government has to legislate to charge and set the rates of income tax.

The rates of income tax are not being changed by this bill. We're confirming that they will remain the same. Clause one imposes a charge to income tax for the coming financial year. Clause two sets the main rates of income tax at 20, 40 and 45%. These will apply to non savings Non-dividend income taxpayers in England and Northern Ireland. Income tax rates in Scotland and Wales are set by their respective parliaments, and clause three sets the default rates at the same levels of the main rates, namely 20, 40 and 45.

These rates apply to the non savings Non-dividend income taxpayers who are not subject to the rates of income tax, Welsh rates of income tax or the Scottish rate of income tax. Income tax is a vital revenue stream for our public services, and clauses 1 to 3 ensure that it will continue to be so in the year ahead. 2627. Turning to clauses 4 to 8, which raise tax rates for property savings and dividend income to ensure I would give way.

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To the Minister for giving way, I wonder, just for the elucidation of the public who I know he knows of the public who I know he knows will be glued to our proceedings this evening? A couple of things. First of all, he said that that debt is falling. Could he just confirm that it's actually sort of levelling off as a share of GDP and levelling off as a share of GDP and possibly may fall slightly by the end of the forecast period, but actually in absolute terms is rising.

And when he says that income tax rates aren't changing in this bill, he's technically correct. But fiscal drag means that for hundreds of thousands of people, actually the tax rate on their marginal earnings will change very significantly in the years to come.

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Yeah. So it is right to be precise. And I was being precise around the rates themselves, which around the rates themselves, which are not changing. He raises the point of the effective tax rate, point of the effective tax rate, which is a a point I understand on the specifics of what I said earlier in the debate. I was talking about borrowing rather than debt. Borrowing is falling significantly over the course of the forecast. Fastest in the G7 as far as I'm aware.

On the latest data, he is right that debt is is is broadly stable, but is falling in the year that the fiscal rules are relevant as a share of GDP, which is the which is the traditional way. And I think the more economically relevant way for assessing the stock of government debt as a share of the economy, one of the ways that our country was able to reduce the debt that we took on after the Second World War was through growing our economy and the debt becoming a smaller share of GDP.

That's something this government will seek to do through continuing to beat the forecast. When it comes to economic growth. Turning to clauses 4 to 8, which raise tax rates for property savings and dividend income to ensure that income from assets is taxed more fairly. Those with property savings or dividend dividend income currently pay lower rates of tax than those whose income comes from employment, as they do not pay National Insurance contributions. It is not fair Madam Chair that the tax system treats these types of income so differently.

It's not fair, for example, that a renter pays a lower rate of tax on their income to the landlord whom they're who they're renting the property from. And so I would give Minister for giving way. Could he confirm if the Treasury has done any analysis on the the amount of that tax increase that will be passed on to renters? And if it has what that's come out this. Minister, the main driver of a rental prices in the UK is supply and demand.

And this side of the House are seeking to do all we can to reform and improve our planning system, to increase the number of homes being built. If members opposite are keen on making sure that we can support households with the cost of living, then I hope they will continue. Well, I hope they maybe would change their approach when it comes to their votes on planning reform in this place, which are vital for supporting families with the cost of living and lowering the cost of renting and owning their own home.

This change, as I was saying, narrow the gap between tax paid on work and tax paid on income from assets. I will, I will if I may, just try and make a little more progress. But those those with small amounts of income from assets will continue to be protected by tax free allowances, and income from savings and investments held in ISAs will continue to be tax free. The vast majority of UK taxpayers are unaffected by these changes as they do not have taxable property, dividend or savings income.

Changes to savings and dividend income will apply UK wide, and the government has engaged closely with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks. Clause four will increase the tax rates applicable to dividend income by two percentage points for the 2627 tax year. Clause five will increase the tax rates applicable to savings income by the same amount, and clauses six and seven will separate will create separate tax rates for property income, which will apply from the 2728 tax year.

The property basic, higher and additional rates will be set at 22, 42 and 47%, respectively, for the 2728 tax year. Clause six will also make changes to the income tax calculation, so that general reliefs and allowances will only be applied to property income, savings and dividend income after they have been applied to other sources of income. Clause eight Madam Chair will make provision for the Scottish Parliament and the Senate to set devolved property income tax rates. This power will be commenced by the Treasury if the Scottish and Welsh Governments agree individually, of course, to take the power, as is the typical process, to protect the powers and responsibilities of devolved governments.

Madam chair, these changes will still ensure that those with the broadest shoulders contribute more. In 20 2930, around two thirds of the revenue from the increases to the dividend, property and savings tax rates is expected to come from the top 20 from the top 20% of households. Taken together, these measures are predicted to yield a projected to yield £2.2 billion in additional tax revenue by 2029. 30 Madam Chair. This finance bill is about delivering on choices, choices to protect ordinary workers, choices to cut their energy bills, freeze train fares and prescription charges, and choices to focus on reducing inflation to push down mortgage costs.

This finance bill delivers the government's commitment to this country to build a stronger and fairer economy where living standards rise, where child poverty falls, and to ensure public services are improved. With every measure in the finance Bill geared towards those high level goals, the choice at this Budget was austerity and decline, or investment and renewal. And this Labour government backs investment and renewal. I therefore move that clauses 1 to 8 and schedules one and two stand part of the bill.
17:59
Gareth Davies Portrait Gareth Davies MP (Grantham and Bourne, Conservative)
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Shadow Minister Gareth Davies. I wish to speak on behalf of the Official Opposition to new clause ten, new clause 11 and new clause 12, with your permission, which 12, with your permission, which stand in my name. But first I want to set the scene on clauses 1 to 8. Clauses 1 to 3 impose the charge of income tax and set the main, default and savings rate for the next year. Next tax year 20 to 20 6 to 2027. We should actually remind ourselves that income tax was meant to be a temporary tax.

Back in 1799, it was sold to the British public as a temporary wartime tax, but it has outlived that war, the century and every promise ever made about it. It should stand as a stark reminder that once taxes are levied, they're not always that easy to undo. I guess there's nothing more permanent than a temporary tax. Now, moving on to clauses 4 to 8. Together, these will implement hikes in the rate of income tax, on income tax, on income from dividends, savings and property in

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the years to come. Yeah. Jim Shannon very valid point, and one that my constituents have brought to my attention as well. If you're in the higher tax rate, they might have interested, they can might have interested, they can have for savings rises up to 40% for those who scrimp and save, who put the money away for a rainy day, put the money away for a rainy day, they will be penalised. And does the Minister agree with me that

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that is absolutely immoral and very, very wrong? Well, I agree with the right. The hon. Gentleman, we are trying to create a savings culture in this country. We're trying to get people to take responsibility to put their income away for a rainy day, for their retirement. And as I will come on to, it is our position that this bill and the clauses within it do not achieve that. In fact, they do the very opposite. As I was saying, clause four increases the ordinary and upper rates of income tax rate charged on dividend income by 2%.

Fact that the Minister seemed to miss out in his opening remarks. The income tax rate hike will apply from the tax year 2026 to 27 onwards. Clause five sets the savings rate of income tax for the tax year 27 to 28, again by two percentage points higher than this year and those set within this bill for 20 2627. I'm very grateful to the Shadow Minister. I draw attention to my entry in the register. I wondered if he shared my concern, particularly at the change in in the taxation rate on dividends, because more important even than building a savings culture is building an enterprise culture.

And of course, by continuing, sadly, this modern trend started under George Osborne taxing the return on risk. We destroy any idea of having an enterprise culture in the UK, and the less and less people can see that their investment in starting a business or in plant and machinery is going to result in a return that is taxed more likely than risky income is, the less likely they are to take that risk. I have great sympathy with what my right hon. Friend is saying.

He's he's right that there is a point at which you overtax risk and overtax enterprise to the point at which they just stop taking risk and stop being enterprising. And I think the the trick within the Treasury is to ensure that you can raise enough revenue from a broad base of different taxation to pay for public services. We're looking for growth, but you want to try and achieve growth not by overtaxing growth and growth activity, but by actually incentivising it through other means.

So I completely agree with my right hon. Friend on that point, and I should say, when I was talking about the increase in tax on dividend income and on savings, this together, these two clauses will have significant consequences, not just for those who take risks, but household savers, for pensioners as well as investors in the companies that my right hon. Friend describes and in fact, Hargreaves Lansdown has described clause five as, in their words, a shocking tax rise for savers.

At the same time, these measures will combine with the Chancellor's cut to the allowances for ISAs. So this finance bill is implementing a double whammy tax on savers. The bill treats savings less like a virtue to be encouraged, and more like a habit to be discouraged. We believe this will have a big impact on the savings culture and the financial reality for people across the country. And that's why New clause 11 calls for the Chancellor to come to this House to make a statement that sets out all British, the impact of all British savers and pensioners, that this overall onslaught, this savers tax hike will have.

But of course, it's not just savers who are impacted by this bill. Small and medium sized businesses. As we were just discussing the engine of growth up and down the country of every constituency, providing 60% of employment will feel the pain from these changes. Indeed, the Federation of Small Businesses has been clear that through the measures in clause four, this government is continuing to make investing in your own business one of the least taxing, tax friendly things you can do with your own money.

More. Many entrepreneurs and business owners choose to pay themselves part of their income in the form of dividends, and for many years, dividend tax rates have not been set below the main rate by accident or ideology, but rather to reflect the fact that dividend income is paid out of profits that have already been taxed through corporation tax. And I'm afraid even the largest businesses, never mind the SMEs, even the largest businesses, aren't safe from this. Literally, as soon as the Chancellor announced the changes in clause four, investment managers were already warning that this is completely contradictory with the government's stated desire to encourage more investors to hold UK equities, so many of which, by the way, are pretty good income paying stocks.

International investors come to the UK to buy dividend yielding stocks, and yet this will discourage that even further. And

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this yeah I'm. Grateful to the shadow Minister for giving way. Would he agree with for giving way. Would he agree with me that the overall thrust of the government's finance bill and these clauses they're putting forward this evening are to discourage saving, to discourage enterprise, saving, to discourage enterprise, to hit the people that do the right thing, all to fund more welfare spending. This is not a recipe for

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spending. This is not a recipe for growth, is it? Well, and touches on an important point. What is this for? People know they have to pay tax. We may disagree on who pays tax and how much tax, but ultimately where is this going? It's going to surrender the Chagos Islands. It's going to pay public sector workers eye watering sums to only see them come on strike. Once again. I think the hard bit for the general public is understanding where on earth all of this money that is being raised by record tax hikes is actually going.

And that is the point that I think the Minister needs to be held to account on today. No explanation has been made for this. We're not in times of Covid. We're not in times of great crisis. This is money that is being raised because Labour are in trouble and Labour are in the pockets of the unions in the pocket of the Labour Party. So I'm very grateful to my hon. Friend for his intervention. As I was saying, new clause ten includes further assessments specifically on domestic equity markets, as I was saying, and institutional investors, because this will have a negative drag effect on the international climate as relates to getting in more investment from institutional investors into UK equities.

Finally, clauses 6 to 8 and schedules 1 to 2 introduce new rates of income tax altogether, this time on property income. Again, these rates are to be set for the tax year 2027 to 2028 at two percentage points higher than the main rate of income tax. Now, members opposite may take great satisfaction in what could be described as a war on landlords, but we should pause and remind ourselves of who many landlords actually are. They're not Barons, they're not vast landowners.

They're ordinary people doing what we've encouraged them to do for decades, taking responsibility for their own future. They're the couple where one parent works long hours and a steady job. The other juggles work and family life, who save carefully and invest in a small property because they know that the state pension alone might not be enough when they come to retire. It's the retired couple who inherit a modest flat from their parents, not as a windfall but as a source of security in later life, and rent it out to supplement a fixed income.

These are not people gaming the system, as many members opposite have tried to suggest in the past. These are people responding to it. They're good people, and 44 of them are actually Labour MPs. And this new tax doesn't just hit landlords, though, it hits renters too. The British Property Federation and the OBR have both warned that this measure could restrict the supply of private rental properties, adding pressure to an already strained market. The Royal Institution of Chartered Surveyors and the National Residential Landlords Association both say that rents will rise faster than might have otherwise been the case.

As a direct result of this bill. So new clause 12, in my name seeks to force the government not to rely on their stereotypes against landlords, but to assess the impact on both the supply and the cost of private rental properties. As a result of their new renters tax. In summary, Madam Chair, these clauses represent a new front in Labour's war on the middle class and aspirational households in Grantham and Bourne and Chipping Barnet and across the country.

These clauses impose not one, not two, but three income tax rises to the British public, totalling more than £5.5 billion. This isn't a plan for change. It's a savers tax onslaught. Carefully phrased, politely worded and deeply felt. Same old labour.
18:11
Jeevun Sandher Portrait Dr Jeevun Sandher MP (Loughborough, Labour)
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Yeah. >> Doctor Jeevun Sandher. >> Thank you, Madam Chair. And before I speak, to draw attention to my register of interest, it's a to my register of interest, it's a pleasure to speak in this chamber and to the millions of people no doubt watching at home today. I doubt watching at home today. I wish they'd speak to clause four of this bill. But before I start, I'd also like to thank the member opposite from Mid Bedfordshire. I seem to recall last year making a slight mistake in this debate and not speaking to a specific clause, and the member very graciously saved me, a young, callow youth that I was.

So I just want to start by saying thank you again very, very much. I do certainly remember that today, Madam Deputy Speaker, today Britain faces an affordability crisis. Record numbers can't afford a decent living. And on top of that, we face a military crisis. We now have to defend our nation, as we haven't had to do for almost a century. On top of that, we're a nation that is deeply divided between those who can afford a decent lives and those who cannot. Because of that, we are unable to stand united as one nation to meet this moment and meet this challenges.

That is why today I'm speaking in favour of clause four because it is a tax that yes, it's the wealthiest, but also ensures that we can help to grow this economy and is easily implementable. I'll cover why that is as we go forward in this debate. Madam Deputy. Madam chair, apologies. People in this country are deeply frustrated. They're deeply angry about where this nation is. Record numbers cannot afford a decent living. Just one third feel comfortable with how much they can afford.

That is lower than in the financial crisis. It's lower than in austerity. It's the lowest in our lifetimes. And that's why we're seeing such anger on our streets. It's why we're seeing it on our screens. We feel it viscerally. As constituency MPs. But alongside that, we've seen that while that is also happening, we've seen the wealth and the wealth in this nation grow and has grown dramatically, whilst as a proportion of GDP has doubled since the 1980s, we see the amount of dividends being paid out more than doubled since 2010.

And we've also seen in this nation people who have owner managers being able to reduce their tax liability by not, of course, drawing out their income through earnings. And that is why it is right that we rebalance the tax burden between earnings and income earned from elsewhere, and especially, Madam Chair, that earned from dividends. What we have seen in this country is a taxation system that has not kept up with the way that our economy has changed, that even as wealth has become far more important in this nation, it has not been taxed commensurately.

Whilst income tax and national insurance have increased the share of GDP. We have not seen the same happen for taxes on profits. While we have seen, for example, the amount of wealth as a proportion of GDP double, we've seen the income tax from that wealth only increased by 30%. The income taxes in this nation are being well, are being levied on those who are earners, but not being levied of those who are getting their incomes from wealth. And that's why it's entirely right that in this Budget and as part of this clause, we ensure that we tax dividends at a greater rate.

And I'd like to set out, Madam Chair, why it is that that will indeed be a way that improves growth, that it ensures that we hit the richest and is easily implementable in terms of improving growth. We've seen that dividend taxation, we've seen that happen in France. It stops payments going out of the company. And instead they they stay in and are invested. We've seen that it hits the wealthiest because one fifth of those who gain dividends are in the top 1%.

And we know it's an easily implementable tax because we're seeing being implemented in this

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bill, I will give way. I'm grateful to the hon. Member for giving way. Does he believe for giving way. Does he believe that increasing taxation on dividends will result in more entrepreneurs taking risks and employing people and growing the

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economy, or fewer? Lead to more investment in this country? And I'll say this as well. country? And I'll say this as well. We see across the world the people who invest in this nation while they create great companies, is because they want the return after tax. And if you have an economy that's growing, if you have more investment, that means more sales. It means more money in your pocket. So I don't accept, I say, the proposition from the hon. Member opposite that by raising this taxation rate, somehow that means less entrepreneurship and less investment in our economy.

I Tim.

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Giving away a second time, is he seriously saying that increasing the rate of tax in dividends will result in more investment in this

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country? So to be clear, we have seen this happen in France. And that is this happen in France. And that is exactly what happened, because the incentive then was for payments to go back inside the company rather than drawn out in dividends. What we also see in this nation, indeed, at the moment, is that payments for at the moment, is that payments for owner earners, they're able to reduce their tax liability by 13% by paying out in dividends. It is a form of income that is effectively earnings but is not being reported as earnings.

So yes, I would say that is the case. And not only would I say it is the case, I would say it's the case. The international evidence shows. I take the theoretical point he raises. But in practice, what we have seen is that by raising dividend taxes, it keeps the money in the company and it leads to rising investment rates. This is, Madam Chair, the most important parliament in a century. And like those who are in this House, essentially, before we face before us deep, deep challenges like those in this House almost a century before, we're seeing the far right on our streets, because people cannot afford a decent living like those a century before.

We face a military dictator in Europe who wishes to redraw borders by force. And like those a century before in this continent, we now must ensure that we defend ourselves. And it was almost a century before in this House that a conservative Prime Minister would increase taxes on the wealthiest to pay to defend our nation. It was almost a century ago that we taxed the wealthiest, to ensure every single person's country had a good job. And it was almost a century ago that we built a welfare state to ensure every single person could have a decent living and have a stake in this nation.

Madam chair, for our nation to meet this moment, we have to be united and to be united. Every single person has to have a stake in this country. To have a stake in this country. They need to see and believe that democracy can deliver for them, that they can earn a decent living. And that's why clause four, by taxing the wealthiest onto dividends from those who gain their payments from wealth and not those from those who are earning from pay, helps ensure that we raise the revenue we need to get investment, to get growth going, and in a way that is easily implementable, I will give way.



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For the hon. Member for giving way. He said earlier in his speech that this was a tax on the rich that this was a tax on the rich because 20% of dividends are to the 1% richest people in the country. But that means that 80% are not. But that means that 80% are not. Does he not accept that dividends are right at the heart of the savings culture in this country? If

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savings culture in this country? If you tax them, you're going to get less savings. So I'm not sure I quite follow

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So I'm not sure I quite follow the point there, to be perfectly honest, because what's true is that most people's main saving investment, for example, would either be through the pension funds they own, which be their biggest savings vehicle, if you like. That wouldn't be subject to dividend taxation in the same way, you know, because you'd buy out the end and ensure that you have a payment for your product. So I'm not sure I quite follow, but but it is possible I misunderstood the point.

To be fair to the hon. Member, Madam chair, I can see there are lots of people trying to get in, so I'll. I'll close now to let them. And it's a thrilling topic which I'm sure we'd all across this house agree, Madam chair, this is the right thing to do to balance the taxation between earnings, between payments, from wealth. It's a long needed updating of our taxation system. I'm proud of a government that does that. I'm sure we all are.

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And with that, Madam Chair, I will close. Spokesperson Daisy Cooper.

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Spokesperson Daisy Cooper. Thank you, Madam Chair. I speak to clauses 1 to 8 in schedules one and two. And overall these tax and two. And overall these tax changes increase complexity, raise the tax burden on small businesses the tax burden on small businesses and savers, and raise the risk of serious unintended consequences on the property market. They all have the property market. They all have the hallmarks of a Treasury tax grab without proper consideration to the broader consequences. When taken together, clauses 4 to 8 really do add more complexity, and concerns have been raised by the Chartered Institute of Taxation and the Association of Taxation Technicians.

They highlight that there are now new there are new property rates that add five new rates to income tax rates. These are the property basic rate of 22%, the property higher rate of 42%. The property additional rate of 47%, the property trust rate of 47% and the savings trust rate of 47%. These different rates are going to be applying at different rates, will apply to investment returns differently as they will, as opposed to savings. Basic and higher dividend rates have been changed, but additional dividend rates have not.

Without any explanation as to the policy intent behind this. And if the Minister could set that on the record, that would be helpful. The long and short of it is that the government says it wants to simplify tax, but these changes are making things more complicated. The making tax digital forms will need to be updated, and what is likely is going to happen is that more individuals and more small businesses are going to make more
18:21
Daisy Cooper Portrait Daisy Cooper MP (St Albans, Liberal Democrat)
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calls to HMRC, now recently researched by the House of Commons Library, commissioned by Liberal Library, commissioned by Liberal Democrats and my hon. Friend for Maidenhead, shows that HMRC failed Maidenhead, shows that HMRC failed to pick up 1 in 5 taxpayer calls over the last decade, with the Tax Service leaving the best part of Service leaving the best part of 100 million calls unanswered. In the last ten years, HMRC has failed the last ten years, HMRC has failed to pick up 83 million calls from Brits in the last ten years, with 6 million of those being in just the last year.

That is why we have been calling for a new HMRC hotline dedicated to supporting pensioners. This will help those who are among the likeliest to seek tax information over the phone, whilst freeing up capacity for the tax service to deal with other queries, something that is imminent, given that these tax changes will result in more phone calls to HMRC more broadly. Madam chair, the Federation of Small Businesses has said that hikes to dividend tax mean that the government continues to make investing in your own business one of the least tax friendly things you can do with your money.

So will the Minister listen to our small businesses, which are suffering under a mounting tax burden, not least from the government's business rates bombshell, and finally, give them some respite. And finally, Madam Chair, on new clause two tabled in my name, we Liberal Democrats are calling for a review of the impact of section seven on rent prices. As a number of hon. Members have highlighted today, this amendment would require the Chancellor of the Exchequer to lay before the House a proper assessment of the impact of these tax changes on rent prices.

Countless renters across the country will be worried that higher property income tax will simply get passed on to them, making things even worse, during the cost of living crisis, we cannot afford to ignore the unintended consequences of any tax policy, so this amendment would require the government to update the House on some crucial detail about the broader impacts of this measure. What proportion of this tax rise will get passed on to renters? According to the Treasury's estimates, which income groups are most likely to be affected by this tax rise and which parts of the country will bear the brunt of it? I hope the Minister will agree with me that this information is essential.

Thank you, Madam Chair.
18:23
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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Good. >> Good. >> Thank you, Madam Chair. And may I thank members on this side and I thank members on this side and particularly on this side of the House, for their contributions today. I believe there may be other things going on in the Palace today that have drawn other members of the Labour Party's benches to committee rooms, but I'm very glad that the that the Member for Loughborough has chosen to prioritise speaking in the important finance Bill debate today.

I thank him very much for that. Madam chair, I will take a few moments to respond to some of the points about that that have been raised during this all too brief debate on these important clauses. The opposition spokesperson I may say it's always a pleasure to stand opposite him here, and it was enjoyable to have a history lesson rather than a selection of poetry or literary references, as I often get when I stand opposite the Shadow Chancellor.

But yeah, he he notes correctly that income tax was originally introduced as a temporary measure. I've been running through, in my mind the taxes that were introduced by the 20 1024 government that were initially announced as temporary, but are still with us, but I won't I won't comment on them for reasons he may understand. He he mentioned my constituency and I thank the opposition spokesperson for giving me a chance to talk briefly about Chipping Barnet because he he he did mention, Madam Chair, what are these tax rises for? And I can tell him that the area that I know best, the NHS waiting lists are falling and falling for the first time in a very long time.

I can tell him that the number of police officers are increasing after having been cut significantly. We're opening. We're opening breakfast clubs in primary schools and those changes are happening in my patch are happening across the country, the investment in our public services Madam Chair that have been enabled by the tax changes that this government has made to raise revenue in a sustainable and fair way, in order to ensure that we can fund our public services and keep borrowing on a downward trajectory.

The opposition spokesperson also raised the the issue, the tax, the change on taxation for landlord income, the two percentage point increase. I fully understand as to see that there are many reasons why people end up becoming landlords, and we want to make sure that the taxation is fair and is reasonable. And that's why landlords do not pay at National Insurance in the way that their tenants do. And we have taken steps to reduce, but not to close in full, the gap in tax treatment now by the two percentage point increase, it will still be the case that landlords will typically pay a lower rate of tax than their tenants, but that that will be that that gap will be reduced by the measures that were set out today.

The opposition spokesperson and other members opposite have raised in interventions. Madam chair, the changes on dividend taxation. The main takeaway from the office for Budget Responsibility on these measures is that they do not expect the changes to dividend taxation that were announced at the Budget a few short weeks ago, to have a significant impact on business investment, and business investment is forecast to continue to grow over the course of the Obr's five year forecast horizon, which is which is which is good news because one of the things that we know we need to do in this country is turn around the long term weakness in investment, both public and private sector, that's driven our long term productivity and growth underperformance over the last 30 years.

And this is an issue that both parties should take, both major parties and the Liberal Democrats for their time in the first five years of the coalition, I may add, should take responsibility for in, I believe, in 24 of the last 30 years, though that's that may now be one year out of date. I'll have to update it for next time. The UK has had the lowest rate of investment of any G7 economy, and until we can start to turn that around through higher public and higher private sector investment, our economy won't be able to be firing on all cylinders as this government would like it to continue to be doing.

Madam chair, welcome to your place. And let me now turn in the time that we have to discuss the specific amendments and clause changes to clauses that have been moved. So turning first to new clause two and new clause 12. New clause two asks the government, within three months of this act coming into force, to lay before the House of Commons, an assessment of the impact of implementation of section seven of this act on rent prices. New clause 12 seeks to make the government, within six months of this act coming into force, publish an assessment of the impact of the changes introduced by section six, seven and eight of this act on the private rental sector in England, Wales, Scotland and Northern Ireland, as members in this House will be aware, the office for Budget Responsibility engages closely with the Treasury on the potential impacts of policy measures as part of standard Budget processes, and the OBR does not expect that the reform to property income will have a significant impact on rental prices in the forecast horizon.

As I was discussing earlier, the economic literature points to rental prices being determined by the balance of supply and demand in the market, not just the cost facing landlords. And the housing market has proven to be more resilient than expected in 25. And as interest rates fall further, that should, we would hope, reduce costs for landlords to the government is committed, madam chair, to building 1.5 million new homes in this Parliament. A year ago we announced major changes to the National Planning Policy Framework forecast by the OBR to deliver one 170,000 additional homes and add £6.8 billion to the economy in 20 2930, the largest upgrade to the size of the economy through a fiscal measure that the OBR had ever scored.

That will raise the supply of housing, as this government is doing through its ambitious programme of reform. And that is the route to improving housing affordability for tenants up and down the country. And I would encourage members opposite who are expressing an interest today in making sure that rents stay low on a sustainable basis for their for for tenants to support the government in its efforts to reform the planning system, rather than focus narrowly just on one relatively modest change to taxation on the on the request to on the request to report back in in the coming months.

The Tax Information Impact note has been published in the standard way for UK wide changes to the tax system, and the Treasury will continue, of course, to monitor the rental market. New clauses two and 12 should therefore be rejected, madam Chair. Turning now to new clause ten, which asks the government within six months of this act coming into force, to make a statement to the House on the impact of the dividend tax measures on household savings decisions, domestic domestic equity market, institutional investors and outcomes for savers and pensioners.

To be clear, institutional investors are not affected by UK personal dividend taxation. Of course, I respect and understand that others are, but overall, the OBR, as I said, does not expect the changes to dividend tax announced at the Budget will have a significant impact on business investment and they say that real business investment will increase on average by 0.75% a year between 2026 and the end of the decade. The government wants to encourage investment in productive assets as well as saving, which is why everyone can contribute up to £20,000 a year into stocks and shares ISAs, with all returns entirely tax free.

The vast majority of pensioners do not have taxable dividend income and will pay no more tax. As a result of this change, all UK residents benefit from a tax free dividend allowance. In addition to the 12,570 personal allowance, which means you pay no tax on the first 500 dividend income above your personal allowance. And yes, all dividends received on assets held within ISAs continue to be entirely tax free. Information on expected impacts of this measure have already been published in the Tax Information and Impact Note, clause ten.

A new clause ten should be rejected. Madam chair, turning to new clause 11, which asks the government within six months of this act coming into force to make a statement on the impact of the savings measures on household savings decisions and outcomes for savers as members in this House know, most UK taxpayers are entitled to a personal savings allowance on top of their standard personal allowance. Basic rate taxpayers can receive £1,000 of saving interest without paying tax, and higher rate taxpayers can receive £500 without paying tax.

On top of the personal allowance are those with low earned incomes also benefit from the starting rate for savings. If your savings and non-dividend income is less than £17,570, the government provides a 0% tax rate that allows individuals to receive up to £5,000 of savings interest tax free. Even after these changes, the vast majority of taxpayers will continue to pay no tax whatsoever on their savings income. A basic rate taxpayer could hold approaching £40,000 in savings without paying tax on the interest earned.

That's £25,000 in a savings account paying 4% interest, which would exhaust their personal savings allowance, plus another £12,000 in a cash Isa each year. That's a significant amount and a significantly much more than many people in this country are able to say, you know, many families in this country struggle Madam Chair to put away more than £10 a month, and we in this place are doing all we can to raise living standards for those families, increasing the national living wage from April, and having done so last year, to supporting pensioners with increases in the state pension, with the triple lock, which will increase the state pension significantly over the course of this Parliament.

And there the steps that we can take to help support people to have more disposable income, to be able to save more when they would like to. Once again, on this point, a tax information and impact note has also been published in the standard way for UK wide changes to the tax system, and the government keeps tax changes under review in the. I'm not sure whether the hon. Member would like to intervene. I would really welcome. I couldn't quite tell was that no, no.

OK. Maybe later. Now, madam, madam chair, I can turn to the contributions from my friend, my hon. Friend, the Member for Loughborough. His speech, which I was hoping I might add, was going to be even longer. I'm somewhat I'm somewhat disappointed not to have heard more from him today. It it provided Madam Chair a clear exposition of the benefits of the modest changes that the government has set out in the clauses of the finance Bill that we're debating in this section of today's Committee of the whole House.

He I would I

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point. I thank you very much for giving

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I thank you very much for giving way was my hon. Friend surprised that the benches opposite spoke about the complexity of about the complexity of implementing clause four when it is simply a measure of changing the rate on dividend taxation, and doesn't actually lead to any more burden on in terms of filing your taxes.

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Nick Smith. Thank you, Madam Chair, and I thank my hon. Friend the Member for Loughborough for that intervention, which gives me a chance to. Yeah, to repeat clearly to the House that these changes are RRRRR2 percentage point increase. So the the tax rates will increase from 20 to 22 and from 40 to 42 and from 45 to 47. This isn't adding a significant or really any additional complication into the tax system. Instead, it is changing the rates in a way that is fair, closes the taxation, treatment.

Closes the difference in taxation treatment between those who receive their income from employment compared to those who receive their income from assets. And Madam Chair, the speech by the Member for Loughborough was really helpful, both in bringing a comparative evidence to the debate, which I hope he will send my way for review, and I believe members opposite who asked about changes made in other countries, may be interested to read that evidence too. He also provided a helpful exposition on the economic theory.

Sitting, sitting, sitting behind some of the changes here and and the and the need to make sure that our taxation system is incentivising people to make make investments and to make good decisions for the long term health of our economy. And I think a crucial point that he touched on, but it is worth making clearly, is that, you know, there are many tax experts and tax commentators who have repeatedly pointed out that one of the challenges in the UK's taxation system is that we do treat the income received from different sources very differently, and that can lead to distortions within our tax system.

And it is, it is it is better to make sure that we are doing what we can to reduce the gaps between tax treatment and different sorts of income. Members opposite have helpfully been making some utterances which I'll be happy to refer to. They've been shouting out the word risk, and of course, I would make the point that there is still an incentive here within the system, the the taxation levels haven't closed completely. Yes, it is smaller. The hon.

Members are gesturing as such, and they are correct that the that the gap has been closed, but there are still significant incentives for people to set up their businesses and set up their income streams in certain ways in order to increase, to increase their income. Let me now turn to the contributions from the Member for Saint Albans. She helpfully mentions the performance of HMRC, the department for which I am the Minister with responsibility for. And as she is right that we need to focus, have a laser focus on customer service, the performance in terms of missed calls, calls that aren't picked up because someone hangs up before they answer, is improving.

It is improving under this government. And and I think, I think I think that that is progress. The hon. Member did specifically raise the performance of HMRC in her in her remarks, and I think it would only be right and proper for me to mention that, too. And, and and again, she raised the the impact of these changes on rents, where, of course, the government will continue to look and monitor the impact of taxation changes on the rental market.

Madam chair, but I would say that one of the crucial things we can do to support private renters is to increase the supply of housing to, in the long term, push down the price of, of rents. And then, Madam Chair, to begin to And then, Madam Chair, to begin to conclude. To begin. To begin to was that was that intervention that I heard from to to, to. Pardon? Was there any was there, Madam Chair, to begin to conclude, I hope I have been able to I will happily give

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way to my friends who. Are no doubt members opposite would also like to intervene after would also like to intervene after I've made my intervention. Can we can we say, does the Minister agree that we in this House do absolutely prise the contribution of business people about the stuff they do? And people about the stuff they do? And we are here to work productively to ensure that actually, workers and business both contribute to the prosperity of this nation. I'm really proud of what business people do.

I come from a family of business people who have invested, who have created a nation, who have created employment, and then also on the other side, of course, ensure that the benefits are paid both to themselves and indeed to our wider economy, that.

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I thank my hon. Friend for that intervention, giving giving me the intervention, giving giving me the chance to reiterate this government's focus on economic growth and on providing economic stability. Last year, the OBR forecast that the economy would grow by 1% and but they revised grow by 1% and but they revised that up to 1.5%. That's a 50% that up to 1.5%. That's a 50% increase in our growth forecast. Of course, we need to continue to redouble our efforts as a government going further and faster when it comes to supporting economic growth, so that we can have living standards rising in every single part of the country.

That's core to this government's plan. You know, we don't we don't want to see people continue to suffer. The last parliament was the worst on record for living standards. It's no surprise that the British people decided to boot out the party opposite and replace them with a government that is laser focussed on improving the cost of living and improving living standards for people. That is both through the changes that the government is making, including in the finance Bill to support our public finances.

But also, as my hon. Friend mentions, to continue to partner with business to unlock private sector investment and to increase economic growth. The changes that we're making to planning don't just support more houses being built and more residential development, which of course we need for reasons that we've discussed in this debate. But they should also make it easier for us to be able to build large infrastructure projects to support economic growth, to build new nuclear power stations, which continually weren't invested in by the party opposite.

And and to be able to get our long term growth and productivity rate up in this country by keeping the clauses unchanged in this bill, we will raise additional revenue from those who are undertaxed relative to most employees. As I said, the changes on dividend savings and property income will raise Madam Chair an additional 2.2 £2.2 billion in the in the. In the coming years, which will which will which will help us repair and improve our public finances.

And also these changes, these changes, these changes, Madam Chair, will enable us to reduce. And we're we're we are to go on to talk about this shortly, to reduce the contribution that we are asking of working people through changes to the threshold freezes, because by making changes like these, like the change to electric vehicles through the introduction of the even like the reduction in the relief for those who are selling their businesses to employee ownership trusts. We are we we are, we are.

I've got some paper. Here we are. We are making it possible to to reduce the risk of working people. And, you know, that is a sharp contrast to the position set out by the shadow Chancellor, who said that if he was in Labour's position, he would be increasing the rates of income tax rather than doing that. Madam chair, we will ensure that this government stays true to its manifesto commitments on tax and the public finances, with borrowing falling in every year of the obr's forecast.

I therefore urge the House to reject new clause two and 10 to 12, and I beg to move, Madam Chair, that clauses 1 to 6 and schedule one, clauses seven and eight and

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here. The question is that clause one stand part of the bill. As many as stand part of the bill. As many as are of that opinion say I. I of the contrary, no I think the ayes have contrary, no I think the ayes have it, the ayes have it. With leave of the house, I shall put together the questions that clauses two and questions that clauses two and three stand part of the bill. The question is that clauses two and question is that clauses two and three stand part of the bill.

As many as are of that opinion say I. I of the contrary, no I think the ayes have it, the ayes have it. We now come to the question that clause four stand part of the bill. The question is that clause four stand part of the bill. As many as are of that opinion say I. I of the contrary, no I think the ayes have it, the ayes have it. We now come to the question that clause five stand part of the bill. The question is that clause five stand part of the bill.

As many as are of that opinion say I. I of the contrary, no I think the ayes have it, the ayes have it. We now come to the question that clause six stand passed the bill. The question is that clause six stand part of the bill. As many as are of that opinion say aye. Of the contrary, no. I think the ayes have it. The ayes have it. The question is that clauses seven and eight stand part of the bill.

As many as are of that opinion say I. I of the contrary, no I think the ayes have it, the ayes have it. Yes. The question is that schedule two b the second schedule to the bill, as many as are of that opinion say I. I of the contrary, no I think the ayes have it. The ayes have it. It's Louise Haigh. New clause 12 has been selected for a separate decision. Gareth Davies to move new clause 12 Gareth Davies to move new clause 12 formally.

The clerk. To section six seven James Asser. The question is that. Sorry, sorry. Section 6 to 8 and schedules one and two. Impact on the private rental sector. The question is that new clause 12 be read a second time. As many as are of that happiness say I,
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None Portrait Division: Finance (No. 2) Bill, Committee, New Clause 12
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I. >> Of the contrary, no no.

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The The question The question is, The question is, as

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The question is, as on The question is, as on the The question is, as on the Order

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The question is, as on the Order Paper, as many as are of that opinion, say aye. Of the contrary, no, no. Tell us for the I's Lincoln Jopp Alicia Kearns tellers for the Jopp Alicia Kearns tellers for the

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Order, Order, order!

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Order, order! The ayes to the right 167. The

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The ayes to the right 167. The

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noes to the left 350. The ayes to the right were 167. The noes to the left were 350. So the noes have it, the noes have it unlocked.

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So. With apologies, the question is that schedule one be the first that schedule one be the first schedule to the bill. As many as are of that opinion say I. I of the contrary, no I think the ayes have it. The ayes have it. We will now it. The ayes have it. We will now come to freezing of allowances and we begin with new we we we begin we begin with new we we we begin with clause nine stand apart, with which it will be convenient to consider the clause stand part and new clauses on the selection paper.

The question is that clause nine stand part of the bill I call the Minister.
19:04
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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I thought someone was looking to >> I thought someone was looking to be the Minister there, but maybe, be the Minister there, but maybe, maybe one day. Madam. Madam chair, before I open this second session of debate on the finance bill, I want to reflect on why we make changes to the tax system, and I'm looking forward to no interventions at all on this speech from members opposite, as they seem to have dried up on their interventions in the last speech.

So maybe they've maybe they've maybe they finished with them. Now, of course, we make these changes to modernise the tax system, to make it fit for purpose, to make it fair and to adapt to a changing world. But we also make these changes so we can raise the funds to fund our public services. Yes, this bill does hold thresholds constant at the end of the decade, but doing so contributes to us being able to renew our public services while maintaining the highest levels of public investment in for decades to stimulate economic growth, and ensuring that those with the broadest shoulders pay their fair share.

Madam chair, I will give way. It's good to see the. The Chancellor in her first Budget, when she.

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Looked at this, said it would have been a breach of her manifesto. Does the Minister believe this is a breach of the manifesto? Minister.

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Minister. This government has stuck to its manifesto commitments. We were very clear about the change, about not clear about the change, about not wanting to change the rates of income tax. We've been I've been in income tax. We've been I've been in discussions with members opposite about the wording of our manifesto, and I'm glad that members from the Conservative Party have taken such interest in it. We are sticking to our commitments. These tax changes are those we are discussing now, and others will allow us to do things such as lifting 550,000 children out of poverty.

This parliament, by removing the two child limit, expanding free breakfast clubs and free school meal eligibility. They allow us to cut waiting lists. They allow us to cut the cost of living, delivering £150 off energy bills. And all of this would be threatened by those opposite who don't support the taxes needed to fund decent public services. This finance bill I will

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give, then I will give way. Yes. Thank you Minister, and I wonder

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Thank you Minister, and I wonder if the Minister could explain why in Devon there is £300 million worth of cuts this year to our NHS, whether it's hospital trusts, our partnership trust that looks after mental health or our integrated

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mental health or our integrated care board. £300 million worth of cuts, please explain. Minister.

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I'm not able to comment on the specific figures that he's just specific figures that he's just raised, but overall, the government is spending significantly more sums is spending significantly more sums on the NHS in this Parliament each year. That is enabled by the year. That is enabled by the changes to taxation that we've announced at this and in previous budgets. And I would say that one budgets. And I would say that one of the challenges that the National Health Service has today is that we have underinvested in the capital, within the NHS for too long.

That's mean that the day to day spending is is having to take more of the strain. And so often what happened in recent years is that capital budgets were raided, including I would I would mention when both both both conservative and liberal Democrat were in coalition. It was a capital budgets that were cut, which has left us with some of the difficult situations that we're in now. And that's why this government is seeking to turn that around through. I should give way over here and then I should happily come back later.



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Sammy Wilson the. Minister is trying to make a brave face of why a manifesto brave face of why a manifesto commitment has been broken, namely that people are going to pay more in income tax despite the promises in income tax despite the promises that were made. But does he recognise that for many people, recognise that for many people, this isn't money to renew public services, this is money squandered on giving compensation to foreign governments for land which we owned, held in Chagos Islands and now paying for its money, which is going to be spent on an ID system which is totally unnecessary and will not serve the purpose which is meant to serve.

And money spending on net zero commitments, which again have destroyed our economy and have had little to the the benefits to the public.

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Minister. He's of course, welcome to express his views on a range of express his views on a range of policies. I would say on the on the final issue, when it comes to net final issue, when it comes to net zero and our transition to a cleaner and greener economy, the independent analysis, the independent analysis, the government's Climate Change Committee and the office for Budget Responsibility themselves and their Responsibility themselves and their long term fiscal risk report have spoken very clearly about how not making that transition, both in the UK and internationally, comes with longer comes comes with larger costs in the long term for the public finances due to climate change and and to growing costs of adaptation.

So it is clear that we do need to make that change, both for the environment but also for the long term health of our public finances. And I would say the Obr's fiscal risk report is always a good read. I hope he and I am looking forward to the next edition when it comes in the summer. Firstly, I, I will give way and then I should for all concerned. Given we have two more sessions, this one and a subsequent, I should make some more

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progress. But I will give. More important. Than the points made by our hon. Friend is that I've read recently that the average family is paying £12,000 in tax to cover the benefit £12,000 in tax to cover the benefit bill. Now, this is really important because we're taxing entrepreneurial people more, and perhaps they're going to work a perhaps they're going to work a little less harder. So it's we're getting all poorer. So I just pray that the government will have the guts to return to its original proposals, which the Chancellor dropped in the light of pressure to try and get people back into work, encourage them back into work.

And but that also means having to cut the benefit bill. So I do encourage the government to be true to their

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original word. I would agree with him on one point, and that is that the welfare system that we inherited was failing, and that we in this failing, and that we in this government need to correct the mistakes that were made when it came to having welfare spending came to having welfare spending running out of control, as it did when the hon. Member, the Shadow when the hon. Member, the Shadow Chancellor, was himself the DWP Secretary. We do need to look carefully at the welfare system and make reforms that support people into work, and make sure that the increases in the budgets that are forecast are sustainable for the public finances.

I would agree with him on that point. I would I haven't heard that specific statistic before, but I would caution on those statistics, which often appear in the press, many of the welfare claimants up and down this country are pensioners receiving the state pension. I do not know whether that figure includes the state pension, something that we all on all sides of the House, with the exception of the shadow Chancellor, support when it comes to the triple lock and also includes much of the welfare payments that go to families who have someone who are in work.

We are trying to reduce the need to support working families with welfare payments through increases to the National Living Wage and steps taken to boost productivity in this country. But it is it is a misrepresentation, I would say, and I wouldn't accuse the member of doing that. But to to use the word welfare as a capsule, when many of those who receive support from the state do really need and benefit in a reasonable way from that support, including those who lose their jobs, who we support through Jobseeker's Allowance.

For example, let me turn to the clauses in this section of the. May I make a bit of go on, I will give. I haven't given away to a Liberal Democrat yet, but I really should make progress. I say it, I thank the Minister for giving way. I will be very brief and he could give me a one word answer potentially to my intervention in 2024. The Chancellor said that she came to the conclusion extending threshold freeze would hurt working people. So to take the Chancellor's words, does he agree that he is proposing to hurt working people

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today. Minister. I would encourage the hon.

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I would encourage the hon. Member to have listen to the words that I just said earlier in the that I just said earlier in the speech that I am. I and this government are not shying away from the fact that at the end of the decade, we are freezing income tax thresholds for a further three years, after, I believe, seven years that they were frozen. I years that they were frozen. I think I'm recalling that correctly. Under the previous government. That decision does enable us to raise more revenue.

The amount set out by the OBR, but it does so firstly at the end of the decade. Secondly, in a way, that means that we can stick to our manifesto commitments, not to increase the rates of tax, which was our clear commitment. And we're and we have we have looked across the tax system. We'll I'm sure members on the opposition frontbench will enjoy with me when we're in a finance bill committee going through line by line, the other changes that we've made in the taxation system to reduce the ask that we're making of people via the extension of the threshold freeze at the end of the decade.

Right. Madam chair, let me get to the specific clauses. Clause nine maintains the starting rate for the savings limit at its current level of £5,000 from the 2026 seven tax year until the 6th of April, 2031. The starting rate for savings must be legislated for each year to confirm the band of savings income to which it applies. In addition to the starting rate for savings, where eligible individuals can earn up to £5,000 in savings income free of tax.

Savers are supported by the Personal Savings Allowance, which provides up to £1,000 of tax free savings income for basic rate taxpayers. Savers can also continue to benefit from the annual Isa allowance of £20,000. Taken together as a result of these measures, in 2526, around 85% of savers pay no tax whatsoever on their savings income. Turning to clause ten, which maintains the income tax thresholds for three years from April 28th to April April 2031. As as we've already discussed, the government is freezing these thresholds to maintain funding for our NHS, to enable us to to reduce debt.

And it is doing this in part through this decision, if I may, I may just make a little bit of progress already taken. Two interventions have happened to be on this exact point. We know that this will have a broad based effect, but as I've said this, we are making other changes so we can make the ask as low as possible on, on on those who will be affected by this change. We're making lots of changes to ensure that those with the broadest shoulders pay their fair share, and I think this is a fair and necessary decision to raise revenue, to fund public services and to restore economic stability.

I happily take the first benches.

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Thank you. Thank the Minister for giving way. He will know because I'm sure it's happened to him as well. I've been contacted by him as well. I've been contacted by a number of pensioners who are very concerned that they will be paying concerned that they will be paying tax on their state pension for the very first time. Can the Minister very first time. Can the Minister explain then which pensioners will be affected by the freeze in allowances, and how any exemptions might apply?

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The Chancellor has been clear about this. I think she was clear about it very soon after the Budget. about it very soon after the Budget. In her interview with Martin Lewis. I believe it was, which I'm sure my I believe it was, which I'm sure my hon. Friend saw that those whose income is only the basic state income is only the basic state pension will not be paying tax on that during the course of this that during the course of this Parliament.

Yes. I'm just getting back to where I was in my speech, madam Chair, the changes, the the changes to the personal allowance will apply to the whole of the UK. The changes to the basic rate limit and the higher rate threshold will apply to Non-property non savings and non-dividend income in England, Wales and Northern Ireland, the Scottish Parliament sets income tax rates and limits for Scottish taxpayers, alongside maintaining the National Insurance contributions thresholds for the same period. This will raise £7.8 billion in 20 2930, helping to fund public services and restore economic stability.

I'm just turning, Madam Chair to Clause 69, which provides that the inheritance tax nil rate bands will continue at current levels. In 2030 31 there were two nil rate bands for inheritance tax. The nil rate band has been £325,000. As members opposite will know, since 2009 ten the residence nil rate band has been £175,000 since 20 2021, subject to reliefs and exemptions. Inheritance tax is payable if the net value of an estate exceeds these thresholds. Madam chair, the previous government froze these thresholds until April 28th.

The government fixed these thresholds at these levels for a further two years at the Autumn Budget in 2024, and this government fixes the nil rate thresholds for a further year until 2031, consistent with the decisions to maintain other personal tax thresholds until April 2031. Madam chair, in conclusion, the clauses debated today are fair and necessary, fiscally responsible and will raise the revenue needed to fix the public finances and funding. Public services. Public services like our NHS, our schools and our police force and vital.

And they will fund vital changes to bring half a million children out of poverty. We will not let members. I will give way on that point.

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I'm extremely grateful for your time to come in to speak. I'm extremely grateful to Minister for extremely grateful to Minister for giving way. He's tried to make the case that the freezing of thresholds is progressive, but what he hasn't mentioned in this intervention, understandably, is intervention, understandably, is the freezing of student loan thresholds. There is strong evidence that that will cause lower earning graduates to have to pay earning graduates to have to pay much more back over the duration of their graduate loans.

Can the Minister explain why the Treasury Minister explain why the Treasury has taken a £6 billion benefit to the asset balance sheet in 2627 through this measure? And can he convince me and my constituents that that is any way fair and progressive?

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The hon. Member does raise the change that was announced at the change that was announced at the Budget on student loan thresholds in the round. The government has looked at different parts of our looked at different parts of our taxation system and our benefit system to, for example, on the system to, for example, on the changes to Motability to make sure changes to Motability to make sure that we are raising the revenue and the funds that we need in a proportionate and a reasonable way, and that the measures that we are debating here in this finance Bill session today do enable us to do that.

Madam chair, I will not let members opposite who repeatedly voted to freeze thresholds until 2028, when they are in government trying to rewrite history. Today. As we debate these clauses, and I therefore move clauses nine and ten and 69 stand part of the bill.
19:21
Gareth Davies Portrait Gareth Davies MP (Grantham and Bourne, Conservative)
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OK. >> OK. >> Shadow Minister. >> Well, thank you, Madam Chair. I wish to speak to new clause 13, new wish to speak to new clause 13, new clause 14 and new clause 15, which stand in my name. But first I'd like to cover what the clauses within this section actually mean for British taxpayers. And if you'll forgive me, I'll do so slightly out of numerical order. Clause nine sets the starting rate limit for savings for tax years 2026 to 20 27 to 2020 30 to 2031.

Keeping it fixed at £5,000. This is an important allowance for so many with relatively low incomes, including those who are part time or retired. Clause 69 fixes the various inheritance tax thresholds at their current level for a further one year, one tax year 2030 to 2031, and clause ten freezes the amount of the basic rate limit for income tax at £37,700, and sets the personal allowance at £12,570 for the tax years 28, 29, 2930 and 3031, according to the office for Budget Responsibility.

The Labour government's freeze to income tax thresholds will raise around 7.6 billion in 20 1930 alone, and more than 12,000,000,000 in 3031. This is a £23 billion tax rise and a £23 billion broken promise delivered through clause ten alone. And the OBR is clear 920,000 more people will be pushed into the higher rate, and 780,000 more people will be pushed into income tax altogether. Now, Madam Chair, we've already heard the Minister try to explain away Labour's breach of the promises they made to the British people and the best the Chancellor can manage is to say that it isn't her fault, because she was very clear in the small print, a technicality dressed up as an excuse.

But people aren't stupid. It wouldn't be quite so embarrassing if the Chancellor herself hadn't proclaimed so theatrically in her first disastrous Budget that extending the threshold freeze would hurt working people. Yet here we are. It is no surprise the Prime Minister is breaking records for unpopularity. Our new clause 13 will ensure that the government undertakes an assessment of the impact of clause ten on the average earner, because we all know that working people will hurt very badly by this clause.

I will give way to the hon. Gentleman, but I hope he's not going to try and ask me why we froze the thresholds, because he will know that we did so under tremendous pressure, given the Covid pandemic and the debt that we accrued in the economy. We are in a very different scenario now. I'm sure that's not what is going to intervene on me about no Madam Deputy Speaker that wasn't what I was going to ask. But but I am glad that we've already got to the.

It was all Cobra's fault argument so early in this section of the debate from the hon. Gentleman, I was going to ask whether the hon. Gentleman has an in-principle objection to the freezing of the rate, or whether he has an objection to the fact that he thinks it somehow is a breach of the Labour Party manifesto, because those two things are different, and I would be genuinely interested to know whether he actually has no issue with the rate being frozen and more people paying taxes as they earn more money, or whether this is about the party politics of previous manifesto commitments.

Well, thank you, Madam Chair. I understand the points that the hon. Gentleman is making, but I will say that as the official opposition, speaking on behalf of millions of people who were told that this would not happen, they voted for a party that told them that they would not be increasing taxes on working people, and the Chancellor to stand at that despatch box just a year ago to repeat that claim and then to go back on it is unacceptable.

And whether I agree with it or not, it doesn't matter. We have to represent the millions of people who are, frankly, let down and misled by this government. That is our job, to hold the government to account as to why they have broken that promise, but also where the money is going to. What is this about? I ask the government, is it about giving up sovereignty? Giving up the Chagos Islands? Paying off public sector unions for them to only then go on strike once again? What is this about? There are two issues here.

First, the public were told that this would not happen. Secondly, now that it is happening, the party opposite the government are spending that money recklessly. That is unacceptable. And that is the job of the official opposition to hold the government to account. But finally, Madam Chair, there's an elephant in the room. From April 2026, the state pension rises by 4.8%. The new state pension will sit below the personal allowance next year, but that changes in 2027 2028, when for the first time, people whose only income is the state pension will be dragged into paying income tax.

The Chancellor, when challenged on this after the Budget, said she'll protect pensioners from paying small amounts of tax and the Minister just repeated that. Now. Fine, but where is it? It isn't in the bill. Not in clause ten, not anywhere in 535 pages of the finance bill. And as far as I can see, it hasn't even been costed. So I have a straightforward question. In fact, I've got two questions for the Minister. What is the Treasury's assessed cost of this promise? As the hon.

Gentleman opposite was

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asking, and how will it actually be delivered in practice? Well. On that point, yeah.

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On that point, yeah. I'm grateful to the. Shadow Minister giving away. The other point is what is small tax? What is the definition of a small What is the definition of a small tax being raised over it? Are we talking £100, £1,000? The government hasn't even set that out. The hasn't even set that out. The Chancellor has just come up with a term that we have no reference for, no use for, and no understanding of

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no use for, and no understanding of country. Yeah, yeah. My hon. Friend is absolutely right, and that's why I want to ask the Minister like he does. How will this be delivered? What is the definition of what she has described, albeit to the media? How is this going to work and why isn't it in this finance bill? We know

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that when they've spoken before, they've not stuck to it. Of course. What do you accept that whether

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What do you accept that whether it's a small tax or a large tax, the Chancellor made the promise the Chancellor made the promise there would be no tax on people who went out to work every day, and no went out to work every day, and no increase of tax on pensioners. So it's not really a question of the degree. It's a question of is the degree. It's a question of is the promise being broken. And clearly from even what the Minister said tonight, the promise is going to be

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broken. Exactly. I have nothing to add to that, Madam Chair. He puts it so to that, Madam Chair. He puts it so perfectly. I will tell him our new clause 14 requires a proper assessment of Clause Ten's impact, though, on state pensioners, a new clause 15 requires an assessment of clause 15 requires an assessment of the cost of the Chancellor's so-called exemption from small so-called exemption from small amounts of tax. Letter. Define that in a piece of legislation. I don't think she'll be able to, because, Madam Chair, clause ten is simple.

Another Labour tax promise has been broken and pensioners will pay the price. I hope that across the House, members can see this, can see what's happened here and vote with the official opposition tonight.
19:29
Daisy Cooper Portrait Daisy Cooper MP (St Albans, Liberal Democrat)
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Yeah, yeah. >> Yeah, yeah. >> I call the Liberal Democrat spokesperson Daisy Cooper. >> Yay!

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Yay! Thank you, Madam Chair. These stealth taxes were started by the conservatives and are being conservatives and are being continued by Labour. When Liberal Democrats were in government, we made sure that to raise the income tax thresholds, taking people out of paying the tax. But it is clear that the two biggest parties continue to drag more people into paying tax. By 2030, an extra 9.4 million people will into be dragged paying the basic and higher rate of income tax, according to the OBR.

Of those, 1.7 million people will be dragged due to this government's decision at the last Budget and by 2031, the stealth taxes introduced by the conservatives and continued by Labour will be costing British taxpayers an eye watering £67 billion a year, 13 billion of that was a result of last November's Budget. To put it into perspective, Madam Chair, in a two person household where someone earns £26,000 and someone earns £60,000 a year over the decade of Conservative and Labour stealth taxes, the lower of those earners will lose the equivalent of an entire year's pay due to frozen tax thresholds, wiping out an entire year's pre-tax salary for a typical earner is devastating for household finances.

It's staggering to realise that this decade of frozen thresholds will cost what is broadly a typical two earner family, a staggering £26,800. The OBR says 1 in 4 adults will be higher rate taxpayers by 2031, up from 1 in 7 in 2022. This represents an additional 5.7 million people, including 920,000 dragged into the higher rate band as a result of the Chancellor's latest three year extension. It is clear, Madam Chair, that it is really important that people understand that this is happening and that is why the Liberal Democrats have tabled a new clause three, in order that people are notified about how they will be affected by these frozen thresholds.

This new clause would require the Chancellor to properly communicate to people the impact of frozen tax thresholds. One of the most damaging aspects of this tax rise is that it goes unnoticed by so many. Unlike other tax changes, the stealth tax doesn't show up on people's payslips, and too many people are simply unaware that they are paying more tax due to government decisions. So this new clause would require the Chancellor to be transparent with taxpayers and directly write to them, explaining in black and white the impact that frozen thresholds will have on their paycheques.

And as many other members have said, Madam Chair, there is huge concern amongst pensioners about what it will mean for them. In a recent meeting with the Chartered Institute of Taxation, it was highlighted to me that it is not clear who will qualify for this treatment. The way the system is set up suggests that we could have pensioners who receive the same amount of income, but from different sources could end up paying different rates of tax. Now, many of us like Martin Lewis, but we cannot rely on the fact that the Chancellor has done a podcast with him in order to communicate clearly to every single pensioner about how they will be impacted by the government's changes.

So I urge the Minister please adopt our very simple new clause three, because the government has said that it wants to make the tax system more transparent. So if Ministers truly want to be honest with people, they should accept this simple amendment and just write to those people who are affected by these policies.
19:33
Ashley Fox Portrait Sir Ashley Fox MP (Bridgwater, Conservative)
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Yeah. >> Sir. >> Ashley Fox. Yes.

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Thank you, Madam Chairman. A Budget is the most important set of choices that a government can make. choices that a government can make. And clause ten is a choice by this government. And I oppose clause ten because it extends the freeze on the personal income tax allowance and the basic rate limit for a further three years, from 2028 to 2031. This means that rates will have been frozen for ten years. The choice in this Budget, as in all others, was clear will spending be controlled or will taxes be raised? And for the second year running, this Labour Chancellor chose higher taxes in 2024.

The Chancellor said that to extend this freeze would be to break her manifesto commitment, not to raise the level of income tax, but at this Budget she did it anyway. At the last election, the government promised growth. They promised not to raise taxes on working people and to fund public services through a stronger economy. But from the moment they took office, they have done the opposite. They have expanded welfare without reform, handed out huge pay deals, without productivity gains, and piled costs and regulations onto employers.

And when the inevitable bill came, what did they do? They reached into the taxpayer's wallet. So these tax rises are a political choice. The consequences of these choices are clear. Taxes on working people are at record highs, growth is sluggish, and unemployment has risen consistently since the election. Record numbers are now trapped outside the labour market on benefits, with no requirement and little incentive to seek work at all. Those who do the right thing, who work hard to provide for their families, now face higher tax

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bills to fund an ever larger way. I thank my hon. Friend for

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I thank my hon. Friend for giving way. He's making an excellent speech, but doesn't he agree that it's actually very damaging for our middle earners, damaging for our middle earners, where the number of people that are being dragged into essentially a fiscal drag into taxation, as goes fiscal drag into taxation, as goes from 15% in 2010 to 24% by 2030, that's bad for the economy, isn't

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it? Yes. My hon. Friend makes a valuable point, and in fact, he anticipates my next point, which is that teachers in my constituency have written to me saying that they will be pushed into the higher rate tax bracket by 2030, paying 40% on any extra work they do. For example, marking exams during the summertime and saying it's not worth it anymore. And many pensioners in my constituency, people who have worked and saved all their lives, people who have done the right thing, are now set to be punished to clause ten will drag more pensioners with modest private pensions into the tax system.

Freezing allowances will mean more pensioners paying tax on their income from savings. Anyone with income from a private pension or income from savings will now face having to fill out a tax return, and this number will only grow when clause ten takes effect. Unlike those in work, pensioners cannot put in more hours or ask for a pay rise. They are victims of this government's failure to control public expenditure. And where is all this extra money that clause ten will raise going to go in rises in welfare expenditure with uprating universal credit, the rise in the amount of people claiming health related benefits, and now the scrapping of the two child benefit cap.

More and more families are finding it less beneficial to work. Madam chairman, clause ten is perverse. It discourages work and entrenches dependency. Labour says it is all about fairness and compassion, but in truth it is the opposite, because the best way to alleviate poverty is through work. And that is exactly what Labour's Budget seeks to discourage. Yes, there is another choice. Yes. Had the Chancellor chosen to control public expenditure, then clause ten wouldn't be necessary. She could have chosen to make work pay.

She could have chosen to reduce our welfare bill, to increase productivity in the public sector, and used savings to pay down debt and protect taxpayers. But she chose not to, because when faced with difficult decisions, this government's guiding principle is its own survival. Surviving the next vote, the next headline, the next rebellion by Labour backbenchers. This government has now U-turned on headline policies 12 times, which, by the Prime Minister's own admission, meets the definition of serial incompetence. So the people paying the price for this incompetence are working people, pensioners and everyone who has ever worked hard and done the right thing to provide for themselves and their families.

It is no wonder that my constituents are so livid with this government, and that is why I shall oppose clause ten, which is the cornerstone of this Budget on Benefit Street.
19:39
Luke Evans Portrait Dr Luke Evans MP (Hinckley and Bosworth, Conservative)
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Gloucester Luke Evans. shame that the Member for Poole isn't still in the chamber because he, for me, has hit the nail on the head and asked the question that head and asked the question that I'm keen to get answered. And the reason why I've come into this debate specifically because it is about that freezing of the about that freezing of the threshold and what the impact will be on pensioners. Because I too am worried about pensioners suddenly being brought in to pay tax and also having to do a tax return.

I'm glad the Minister saw the podcast or the interview with Martin Lewis, because the Chancellor was very, very clear. So he has to try and answer the questions, because when Martin Lewis put it to her about this case, the Chancellor said, if you just have a state pension, we are not going to make you fill in a tax return of any time. Great. How? How does that work? What does that look like? Where is that written down? She also went on to say, in this Parliament they won't have to pay the tax.

We are looking at a simple workaround at the moment. Now that was back in November. So my curiosity was pricked to think maybe it will be in the finance bill. Number two at the Committee stage. Yet, as the frontbencher pointed out on our side, 535 pages, I believe it was and there's no answer. So I'm pleased to have the opportunity to ask on behalf of my constituents in the country to the Minister, how is he going to answer that question? What is the work around that is in play? Because if it's there, we should like to see it.

And is there an impact assessment that goes with it? To understand, will people have to do a tax return? How many people will have to do a tax return if they won't have to do a tax return, how are we going to know whether or not they need to pay the tax? Is it simply going to be part of a pay? This is a solution that you could move it. They already make adjustments. Are we going to actually simply say it is an easement and write it off.

But then went to the problem of the Chancellor talking about small tax. We have no definition of what small tax looks like or is with regards to this government. It's as close to a definition as we have working people from this government. And we all know what the definition of working people is under this government. Well, actually we don't. And that's the problem. So here we are, and I'm here asking the question on behalf of my constituents, what does this workaround look like? How will it take place and how is it going to affect my constituents.

And this is why I will be supporting new clause 15 to at least go part way to understanding the assessment of this decision taken by the government. But I appreciate it is outside of this bill as well. If the government turns around and says it doesn't need to do primary legislation, the best protection for my pension is, well, he can find another way to do it, but I

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look forward to hearing what that will look like in statements to the House. I will give way. I'm not going to make myself very popular by asking this question, but I'll do it anyway. The Minister took me to task earlier because I talked about the earlier because I talked about the total increase in DWP Budget, which includes pensions. I think all includes pensions. I think all three political parties are traipsing around this issue of the traipsing around this issue of the triple lock.

Frankly, if we didn't have the triple lock, if there was a serious debate, if we could get consensus in this House, we wouldn't have to freeze income tax thresholds and we could divert more resources to those really, truly vulnerable pensioners. So this is not a very popular point, I know, but I think it is a question that seriously, we all have to debate in a rapidly ageing population.

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Well, I appreciate his intervention. I know he has been a stalwart on making this point and actually leads on to the wider point when we think about social care and how we're going to fund social care, these sticky points are really important to make sure are really important to make sure we in this have have this debate. The fact is we are dealing with the finance Bill number two committee, finance Bill number two committee, and I'm really keen to try and understand when the government is making these choices, how it will making these choices, how it will have the impact directly on my constituents as we speak now.

Actually, it's interesting because in the last general election, the last government, the last government, now opposition in our manifesto had a solution to to deal with this, which was the triple lock. Plus, actually, that would have negated the issue at source. So there is a ready made solution if the government would like to go for it. But I understand the difficulties, as my hon. Friend has pointed out about the cost associated with that. So therefore, it brings us all the way full circle to where the Member for Poole started, which is exactly how are we going to solve this for pensioners? Does the government just need to be upfront with them and say they will have to do a tax return? Are they going to be pulled into this tax, and if not, how not?
19:44
Vikki Slade Portrait Vikki Slade MP (Mid Dorset and North Poole, Liberal Democrat)
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Vikki Slade. >> Vikki Slade. >> Thank you, Madam Chair. I completely recognise that the extension of the frozen tax extension of the frozen tax threshold isn't going to be felt immediately. We're all here worrying about it, but most of our residents aren't actually going to see the difference until probably the next general election. But it is on us now to resolve this once and for all. The Minister talked in his opening speech about asking those with the broadest shoulders to pay more.

And I want to speak briefly about three groups of people apprentices, graduates and pensioners who do not have the broadest shoulders and instead are feeling completely targeted. Very briefly, just speaking to apprentices who earn just £7.55. That's £5 an hour less than the national minimum wage. And yet, because they are paid for their training hours as well as their working hours, they too will be dragged into paying income tax. These very young earners who are at the very beginning of their time, who should be being supported, will be paying tax because of the increase at the the the stealth tax that we're seeing.

They simply don't feel like people that are having the broadest shoulders. And if the government is looking to consider exemptions for groups, might I ask them to consider some of our youngest apprentices, other people who are least able to manage these additional burdens? And turning to the group that I think that we collectively and at the moment this government are failing, and that is the young adults who've invested in their future by going into higher education. Time after time, we are seeing this group of people failed.

They have eye watering house prices and rents to pay. The interest rates on their student debts are way above the interest rates that their landlords for the buy to let properties they're forced to live in that have mould growing up, the walls are paying on their investment properties. Now they're being dragged into higher tax payments without an increase to their student loan thresholds. Time and time again, young adults who've invested in their futures, who have done everything right, who have tried to make the world a better place, are being targeted by successive governments.

Now, I'm the parent of two recent graduates and an undergraduate. So I see those daily struggles and I see

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many young people now saying, what is the point of going to university? Bitcoin is she discerned as me,

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Bitcoin is she discerned as me, as I am about the fact, it seems to be planned to student loans that are particularly impacted by the thresholds and what that impact has

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thresholds and what that impact has for the way in which they're going to have to make their repayments. Yeah. I thank the hon. Member for his

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I thank the hon. Member for his intervention. I'll answer that before I come on to the hon. Member for Strangford. I'll be honest and for Strangford. I'll be honest and say, I don't know the details of the different groups. Having not been to university myself, my students are all very recent graduates, so they went in knowing they were going to have enormous debt. They actually went in recognising that they would be 50,000 plus in debt, and with probably no prospect of ever paying it off.

But I don't think they went in realising they were going to get such a bad deal when they were at university, with eight hours of contact time a week. And, you know, PhD students doing their their lectures rather than actual lecturers, some of whom can't even speak English and only here for their visas. So I think they're having a really rough time. And

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this is just rubbing salt into the wounds. Thank you for giving way. I've often said in the last maybe 3 or 4 years in this chamber that when it comes to medical students, those who are looking to be doctors or who are looking to be doctors or whatever the position may be in the medical service, that government should sponsor them and ensure that should sponsor them and ensure that they do three years or maybe four years in the Health service. Wales years in the Health service.

Wales does it and it works. I have a constituent from. We'll never get her back because she's now fallen in with a Welshman and she'll stay there and she'll marry him. But she got her, had to stay for three years but got all of her student fees paid. Is that not what government should be doing to make it easier for young students, and

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then retaining them within the health service? I thank the Member for

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I thank the Member for Strangford for his his interventions. I always value his interventions and as the the niece of a of a young GP, Bethan, who has got over £100,000 worth of debt, it's absolutely ridiculous that our young people are being saddled with this, and I do have constituents this, and I do have constituents who have deliberately gone to study in Wales so that they are able to get that benefit, and I do think that it is time for us to to look collectively at really analysing the cumulative impact of the issues faced by our young, aspirational adults, because we are going to see more of them deciding to go abroad.

And, you know, we desperately need our home-grown talent to stay. And thirdly, I want to turn to the pensioners as as most people in the chamber here have done. And I know that the older age group will have been pleased to hear that they're due to be exempted from the tax threshold if their only income is state pension. But but I've had two constituents write to me, Colin from Wareham, who is a regular correspondent, and John from Lytchett, who both suggest that the Chancellor may either have inadvertently misled the Martin Lewes.

I won't use their accusation. I'll get into a lot of trouble. But but one of them said most pensioners are expected to survive on a weekly state pension four times lower than average wage. Mandating that they will be taxed will plunge many older people into desperation and poverty. They've suggested that the fact that state pensions alone is not being taxed is not quite accurate. I'm using my words very carefully. So can he, like others, assure me and my constituents that from April those with no other income other than the state pension and a modest savings will pay no income tax, particularly as there appears to be nothing in this bill.

Finally, Madam Chair, given that many millions of pensioners or millions of people, particularly many pensioners with tiny private pensions will be dragged into tax, will he consider the Lib Dem proposal for pensioners red phone to ensure that they do not spend hours hanging on the telephone?
19:51
Sammy Wilson Portrait Rt Hon Sammy Wilson MP (East Antrim, Democratic Unionist Party)
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Yes.

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Chairman. Chairman, this debate tonight is not just about an opportunity for the opposition to have a go at the government. Many people, I suppose getting cynical about politics will say, well, of about politics will say, well, of course you would expect them to say that and to have a go about that and to have a go about taxation and the behaviour of the government on that issue. But it government on that issue. But it goes far, far beyond just a debate and just an opposition, an opposition opportunity to have a go at the government, because the implications of what we're discussing tonight are very, very serious.

First of all, there are the macro impacts of this decision to make work, not pay because of higher taxation. The government has hung a lot of its economic success and economic predictions on obtaining economic growth. And the one thing we know we're not going to do is tax our way to growth. This will be an anti-growth measure and therefore has implications not just for this year, but for future years and also for future budgets. Secondly, of course, for many people facing the cost of living crisis that they are at the moment and finding it difficult to have their income stretched to meet their needs, this is going to have personal consequences.

And lastly, of course, it has an impact on the confidence that people have on the democratic system. The government will get this bill through tonight. It will get it through because it's got a massive majority and it's got a massive majority because it made massive promises, promises that people would not face income tax increases. And for many working people, I have no doubt that that influenced how they voted. And yet we have an acceptance by the Minister tonight that by the end of this period, 28 billion will be raised.

And one of the reasons why I support new clause three and 13 and 14 is because I believe that at least it gives an opportunity for people to realise what the government is doing to them. And also it shows that politicians in this House want there to be honesty with the people. If there wasn't honesty when the manifesto was made and declared, then let's be sure that there's honesty when the implications of the decisions that this government is making come to the the citizens of the country.

So I think that it is a confidence measure. And let's just remind ourselves, we've been reminded a number of times tonight what the government promised that they would not increase taxes on working people, and then went on to define working people, people who went to work every day. And yet we know that by freezing the thresholds, people who go to work every day and therefore when they earn money, they're subject to income tax being charged on them, they're going to pay more.

So working people know that a promise has been broken to

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them. And pensioners of course were. Yes I will. I think the. Chancellor knows that after her statement in the first Budget, when she said changing the thresholds would be a tax on working people, does she not? Yes.

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does she not? Yes. Of course she did. And I think that it's one of the reasons why I that it's one of the reasons why I believe that the new clauses are important, that we we recognise that there's a need for people to that there's a need for people to be made aware of the consequences and the impact on them of the decisions which have been made in this House by a majority government that got there by making promises which are not being kept.

And what is the impact? Well, we've already had the, the Minister tell us £23 billion more tax will be paid. And he he justifies that by saying and I think he mentioned this twice, that first of all, they've sought the government has sought to be fair and sought to place the burden on those with the broadest shoulders. Now, I've got to say, Madam Chairman, when 750,000 people who are currently earning £12,500 per year are dragged into the tax system, that does not strike me as fair.

That strikes me as placing a burden on people who go out, work every day, don't earn a great deal of money for it, don't have a great reward, and now find themselves having to pay tax when they thought they would never have to. And as I said in an earlier intervention, I can understand and people might appreciate and might be willing to pay taxes if they thought it was going to lead to things which were going to improve their lives. We had this promise at the first Budget.

We're putting up taxes by whatever it was, £40 billion at that stage, but it's to improve public services, have public services improved? Do they have? How's the money being spent on public services? No it hasn't. Wage increases yes, have been given, but there's been no productivity increases. In fact, the OBR said this as a result of the extra money being spent. So if people and taxpayers thought, well, I'm going to get some benefit from this, then they might have had a willingness to accept the changes.

But of course they're not getting that. And what are we getting? We're getting wasteful spending expenditure. It's already mentioned that £5 billion will be spent on taking money from those who go out to work, to pay, to those who don't go out to work. That's not fair. And it doesn't even make economic sense either. And then, of course, there's all of the other wasteful expenditure that the government has engaged in a deal where we had the Chagos Islands, we had our bases there, etc.

we're now going to pay somewhere between 38 and £47 billion to the Mauritius government for to give the islands back and unleash them back again. You can understand why people say, is that what I want my taxes to be spent on? Of course it's not. Or an ID card system, which the government's own estimate is 1.8 billion. The London School of Economics says it could be 10.7 billion. What to stop illegal immigration when we know full well that it wouldn't matter whether you have six ID cards, those who come into this country illegally will seek to work illegally, and there are other means of checking up on them anyway.

There's there's also the issue of the new bureaucracies that the government set up. One of the first actions this government did was to set up a huge bureaucracy, bureaucracy, GB energy, £9 billion. And again, what benefit are we going to get from it? The government said we'll deliver their net zero policies. Is it necessary to have a bureaucracy of that nature? And of course, I know many people in this House will not agree with me, but we're spending billions of pounds on restructuring our economy to meet the net zero targets when many other countries are saying we're not prepared to damage our economy in that way.

So when we look at these proposals tonight, I think it is right that at least and the amendments and new clauses are not all that demanding. All they're saying is let's have some transparency about what all of this means to the people who are having to pay the money. That's not too much to ask. And I think that it's I would hope that people will consider how they cast their vote tonight. The one thing I would say in conclusion is that we seem to have a government, which, as its first choice, will spend taxpayers money rather than looking at how the money which it currently takes from taxpayers can be used more effectively.

Mr.
20:00
20:01
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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Minister. always listening to the speeches made by opposition members so intently that I wasn't at the right place to start my speech. Forgive me, Madam Chair. Let me extend my thanks to the various hon. Members for their contributions today. I will be very brief in winding up. I know there are some members particular who will enjoy that, and I do want to turn to the conservatives. Proposed new clause 15, which asks the government, within three months of this act coming into force, to publish an assessment of the impact of exempting pensioners whose sole income is the basic or new state pension from income tax.

This issue was raised by the opposition spokesperson, the Member for Hinckley and Bosworth, the Member for Dorset and North Poole and maybe some others too. The clause is referring, as has been discussed, to the Chancellor's announcement, that only those whose income is the basic or new state pension, without any increments will have, will not have to pay income tax over this Parliament. And I know that some and I know that some members are particularly impatient and energetic, but I will have to say that on this point, more details will be set out on this later in the year as the as the details of the policy have not yet been announced, it would be premature for us to set out the impacts at this stage.

Many members wish to come in, but I will happily give way over here. After some repeated

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requests for. I thank the Minister for giving way, but obviously he says that way, but obviously he says that pensioners who only receive the new state pension won't pay. I won't state pension won't pay. I won't have to pay income tax. But can he say whether pensioners who were who say whether pensioners who were who paid the old basic state pension but contracted out and have alternative provision, that brings alternative provision, that brings them up to the same level as the new state pension, will they have

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to pay income tax? Yeah. Great question. The as as as has been set out.

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The as as as has been set out. But of course there is more detail to follow later this year. The Chancellor was clear that those Chancellor was clear that those whose only income is the basic or new state pension without any increments, will not have to pay increments, will not have to pay income tax over this Parliament. I'm aware that members would like I'm aware that members would like to see more detail, and it would be premature for us to set out the impacts of this policy at this stage because, yes, the details will be forthcoming later this year.

I therefore move Madam Chair that new clause 15 should also be rejected. Madam chair, it's so wonderful to see so many members of the opposition wishing to. Have me let them come in. They were much less forthcoming in the previous closing remarks. I will, I will give. I've given way to one concern. Let me give way over here. Then

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we'll we'll. To the Minister for giving way. He will have heard a number of colleagues in this House asking for colleagues in this House asking for more detail about how this pension provisions will affect pensioners. The Minister has just said that The Minister has just said that there is more further information to come. Could he please give the House an indication of the date and

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House an indication of the date and when? We can expect that guidance to be published in order that we can then come back and clarify points? Yeah.

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Yeah. That information will be forthcoming in due course. In conclusion, Madam Chair, I hope that in this debate, members will see how the amendments that have been placed forward today are not necessary. We have set out the impact of our tax changes in numerous tax and tax impact and information notes, which members can read online at their leisure. And I and this government will not let members opposite who repeatedly voted to freeze thresholds until 2028, when they were in government, to rewrite history, to.

Though this Labour government rejects the austerity measures from the opposition which got our country and public services into this sorry state, we inherited a mess at the 2024 general election and the measures here and elsewhere in the finance bill enable us to rebuild our public finances, to fund our public services for the long term, and to get borrowing over the course of this Parliament to continue to fall. I therefore, urge the House to reject new clauses 3 to 5 and 13 to 15, and I beg to move that clauses nine, ten and 69

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stand part of the bill. Hear, hear. The question is that clause nine

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The question is that clause nine stand part of the bill. As many as are of that opinion say I. I of the contrary, no I think the ayes have it, the ayes have it. We now come to the question that clause ten stand part of the bill. The stand part of the bill. The question is that clause ten stand part of the bill. As many as are of

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part of the bill. As many as are of that opinion say I. I of the contrary, no. No.
20:07
20:21
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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Madam chair, as we come to the final session of today's Committee stage on this finance Bill, I'm pleased to open this important debate on clause 62 and schedule 12 and the many associated amendments as reiterated throughout the day. This finance Bill delivers on the choices made at the two budgets delivered by this government. It delivers fair and necessary reforms, Madam Chair, that strengthen the foundations of our economy and provide a secure future for our country.

The choice at these two budgets was austerity and decline, or investment and renewal, and on both occasions the Labour government rejected austerity and chose renewal. On clause 62. Madam chair, schedule 12, as well as government amendments 24 to 29, make changes to Agricultural Property Relief and Business Property Relief to target them all fairly. Contribute to the sustainability of public finances and fund public services. Under the current system, 100% relief on business and agricultural assets is heavily skewed towards pursuit towards the wealthiest estates, according to data from HMRC.

For 20 2122, 40% of Agricultural Property Relief across the UK was claimed by just 7% of estates, making claims. That is £219 million in tax relief from just 117 of the largest estates in the country. And it is a similar picture at Madam Chair for Business Property Relief. More than 50% of Business Property Relief was claimed by just 4% of estates making claims. That's a striking £558 million in tax. Relieved from just 158 estates. This contributes to the very largest estates paying lower average effective inheritance tax rates than the smaller estates, and significantly lower average effective inheritance tax rate.

The most people who end up paying IHT would pay. That is the status quo that those seeking to reverse the government's reforms in full wish to perpetuate. It's not sustainable, and it's certainly not fair, in the government's view, to maintain such a large tax break for such a small number of claimants, especially in the context of the wider pressures on the public finances and public

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services. The changes made. But I will give her. Thank you. I'm very grateful for

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Thank you. I'm very grateful for Minister giving way. I very much welcome the fact that from next year, an estimated 85% of farms year, an estimated 85% of farms will pay no more inheritance tax on their farming and business assets. I agree with the Minister. It's a I agree with the Minister. It's a proportionate measure that aims to prevent the wealthy from abusing APR. Mindful, as I know the APR. Mindful, as I know the Minister is about the profitability of our small and medium sized farms, will he undertake to work with DEFRA colleagues to make sure that we get the definition right for the new SFI, so that as many of those

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small and medium sized farms are possible. Did you hear?

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Did you hear? I thank my hon. Friend for her question and her continued interest question and her continued interest in this area. The strong representative that she is for the rural communities that she rural communities that she represents in in the north west of our country. And yes, I am sure our country. And yes, I am sure that colleagues in DEFRA, the Secretary of State and others will be working hard to make sure that the funds that this government has allocated towards farming and farming businesses are spent and spent in full, rather than leaving hundreds of millions of pounds underspent as the previous government did.

And we will make sure that that money gets to those farms who will benefit from it, to support them with the initiatives that that they and we know it would be good for them to pursue good, good, good, good for the environment and for those

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businesses. I would give way. Yes. I thank the Minister. For giving way. He's very

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For giving way. He's very courteous. Clearly, as members will understand, in North Scotland, I represent a very remote constituency where crofting, very marginal farming and hill farming is fundamental not just to the is fundamental not just to the economy of the highlands but also to the social structure, if you like. The great curse in the past like. The great curse in the past was de-population and what was done in the 20th century. To halt this was to enact various safeguards to ensure that crofting continued.

The crofters are asset rich, I grant you, but the income very poor indeed. Could I? I welcome what has been said by the government Darlington government so far. Could I ask, please, with my hand on my heart, to keep an eye on this particular sector? Because anything that would discourage people could be fatal for the whole society

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where I represent. I thank the hon. Member for that

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I thank the hon. Member for that intervention and raising the crofting sector and the and the and the rural communities that he represents. The government will, of represents. The government will, of course, continue to do all it can to support different types of farmers and also to make sure we farmers and also to make sure we can support tenant farmers too. And I thank him for raising that point and for the representation that he provides to his constituents. The the changes made by clause 62, schedule 12 and government amendments 24 to 29 will reform how we target Agricultural Property Relief and Business Property Relief

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from the 6th of April this year. It Rotherham. I thank the Minister for giving

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I thank the Minister for giving way. It's been many, many, many months since the Agricultural Property Relief changes and Property Relief changes and business property relief changes were first announced by this government. In that time, this government. In that time, this government had so many representations from farmers, farming industry, small business groups, family business groups, groups, family business groups, people in this house, industry sectors, Nfu's, CLA, SL. I could go on and on and on. Their backbenchers, backbenchers on this side, the public at large.

Everyone was telling the government but this was a bad policy. Why did it take them so long to change?

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Yeah. Minister members opposite keep

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Minister members opposite keep repeating 14 months. I should I should use that as an opportunity to remind people of the 14 wasted to remind people of the 14 wasted years that your party put farmers, put rural communities through the, the the trade deals that the members opposite implemented that made life worse for our farmers and our farming communities. The our farming communities. The hundreds of million pounds that went under spent in those 14 years in the in the farming budgets that could have benefited rural communities and benefited farmers.

After continued engagement from Ministers across government, in the Treasury and in and in the Environment Department, as well as engagement that the Prime Minister had with important representatives in this space, the government did make a change, and that is the change that the amendment today will enable this House, if it so wishes, and I do hope it will wish to legislate for this change will strengthen the public purse by

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around £300 million. Yes, I will give way. Thank the. Minister for government. I'll take him back to an earlier point take him back to an earlier point in the commitment he made in regards to Scotland. Will the government also give the same commitment to the farmers in commitment to the farmers in Northern Ireland? We have a very different family farm structure than the rest of the United Kingdom, and the engagement in the representations that were made by the Ulster Farmers Union and indeed the Young Farmers Clubs of Ulster, and bringing this government to a and bringing this government to a realisation that the last proposals that they brought forward was not certain and didn't suit farmers

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across this United Kingdom. Yeah. Thank you, Madam Chair. I had the pleasure of attending a the pleasure of attending a Westminster Hall debate a few weeks back that was specifically focussed on the issue of farming and farmers in Northern Ireland. It it it was a good and productive debate, and good and productive debate, and many of the points raised there, I took away with me. And the member took away with me. And the member will know that the government has made a change here to increase, to increase the threshold.

Given that the hon. Member called that debate, I will I will give way.

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Thank the Minister for attending the debate. But in attendance at the debate, he had noted that he the debate, he had noted that he may meet with the Ulster Farmers Union. Sadly, that did not happen. The government have been tone deaf The government have been tone deaf for the last 14 months on this issue. When the Ulster Farmers Union and each of the unions across this United Kingdom were telling this government the role that they this government the role that they were doing, they weren't listening.

So would you meet them in the wake of all of this to discuss the

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workings of it? Yeah, yeah. I am sure that members I'm sure

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I am sure that members I'm sure that members of the government in the Environment Department will continue to engage with farming continue to engage with farming unions and farming and farming representatives, and in and both in representatives, and in and both in the run up to the Budget and subsequently, Ministers from the subsequently, Ministers from the Treasury and from other departments have have continued to engage with farmers, and we will continue to do so in order to in order to support farmers in a way that the previous government never did.

Individuals still benefit from 100% relief for the first £2.5 million of combined business and agricultural assets, and it will be fixed at this level until April 2031, alongside other inheritance tax thresholds. As we have just been debating Madam Chair, any unused allowance can be transferred to a surviving spouse or civil partner, including where the first death is before the 6th of April, 2026. On top of this amount, there will be a 50% relief. This means that inheritance tax will be paid at a reduced effective rate of up to 20%.

We're also reducing the maximum rate of Business Property Relief BPR that's available from 100 to 50% for shares designated as not listed on the markets of registered stock exchanges. The reliefs sit alongside other exemptions and nil rate bands. This means that a couple will now be able to pass on up to £5 million of agricultural or business assets tax free between them, on top of the existing allowances such as the nil nil rate band and where inheritance tax is due. Those liable for a charge can pay any liability on the relevant assets over ten annual instalments, interest free.

This is a benefit that is not seen elsewhere in the inheritance tax system, and it means that the relief continues to be more generous than it was for the vast majority of the 20th century. In fact, from April 2026, the reliefs will be more generous than they ever were under Margaret Thatcher's government. For example, our reforms are expected to result in a total of up to 1100 estates in total across the UK, paying more inheritance tax in 2067 only up to 100 and only up to 185 estates across the UK claiming Agricultural Property Relief, including those also claiming BPR, are expected to pay more in the next tax year.

This means that around 85% of such estates will not pay any more tax. As a result of the changes in 20 2627, excluding estates holding shares designated for not listed on the market of registered stock exchanges, the reforms are now expected to only result in up to 220 estates across the UK, only claiming Business Property Relief. Go on, I will give way, I will give

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way, I was trying Hitchin. But I'm.

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But I'm. I hate. To to interrupt the Minister.

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To to interrupt the Minister. He's right, I'm afraid. The Chancellor told the House and the country when this policy was first country when this policy was first introduced effectively. Don't really worry a huge amount because not a vast amount of farms will not a vast amount of farms will fall into this trap. The welcome but limited announcements made just before Christmas with of course, reduced still further the amount of people who will fall into this trap. He's now just set out to the house, a very, very complicated set of checklists and this, that and the other.

Would it not just make more sense to scrap this whole stupid idea and give a big tick of confidence to our food security environment protecting, job creating farming sector which is so

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vital to UK plc? Minister Tomlinson.

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Thank you, Madam Chair. This government does support the farming sector and the farming industry and will continue to do so through the will continue to do so through the funds that we will make available via Defra, which funds which were via Defra, which funds which were not spent in full under the previous government. And we have listened to farming communities and listened to farming communities and business representatives and raised the threshold from 1 to 2.5 million. As a result of that listening and that engagement, the government doesn't think it would be right to abolish the policy in full, because that would forego £300 million of revenue from the very largest estates.

The member opposite may say that £300 million is a rounding error or an. But I think that it's important to raise revenue from a broad range of taxes and from those with the with the largest value estates in the country. As I said earlier on in my speech, there's hundreds of millions of pounds in tax is received from the very largest estates in the country. If members opposite wish for that to continue to be the case, that is of course their right.

But we on this side of the House think that our

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reforms are fair and proportionate in raising revenue from the very large estates. I will give way. The Minister.

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The Minister. For giving way. But could the Minister explain how we've ended up in this very bizarre scenario where you can have two estates? And when you can have two estates? And when I refer to the term estates, because this doesn't necessarily mean a farming business, it could be any type of family, business, be any type of family, business, estate that is valued at £5 million. But the tax that is then generated to the Treasury can be different depending on the ownership structure of the estate.

And secondly, could the Minister explain, because I can't see it in the amendments that have been put forward, why there is no indexation that is linked to any increase? Because obviously land values will increase over a period of time. And thirdly, could the Minister just clarify, because when he was last at the Dispatch Box, he said that interest would not be charged? I just want to get some clarity from the Minister when an IHT liability is triggered, whether interest is or isn't triggered in that ten year period.



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Mr. Tomlinson. Some very forensic questions in

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Some very forensic questions in that not brief, not brief in in intervention. But I of course appreciate it. And I look forward appreciate it. And I look forward to trying to go through those to go through and I'm trying to answer them. I'm trying to answer the questions. OK. It it's a bit difficult when members on the difficult when members on the opposition front bench continue to to sort of barrack me when I'm actually trying to answer the questions that the opposition backbench spokesperson, the backbench member, has raised with me, if she instead wants to continue to hector me from from a sedentary position, then she may and we won't have any time for me to answer any of the questions right on the points raised by the member opposite, let me dial down the temperature here.

Congratulations for getting to me. The the the spousal transfer and the way in which it is used in the inheritance tax system is we are replicating that in, in the treatment of the, in the treatment of spousal transfer when it comes to APR and BPR changes. That's the routine way that that it is set out within the inheritance tax system. And we aren't doing anything different or novel here. We just debated in the previous session the the threshold at which will be set at the current levels and not be uprated in line with changes that we're making on other taxes.

And then he asked also about interest. And as I said, yes, where inheritance tax is due, those liable for a charge here can pay any liability on the relevant assets over ten annual instalments, and that will be interest free if they if they would like to. I've been through the numbers at only 185 additional estates claiming APR are expected to pay more in 2026. Madam Chair to to to conclude these reforms, get the balance right between supporting farms and businesses, fixing the public finances and funding our public

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services. The reforms reduce. I would give way. I thank the Minister for giving way, but I'd just like to pick up way, but I'd just like to pick up on the point of the hon. Member where he talked about the ludicrous situation we've got now, where a situation we've got now, where a farm that's worth 5 million, if it's owned under a certain ownership model, is not going to be ownership model, is not going to be subject to tax. But a farm less than that could be subject to tax.

I have Graham, a farmer from my North Cornwall constituency, visit North Cornwall constituency, visit my surgery on Friday. He's in that exact situation, a sole trader slightly over the 2.5 million mark. We ended up discussing for more than ten minutes whether he should marry his long term partner to get

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away from this tax. Doesn't that illustrate just how ludicrous a situation we are now in? Minister?

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Minister? Mr. Tomlinson. This is this is the normal way

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This is this is the normal way that the taxation of inheritance that the taxation of inheritance tax assets, not just APR and BPR as as they will be from the changes that will come in in April, but also other assets that are passed also other assets that are passed on through inheritance. This is this is the same treatment that we are applying here. It's the standard way to to set inheritance tax for various assets. Madam chair, as I was saying, these reforms get the balance right between supporting farms and businesses, fixing the public finances and funding public services.

The reforms reduced the inheritance tax advantages available to some owners of agricultural and business assets, but they still mean that those assets will be taxed at a much lower effective rate than most other assets. For example, a £6 million estate owned by a couple could have an effective tax rate of just 1.2% that can be paid interest free over ten years. Those opposing these reforms in full are voting for the status quo, a status quo where the very largest estates pay a lower average effective inheritance tax rate than the smallest estates.

A status quo where the Exchequer sees 219 million in tax relief from just 117 estates claiming APR, where we see 558 million in tax relief from just 158 estates, claiming BPR. It's not sustainable and it's certainly not fair, and therefore I move that clause 62, schedule 12 and government's amendments 24 to 29 stamp part of the bill appear.
20:41
Gareth Davies Portrait Gareth Davies MP (Grantham and Bourne, Conservative)
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I call the Shadow Minister of Gareth Davies. Gareth Davies. >> Thank you, Madam Chair. I wish to speak to amendments 3 to 23, to speak to amendments 3 to 23, which stand in the name of my right hon. Friend the Member for Louth and Horncastle. I think, though by now we all know what clause 62 and schedule 12 do, they would restrict Agricultural Property Relief or APR and Business Property Relief relief, or BPR to 100% of the first £1 million of qualifying assets and 50% thereafter.

Though I note that this clause was written before the recent announcement, which I'll obviously come on to. But, Madam Chair, be in no doubt the Conservative Party will fiercely oppose Labour's family farm tax and family business tax in the lobbies today, just as we have since this was announced. But we must first face the reality of the sheer number of Labour MPs intent on punishing those who dare to feed us, or who take a risk to build their own business.

Our amendments seek to mitigate at least some of this damage by removing the anti forestalling measures that have purposely tied the hands of so many farmers and business owners across our country. The Chartered Institute of Taxation and many others have pointed out how these measures particularly trap those more elderly farmers who have been robbed of their ability to plan. The government has said all along that they expect farmers and business owners to alter the ownership structure of their assets.

I would be really interested to hear just how the Minister believes elderly farmers in the final few years of their lives in particular, should do this. Madam chair, before I turn to the other issues in this clause, the amendment paper in front of us tells its own story. Government amendment after government amendment, each one a U-turn, each one a rushed attempt to bury the incompetence, indifference and hostility this Labour government has shown to family farms, tenant farmers, rural communities and family businesses.

I ask respectfully of the Minister, just as my hon. Friend for Gordon and Buchan asked earlier, why has it taken the Treasury more than a year to admit they got this wrong? Why have farmers been forced to leave their fields and bring their tractors to Whitehall, just to be heard? At this point, let me pay tribute to my right hon. Friend, the shadow DEFRA Secretary, and my hon. Friend for Keighley, who have given this House five chances before today, five chances to vote against these changes.

The government had ample opportunity. But yet here we are, and we know the partial U-turn from the government will not be enough. The country, Land and Business Association has been very clear that it will only limit the damage. There are so many serious questions and concerns that remain on the impact of this clause. 62 but I will highlight three tonight. Firstly, from the very start, the government's numbers on this have been at best questionable. We have the Treasury disagreeing with the CLA and others on how many farmers and businesses will actually be affected even after this partial U-turn.

HMRC, as the Minister set out, still expects 1100 estates to face larger inheritance tax bills in 2026 2027, 185 of which will be claiming APR. Yet the experience of many members in this House and several industry bodies, when we speak to farmers in our constituencies and businesses, that

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is massively wide of the mark here. Shadow Minister. For giving way. I mean, the government's figures were pretty government's figures were pretty shoddy beforehand when this was announced in the Budget. How confident is he now that the

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government's figures are any better? Gareth Davies well, if I look at different industry bodies and my different industry bodies and my right hon. Friend, the shadow DEFRA secretary has engaged extensively with farmers, but also those who represent farmers. And the reason I'm raising this now is because the numbers are questionable, but the numbers are not just questionable on the impact and who is impacted by these measures. It's the net revenue to the exchequer that I questioned to.

Some have suggested that the changes in clause 62nd May even end up costing the exchequer, while the OBR forecast £500 million will be raised through clause 62. In 2930. The CBI's analysis suggests that instead a net a net loss to government of some 1.9 billion over the forecast period will be realised because of the wider impact that this clause 62 will have on the wider economy give

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way. Yeah, I'm. Very grateful to my friend. For giving way. He's making a

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For giving way. He's making a serious point given the huge discrepancy with with the robustness of the figures from the Treasury and the wider government and the challenge that they have faced from industry bodies and experts, given the sensitivity of experts, given the sensitivity of the issue and the importance of the agricultural sector, would he agree with me that the Treasury may well with me that the Treasury may well wish to stick to its policy, but should actually now pause it? Take some time to try and build some consensus across the sector to agree the data and to actually work out the trajectory of costs.

But this back of a packet, fly by night

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way of trying to approach serious policy is simply insulting. Gareth Davies well.

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Gareth Davies well. I completely agree that in the first instance we wouldn't be doing this right. We shouldn't be here. But clearly this has been executed But clearly this has been executed without a plan, without serious thought, analysis or engagement. thought, analysis or engagement. And so anything the government can do to make this less painful for those affected, anything the government can do to get the numbers right. I would absolutely welcome. The Minister talked about the partial U-turn and the government, how the government expects to raise around £300 million even with this U-turn.

But the Obr's initial costing was labelled in the Ifo as highly uncertain. By the way, for those not familiar with this, there are different categories of uncertainty. In the highly uncertain is the most uncertain. You can be about the figures. So surely this new figure of £300 million is in uncertain, just as the 500 million was in the first place. So what assurance can the Minister provide that the Exchequer won't, in fact be losing out overall, despite the pain they're determined to inflict? How confident is he in these numbers? That's the first point.

My second point is that since the Chancellor's first Budget, family businesses and farmers have had to make many difficult decisions. Family Business UK and make UK say that 55% of BPR affected and 49% of APR affected businesses have paused or cancelled investments. Family run farms are putting off the purchase of new, more efficient machinery. Family run shops no longer see the point of expanding to an additional site or another high street, or taking on more staff comes back to the questionable figures that I talked about in the CBI's analysis of the impact on the wider economy.

And finally, Madam Chair, we should have no confidence in the practicality of the measures before us, the Chartered Institute of Taxation has warned that extending ten annual interest free instalments to APR and BPR property does not solve the problem. Those instalments will still be a significant burden in practice, it is unlikely that many families will

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be able to pay the tax without selling up. With the shadow Minister. On the point of practicality, I'll be very point of practicality, I'll be very interested to understand from the Minister whether he or the Treasury have done any analysis on the fact have done any analysis on the fact of the impact on the District Valuation District Valuer, because there is a real challenge here there is a real challenge here where when a farm is valued, that value will be disputed by either value will be disputed by either the Treasury or indeed the agent that's acting on behalf of the landowner who has that tax liability.

And secondly, if you're looking at two farms in different parts of the countries, the values vary dramatically. And therefore, what reference has the Treasury do you think, given to the point in which the tax liability, based on the value of land for 200 acres in one part of the country, varying very differently to 200 acres valued at a higher rate, for example, in Northern Ireland.

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Elsewhere, practicalities matter. Exactly right. And let me pay tribute to him again. He's been a forceful champion for farmers forceful champion for farmers across the country. On that specific point, I'll let the Minister obviously address it, but Minister obviously address it, but he's consistently raised these issues. You know, it goes back to my point about the warnings that were provided to this government, the practical implications of this, the impact on family farms in the impact on family farms in particular.

And yet it was ignored until this point. And the minister's going to have to explain why that was indeed, the Chartered Institute of Taxation have warned that schedules 12 failure 12 failure to allow allowances to be allocated to specific property could undermine many wills as they're currently drafted. This creates a tremendous amount of uncertainty. It creates disputes and real hardship. And finally, you know where the cap is exceeded. The first inheritance tax payment will fall just six months after death.

If they miss that deadline, the estate is hit with a punishing interest rate. Within six months. They must secure probate value complex agricultural and business assets, calculate the liability and then raise the cash, often by selling parts of the estate to make the first payment. The NFU has been clear that expecting probate within six months is simply unrealistic, given the complexity of valuing agricultural businesses. As my hon. Friend for Keighley has pointed out. So in practice, families and personal representatives will miss the deadline through no fault of their own, without a confirmed tax bill and without the funds to pay for it.

Madam Chair. The government's expectation is simply unrealistic. This approach is flawed and this window must be extended. If this clause 62 is passed today. If the government will not finally concede family farmers and businesses in my community of Lincolnshire and those right across the country will not rest until these changes are fully reversed. The only consolation can offer farmers and businesses watching the votes closely tonight, and they'll be watching every single vote tonight. Is that the next conservative government will scrap these immoral changes?
20:54
Ruth Jones Portrait Ruth Jones MP (Newport West and Islwyn, Labour)
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Yeah, yeah, yeah. >> Ruth Jones. >> Thank you, Madam Chair. >> And I rise to speak on schedule 12, and I greatly welcome the government's changes to the proposed Agricultural Property Relief and Business Property Relief thresholds. Madam chair, as chair of the Welsh Affairs Select Committee, I am proud of the work that my committee has undertaken on reviewing the Welsh farming industry and the report we produced prior to the Budget, with clear recommendations. But I also thank the Treasury for its swift response to our report and also the changes that they have made to the thresholds.

These changes show that the government is listening not just to farmers, but also the Welsh Affairs Select Committee and Welsh Labour MPs. The new higher thresholds are a win for Welsh farmers, raising the allowance for 100 100% relief from 1 million to 2.5 million will ensure that the changes to inheritance tax are properly targeted at the wealthiest estates, whilst ensuring smaller scale family farms remain protected. Couples will now be able to pass on £5 million worth of agriculture or business assets between them, tax free.

This additional relief will have a particularly significant impact in Wales given its specific context, which is very different to England. A key finding of our Welsh Affairs Committees recent inquiry.

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Well, of course I will. To my hon. Friend. For giving way, and I commend

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For giving way, and I commend her on her leadership of the Welsh Select Committee. And she said rightly said the committee did stellar work in in reviewing the stellar work in in reviewing the proposals on the potential impact on agriculture in Wales, which you also agree with me further to the point you just made about the point you just made about the unique nature and structure of the agricultural industry in Wales. Now the Treasury would do well, regardless of the changes that regardless of the changes that they've introduced to undertake that specific Wales Wales wide

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impact assessment of these changes. Because if he leaves his seat. And he's made the point, I'm

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And he's made the point, I'm going to come on to later, because we know that Welsh farms are typically smaller than those in England, with 55% being less than 20 hectares. 66% of Welsh farms are cattle and sheep farms situated on cattle and sheep farms situated on hilly or mountainous terrain, compared to just 12% in England, and which also has a much higher and which also has a much higher concentration of arable farming. This leaves Welsh farms with the lowest average income of the four nations, £18,000 lower than in England.

Welsh family farms are also a cultural bastion of the Welsh language, with almost half of people working in Welsh farms speaking Welsh as a first language, more than double the Welsh average. Whilst the government changes to APR and BPR are likely to disproportionately benefit Welsh farmers, the diverse nature of farming across the four UK nations needs to be considered when making such significant changes. That is why the Welsh Affairs Select Committee continues to call for a Wales specific impact assessment. As my hon.

Friend opposite referenced just now of the government's changes to inheritance tax, it is critical that those with the broadest shoulders pay their fair share of tax. That's why it's important that we close the inheritance tax loophole that allowed wealthy investors to purchase agricultural land as a way of avoiding tax. Ensuring that the tax burden falls fairly, however, relies on effective data. The Welsh Affairs Select Committee and I remain concerned about the availability and accuracy of the data used to justify the threshold set for APR and BPR, particularly in regard to Wales.

The government has thus far been unable to provide any estimate of the number of Welsh farms which will be affected by these reforms to inheritance tax. Such data is critical when considering any potential impacts on the Welsh farming sector, given its greater financial precarity and reliance on low income, family run livestock farms. We cannot afford to be complacent. Going forward, I hope the government will ensure it takes specific account of the unique cultural, environmental and economic circumstances of farming in Wales when making such significant policy decisions, and I support wholeheartedly the changes in the APR and BPR as laid out in the government.

Amendments to schedule 12. Thank you.
20:58
Charlie Maynard Portrait Charlie Maynard MP (Witney, Liberal Democrat)
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I call the Liberal Democrat spokesperson, Doctor Charles Maynard.

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Thank you, Madam Deputy Speaker. Farmers up and down the country should be really proud of the campaign that has forced the campaign that has forced the government to rethink the completely short sighted and ill thought out policy that has thought out policy that has threatened the future of family farms up and down the country. I congratulate them on the result that they have secured, and I think everybody in this House acknowledges that they have spent an enormous amount of time and an enormous amount of time and energy and anxiety and stress getting to the position that we are now in, and it would have been a

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lot better if they never had to do that in the first place. Yeah. The Liberal Democrats were the

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The Liberal Democrats were the first party to come out against these tax changes, and I want to pay tribute to my colleagues, the Right honourable and hon. Members Right honourable and hon. Members for Westmorland and Lonsdale and for Orkney and Shetland, who, along with other Lib Dem MPs, have with other Lib Dem MPs, have challenged the government on this at every opportunity and stood in solidarity with the farming

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solidarity with the farming community each step of the way. I will. I'm very grateful, but.

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Correct me if I'm wrong. The Leader of the Opposition responds to the Budget. And the Budget.

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And the Budget. And opposed it. The Liberal Democrat spokesman would have spoken later down the list. So I spoken later down the list. So I beg to differ to the Honourable the hon. Gentleman. The Conservative Party was the first party that

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Party was the first party that opposed this proposal, not the Liberal Democrats. So I guess we'll have to check

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our social media accounts. So I. Thank my hon. Friend for giving way. I'd just like to slightly correct the record there. We're having a technical debate about who pays this tax. First, I'd just like to remind the House it was the Conservative Party that negotiated those disastrous New Zealand and Australian trade deals, which decimated farming. And my North Cornwall constituency.

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I thank my hon. Friend, would you like to intervene? Would you like to intervene?

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Would you like to intervene? I have no desire to intervene on intervene?

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intervene? My apologies, Deputy Madam Speaker. OK, so the government rushed out their original proposal with little understanding of the with little understanding of the real world impact it would have on the sector. The 14 months of both personal anxiety and business uncertainty will have lasting impacts on many, and has hugely eroded trust in this government. And it shouldn't have taken 14 months of anxiety, anger and protesting to make the government see sense. The farming community immediately warned what a detrimental impact this would have on rural communities, and the government should listen to them earlier.

This tax has represented an existential threat to the farming community, threatening to break the chain of family ownership which holds together our countryside through the generations. And it is on top of the wider challenges of the economic environment, which farmers are now operating in. On the surface of things, these farming assets are worth a lot, but the reality is that most family farms are operating on incredibly thin margins or a loss, making sharp rises in input costs. Fuel, feed, fertiliser, labour shortages, National Insurance contribution increases and unfairnesses in the supply chain means that nationally, the average profit on capital invested in farm businesses is less than 1%.

And it's not just the family farm tax, which the government has beaten up our farmers with. It's also the sudden and unheralded removal of SFE payments last March and almost a year later, there is still no news on a replacement scheme. Please can the government move faster to provide a new plan? Farmers urgently need this information as it drives key decisions and the

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seasons don't wait. Certainly I thank my colleague

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Certainly I thank my colleague for giving way. The farmers of the South Cotswolds warmly welcome this increase in the threshold. Better increase in the threshold. Better late than never. But would my hon. Friend agree that this government needs to move beyond not punishing needs to move beyond not punishing our farmers and be actively supporting our farmers in being not

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only the stewards of our countryside, but also protecting our future food security. Yes. Doctor Charlie Maynard.

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I thank my hon. Friend, I very much agree. We as a DESNZ, have welcomed the U-turn by the welcomed the U-turn by the government in December, raising the allowance to 2.5 million, and we welcome the change announced in the Budget, permitting the allowance to Budget, permitting the allowance to be transferable between spouses and civil partners. But at my right hon. civil partners. But at my right hon. As my right hon. Friend, the chair of the Select Committee put it, these changes make the policy better, but there is not the same as saying they make it good.

So we ask the government to think again in the following areas. The Treasury estimates that it will now raise £300 million by 2930, down from £520 million. If the same pro-rata reduction is applied, then less than 100 million will be raised in 2627 minuscule against the estimated total tax receipts this year of 1.23 trillion. Professional bodies such as the ICA, ICW, have expressed concern at how administratively burdensome it will be to value assets and calculate potential liabilities, even if there was no tax to pay.

So how does the revenue forecast to be raised compare to the cost of administering this new policy? When the government originally announced the planned changes to April last year, the Chartered Institute of Taxation also suggested introducing transitional gifting rules to support older farmers who have done the logical thing of hanging on to their land, but who are now faced with penalties for doing so. Can Ministers please look at ways of alleviating some of this burden for older farmers who have not been able to plan ahead for this change? So we will be voting against clause 62 because we as a party have consistently voted against the family farm tax, and we want it

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scrapped in its entirety. I certainly. Thank you. For giving way. He mentioned that 100 million or 300 million is that 100 million or 300 million is minuscule amounts. Well, it's quite a lot of money to my constituents who are hard pressed. So could the Liberal Democrats outline how they Liberal Democrats outline how they would pay for the policy that they advocate either increasing taxes on working people in my constituency

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working people in my constituency or cutting the services that they face? Charlie Maynard. That's a very good question. But 1.23 trillion good question. But 1.23 trillion against 100 million is is at what point one of a percent? So in materiality, it's important to think of it in that range. And I don't think this is the way of going about it. So I ask the government to consider voting in favour of amendment three, which would remove the transition period in respect to the changes in APR and BPR and delay the implementation date.

So the changes would take effect for transfers made after the 1st March 2027, and similarly so regarding our new clause seven, which would require the Secretary of State to undertake and publish an assessment of uprating annually the relief allowance for APR by the change in the value of agricultural land. Looking at the changes both to APR and BPR. While awareness of the April changes is very high among the farming community, I'm concerned that awareness may not be as high as the changes to BPR among business owners in many sectors.

Does the government have any plans to raise awareness so people know Smith.
21:05
David Smith Portrait David Smith MP (North Northumberland, Labour)
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Thank you, Madam Chair. and schedule 12, which refer as we've been hearing to APR and BPR. I've spoken on this subject several times and did so back in November. And that's because my constituency in North Northumberland has over 700 farm holdings, each of them growing the food that we eat, ensuring our land. As one farmer said to me recently, we've farmed this land since the mid 1800s, each generation investing in long term decisions which have benefited not just the farm but the local area.

And I believe it is messages like that and the ability of farmers in North Northumberland to get this message across was pivotal to bringing about these government amendments, and the amendments are going to establish a 100% relief, up to £5 million for a couple transferable between spouses and a 50% relief thereafter. This will protect most family farms, with 85% of estates seeing no additional burden from April. So I, Madam Chair, I am indebted to the farmers of North Northumberland both for the way that they have engaged on the issue of inheritance tax and frankly, for the hard work that they do day in and day out in order

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tables. The hon. Member. Give way. I will give way.

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I will give way. I thank the hon. Member for giving way, and I have enjoyed working with him on the local rural research group. And I wonder if he research group. And I wonder if he agrees with me that having, as in being so grateful to our farmers for engaging with an education as for engaging with an education as we've gone along, that actually we have now this fantastic opportunity to rebuild trust with our farmers, to rebuild trust with our farmers, who I have had many emails of.

Thanks, and I thank the Prime Minister and Treasury for this amendment to the policy. But does he? I wonder how many of his farmers have also said that despite the fact they usually and often

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have voted conservative, they always do better under a Labour government? Yeah. I, I thank my.

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I, I thank my. hon. Friend for that intervention. And I, as I will go on to say, I can confirm that I on to say, I can confirm that I have had many messages of support for this change in policy and it's been a pleasure to work with the

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Labour Rural Research Group and colleagues on this matter, As my hon. Friend mentioned. And

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As my hon. Friend mentioned. And so as I thank farmers, I also want to share my thanks with the government for listening, for learning and for acting. I think it is the hallmark of a mature government and of a healthy parliamentary debate, that we have got to the point that we are at. But there are, as my friend began to mention, there are multitude of structural factors that do contribute to the sustainability of intergenerational farming. Indeed, there are many similarities between Britain's blue collar workers in the factories and what we might call green collar workers in the fields.

Both are squeezed by commercial interests and a globalised race to the bottom on pricing costs and wages, which is why the laissez faire approach to farming economics, such as the imbalanced trade deals of the party opposite work against the sustainability of farming. We have got to plough a new furrow that will make farming genuinely sustainable in an intergenerational way. Protecting farming will require government to form a new covenant with farming and green collar workers. More generally, the implementation of the Battersea review will be very important here, particularly the Farming and Food Partnership Board, so that the whole supply chain can be examined and improved.

And it's high time that the supermarkets in particular, give a fair price to the produce of our farmers. And unlike the spokesperson for the Liberal Democrats, actually, last week, the Secretary of State did announce the plan for the SFE application process later this year. And particularly, I welcome the aspect that there is going to be a ring fence support to smaller farms within that with as I draw my remarks to conclusion. Madam chair, with respect to APR and BPR in particular, I would just mention even after the changes, there are some larger farms that will be impacted.

So for those just above the threshold, I would encourage my hon. Friend to consider the addressing the potential challenges of capacity and timing when it comes to accurate estate valuation and probate. Accurate valuations and speedy probate must dovetail with expectations of inheritance tax payments so that estates that need to pay have clarity and are not penalised for blockages within the wider system. I know that the government is totally committed to the success of farming. That is vital because the country needs a

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farming sector that is flourishing. I will give way. I am grateful as my constituency neighbour representing a similarly rural constituency, I know how strongly farmers on my side of the border feel and I know they feel similarly in his constituency and the word betrayal comes up time and time again amongst my farmers time again amongst my farmers because this Labour Party said that they were not going to introduce this tax and then they did. But does he now regret not following in the lead of the hon.

Member for Penrith and Solway, who did the right thing and rebelled against

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this policy, something he failed to do? Well, I thank the hon. Gentleman

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Well, I thank the hon. Gentleman for my constituency neighbour for that intervention. Let me, rather than go down the route of his than go down the route of his question, let me put the words, let me put let me respond with the words from one of my farmers and I words from one of my farmers and I will just read you this quote. This is a farmer on the 23rd of December wrote to me, and she said this. As wrote to me, and she said this.

As you know, we have been very vocal in opposing the earlier proposals. So it is equally important to state how strongly we welcome this change in policy, increasing the threshold, together with the ability to retrospectively transfer unused APR BPR allowances from my late mother to my father will make a huge difference to our family and to the viability of our farm business. And I will leave my speech there.
21:11
Robbie Moore Portrait Robbie Moore MP (Keighley and Ilkley, Conservative)
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Robbie Moore. schedule 12 and the amendments that have been put down in relation to both these clauses from the front bench on this side of the House, we've heard from contributions throughout the course of the finance bill debate about the changes to inheritance tax. And of course, this is predominantly in relation to both Agricultural Property Relief but also Business Property Relief. And I want to make the point that my comments not only refer to the many family farming businesses that have been impacted by the government's changes, but also the many other family businesses, whether they are hospitality businesses, hoteliers, manufacturing businesses in my constituency of Keighley that are all impacted by the same direction that this Labour government is putting on them, because what the changes that the government have put on the floor of the House this evening, do not get rid of the cliff edge that is associated with the April date kicking in in a few months time.

Therefore, regardless of thresholds changing from £1 million to 2.5 million, do not remove that cliff edge. If a family business is caught up with an IHT liability kicking in. And I'd like to get further explanation from the Minister as to why they are not addressing the cliff edge, that stark cliff edge that has been reiterated to this government over the last 14 months by all members on the conservative benches and members on the all members on the opposition benches, and why in the last 14 months, this government has not addressed the sharp cliff edge.

Secondly, Madam Chairman, I would like to just discuss the absolute bizarre and bonkers scenario that we now find ourselves in where if you have two estates that are valued at a £5 million valuation, that they could be subject to different tax liabilities depending on the ownership structure. How bizarre is it that we now find ourselves in a scenario where a estate being owned by a single person could be subject to an H liability at 20% over and above 2.5 million.

But in a scenario of farm valued at 5 million is subject to no IHT liability at all. I would like further explanation from the Minister specifically on that point. And of course, values vary dramatically across the country. We know in Northern Ireland where they have a very high valuation of most farmland assets, that you could have a farm of a particular size, say 200 acres in one part of the country that is valued significantly, highly, but elsewhere in the country slightly less, but still being over the 2.5 million or £5 million threshold, depending on the ownership structure and therefore being subject to a different tax liability that is going into the Treasury.

And let's not forget that if you're an arable farm, feed wheat. Prices have not changed dramatically over the last 20 years. They're still average about the same. Of course, input prices are going up. No thanks to this government in terms of raising employers, national insurance and the fertiliser tax, etc. coming in. But the reality of it is that productivity in return rate is about a percent, if at all, breaking even for a farming business. So if you've got a asset base that is valued significantly higher, you are going to be subject to a higher tax liability, but you're then going to have to be selling off more assets to pay the same.

Despite your level of return being a percent, if at all, a percent. And that is different to a farm if they're valued at a much lower valuation rate. And therefore, I'd like to get the Minister to explain what level of detail has the government gone in to explore those challenges that are facing many of our farming businesses? And that brings me on to my next point, which is the shadow Minister, quite rightly and eloquently said from the Dispatch Box the issues of practicality, because the reality of it is there will be disputes that are made throughout the process to do with how a farm or a asset base is valued, quite rightly.

Why wouldn't there be? But what capacity is there within the Valuation Office? What capacity is there within our district valuers to be able to deal with the uncertainty of valuations that will be coming through on deaf, so that a timely tax liability can be paid within the time frame, the tight time frame that this government has set out. And that also then brings me on to the point to do with the fact of this being going on for the last 14 months, and I do want to pick up on the point that the many Labour MPs have turned up today.

But there was only one Labour MP that had the backbone to stand up on behalf of his constituents against the Chancellor, has been has had the whip removed from him, and I give that the Member for Penrith and and the borders absolute credit for standing up on behalf of his constituents. I find it absolutely galling, the fact that Labour MPs are now turning up and reiterating that they gave this narrative to the Chancellor and the Prime Minister throughout. Where on earth were these Labour MPs in the last 14 years? And then it brings me on to the point that I just want to indicate around Business Property Relief, because, yes, quite rightly, the attention has been put on our farming community and the impact that this Labour government is having on the wider supply chain of associated with our rural economy.

But the reality of it is, madam Deputy Speaker, in Keighley and Ilkley, we have many manufacturing businesses, many hoteliers, a brewery which many of you will be familiar with because they serve an excellent pipe, but pint, but because they are family businesses, they are also being impacted by the BPR changes. And it is really frustrating that I don't think I've actually heard one Labour MP bring the narrative to the Government benches or the Chancellor over the last 14 months about the implications on many of those other family businesses beyond the farming world that are being impacted by the BPR liability.

So in summing up, I would specifically like to get the Chancellor to explain why we've ended up in this bizarre scenario where you can have two valuations on death at £5 million, where there will be, in one scenario, no liability in another, potential dramatic IHT liability. He did not answer the point around indexation on when I intervened with him at the despatch box. Because he is fixed or the government has fixed the threshold at 2.5 million for a long period of time.

Valuations will change in that period of time, therefore exposing a business to potentially having to dispose of more assets to cover an IHT liability. And why on earth is it fair when you have a business, a family business in my constituency that have already been told that their BPR liability will be over £800,000, they employ 250 people in Keighley. And the advice, the professional advice that they've been given to mitigate that tax liability will either to be disposed of assets or to dispose of shares within their business.

Either way, they are losing productivity of a business in their constituency, exposing potentially a number of jobs. They employ 250 people in Keighley, or having to give away the ownership of their family business that they've had for four generations. Madam Deputy Speaker, this is bad policy by this government. They may have raised the threshold on this, but it's quite clear to me, and those many stakeholders that I've spoken to is they have not done their homework in looking at the practicalities of the implementation.

And that is why from these benches, we will continue to take the narrative that this family farm tax and family business tax must be axed in its entirety.
21:19
Maya Ellis Portrait Maya Ellis MP (Ribble Valley, Labour)
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Ellis. Thank you, Madam.

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following. What was possibly the received. With no shame. To my parents or husband. But

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To my parents or husband. But when I got the call from Treasury on December 23rd, it was more than we'd ever hoped for in terms of raising the threshold on raising the threshold on Agricultural Property Relief and Business Property Relief. So I'm grateful to the Chancellor and the Prime Minister and colleagues for navigating the genuinely.

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navigating the genuinely. Tricky balance between ensuring the farming industry is not used to avoid tax, while still ensuring our family farms are protected and encouraged to thrive, and to protect our food security and increasingly turbulent times internationally. And can I also put on record a huge thanks to my colleagues in Labour Rural Research Group, which I'm delighted to have become treasurer of today, as we regrouped our next plans in pushing for this change, they have shown me the collegiate, constructive politics I was, I always hoped, as possible for this country.

Under the leadership of the impressive

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member for Suffolk Coastal. Yeah, yeah. One of the things I was most excited for in standing as a Labour excited for in standing as a Labour MP Madam Chair in a rural area, was learning more about the land and the farming industry that had been all around me growing up. It was challenging to have to start those conversations among such heated debate for sure. But I got into politics because I like a robust politics because I like a robust discussion. And you know what? It allowed us to quickly move past the niceties and talk frankly from the niceties and talk frankly from the beginning about what really mattered to farmers and farming communities and to family businesses.

And let me tell you, it has been a joy to hear the passion, the history, the deep pride in this country, its traditions and what our land and close knit communities provide for us. From the voices of families who are motivated to keep it going in a way that money alone could never inspire. We've had a lot of discussion in recent years in this country about what it means to be British. A more in common poll found last year that, of all the things British people are proud of, the countryside came in second, with only the NHS ahead of it.

And there's a lot of decisions to be made about the role of agriculture in British society. I'm grateful to Minette Batters for producing in her prime Farming Profitability review, a brave and system wide approach to the future of farming in this country, and I hope the government are bold enough to take on all of her recommendations. We also have trade deals that negotiate, which must uphold the same standards that we rightly hold our farmers to and indeed they want to uphold without being undercut from abroad.

We've also had lots of discussions about things like 15 minute cities and sustainable economies. Well, most rural towns and villages are 15 minute cities. Everything in one place, everyone helping each other out. I know globalisation, flavours, flavours, agglomeration and the urban. But let's not forget who did. Circular economies first are rural towns and villages and let's learn from them now as we, as much as we ask them to learn from the things we do in this place. So when we talk about what it means to be British in light of this finance bill, which sets the tone for what we want British growth to be in the next decade, let's make sure we protect what makes us want to be British.

I don't want to be prosperous in this country, at this, in this country at any cost. I want to be prosperous in a truly British way. of who we are. And so I thank the government for their continued work on both adapting this bill with amendment 24 and looking more widely at how we improve and sustain support for farming in the long term. I have 829 farms in my Ribble Valley constituency, mainly dairy and cattle, with a wide range of innovation and diversification to one farm I visited has a value of around £3 million and told me of how they'd slowly seen farm after farm, close in their part of their in their part of the constituency in the past 20 years.

These new changes mean they have confidence now that the farm can be passed on to a fifth generation. And they are also confident to invest in a new calf calf housing supported by other government funded funding. And I question how many farmers, those on the benches opposite, have actually spoken to in recent weeks, because most of my farmers are happy with these changes and want me to now focus on other critical issues because we that particular farm is in a 9.5 pence drop per litre in what they were paid for milk since last October.

So while I welcome the tax policy in this bill, huge amount of work to do to ensure farms are sustainable and that our food security is robust. I hope the government will work with us to put increasing pressure on supermarket shareholders to play their part, as companies who thrive from British custom, by working much harder to protect the lifeblood of our

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economy as farmers are, as well as their pockets. Yes. Thank my hon. Friend.

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Thank my hon. Friend. For giving way. It has been an absolute pleasure working with the Labour Rural Research Group and to Labour Rural Research Group and to see the difference that it actually makes when you have serious conversations behind the scenes, conversations behind the scenes, talking to Treasury, talking to Ministers. And I met with over 100 Ministers. And I met with over 100 of my farmers in the last 12 months who were all incredibly concerned about the changes we were making, and we had serious conversations about what we needed to do, listening to their problems.

And while they're all incredibly pleased with the changes, would she agree that for decades our farmers and farming communities have struggled? They might have farmers worth lots and lots of money, lots and lots of money. But to be profitable is more important? And would she agree that there the changes we need to be making?

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Yeah, I completely agree. And that's why it's disappointing that details are being sort of looked at details are being sort of looked at on the other side, when actually all our farmers that I'm speaking to are desperately wanting us to to are desperately wanting us to focus on the next stages of how we support those farmers now because we've done the thing we need to do to protect the smallest one. I will

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to protect the smallest one. I will give way. hon. Member, for giving way. And she's speaking about the law Labour she's speaking about the law Labour rural group. Will they all stand with us about rejecting Ukrainian eggs coming into the UK that are

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undercutting British farmers, and see that we can end this as well? In an. Important point that he raises.

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Important point that he raises. And I know that we've been speaking about that with Ministers. So I think it's an important conversation that we absolutely conversation that we absolutely have to have. Yes. Another of my farms belongs to a constituent who was one of the first to reach out was one of the first to reach out to me and meet me in London and spoken about his farm in previous debates. His farm is a partnership between husband, wife and mother, between husband, wife and mother, and he would have faced a liability of £130,000 when their mother passed away in coming years under the original plans.

But thanks to Government Amendment 24, this liability is now completely removed and allows them to focus on profitability going forward. I also have a significant number of family owned businesses in my constituency, including Massey Feeds, who happen to also supply the agricultural sector. They made a really strong point to me when I met with them last year, that if they'd had to downscale to afford the original proposed changes to BPR, their main option would be to sell one of their three sites to a foreign owned competitor.

Now, while of course we welcome foreign investment in this country, it does nothing for our sovereignty or growth or an innovation to have the proceeds of the hard work of British built companies end up as profits in other countries. So I was delighted to hear from owner Massey after the announcement in December, who thanked this government for listening and for adopting the thresholds of BPR. He told me that this recent change now means that they have the confidence to continue invest, including a 2 million investment to grow capacity of their site in my constituency.

And finally, Gays Gill Farm in my constituency has been in the same farm for 500 years and has an estimated value of just over 4 million, employing 39 full time equivalents through its organic farm. Its award winning restaurant, which I recommend to everyone visiting Lancashire to try out, is the best farm to fork experience in the country and its growing farm shop. Emma and Ian, who run Gaitskill, are the perfect example of ambitious and innovative company owners working hard to regenerate and bring new employment and tourism to parts of Lancashire that will really benefit from new investment.

These new changes to APR allow them to push ahead with that investment, including building a new farm shop later this year. If we are serious about supporting small businesses across our regions, and if we are serious about local sustainable economies, and if we are serious about improving the health of this country, then farms like Gaitskill are exactly the type of companies we should be supporting to grow. And so I wholly support Government Amendment 24 to ensure significant protection and support for business owners like Emma and Ian and all the incredible farms in Ribble Valley constituency who I'm so, so proud to represent here.
21:27
Carla Lockhart Portrait Carla Lockhart MP (Upper Bann, Democratic Unionist Party)
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Black Rod chair, I rise to speak to the changes to Agricultural Property Relief and Business Property Relief contained in clause 62 and schedule 12. I do so having stood shoulder to shoulder with farmers from my constituency of Upper Bann, from farmers across Northern Ireland, and indeed this entire United Kingdom, people who have lobbied, protested and spoken with one voice in defence of their livelihoods and their family farms. Since this tax grab was announced, it has been my greatest honour to come alongside them and to fight this battle with them.

And it is because of their persistence that we have seen any movement at all from this government. While I acknowledge that the increase in the inheritance tax threshold to 2.5 million represents a concession, it is a hard won one. It was not offered freely. It was forced by strength and unity on the farming community and the courage of the minority. On the backbenches of the Labour Party. Even so, it remains wholly insufficient and fails to address the fundamental unfairness that remains embedded in this bill.

Ultimately, we want to see this policy scrapped in its totality on these benches. Indeed, right across the Ulster benches. That is why I support amendment three and the amendments 4 to 23, which would delay the commencement of these changes to the 1st of March, 2027. Farming families planned succession responsibly and in good faith under the rules, as they stood to change those rules. Midstream is unjust, destabilising and undermines

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confidence across the entire sector. I will. Can I commend my hon. Friend and

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Can I commend my hon. Friend and colleague for all that she has done in the campaign to a very much to the fore, but also commend the the fore, but also commend the Ulster Farmers Union and the stance that they have taken, they have never given in. They stood their ground the whole way through, as ground the whole way through, as indeed has the NFU across Scotland and Wales. Does the hon. Lady agree and Wales. Does the hon. Lady agree with me that or does she have farmers from her constituency, as I have from my constituency of Strangford, there's 25% of farmers who own farms and who will not benefit from the changes.

And those are some of my neighbours who have been farming for generations. And does she have agree that when it comes to the legislation coming forward, that the Minister is duty bound to do what my hon. Friend has asked for, to have that meeting with the Farmers Union to discuss

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these very matters? I thank my hon. Friend for his

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I thank my hon. Friend for his intervention and indeed 25% still will be had. Some of us world class will be had. Some of us world class produce in Northern Ireland, and particularly within the dairy sector, will be hit hardest in sector, will be hit hardest in Northern Ireland because of our land values. And I will go on to speak of that. Madam chair, I also speak of that. Madam chair, I also want to address new clause seven, which seeks to address a glaring omission in the government's approach the failure to index, link or update the APR allowance or uprate the APR allowance.

Agricultural land values have risen sharply over many years. In my own constituency of Upper Bann in recent months. Land was sold for £32,000 per acre. Now that demonstrates the value of land in Northern Ireland and the impact that this will have on our farms in Northern Ireland, and those land values are not through the effort of the farmer. While farm incomes have not kept pace, a static threshold in a rising land market guarantees that more and more family farms will be dragged into the inheritance tax net year after year.

Index linking is not radical. It is common sense, something that appears to be lacking with this government. In the same spirit, I also want to highlight amendment 43. This amendment would retain 100% Business Property Relief, where a property has been owned for at least ten years as part of a genuine, actively operated family business. It recognises long term stewardship and intergenerational responsibility, and it draws a clear distinction between established family enterprises and short term or speculative ownership. If the government's stated aim is to target avoidance rather than punish genuine businesses, this amendment deserves serious consideration.

There is also profound unfairness at the heart of this policy that the government has yet to explain or justify. A single farmer receives a 2.5 million threshold, while a married couple can pass on 5 million free of inheritance tax to identical forms

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of identical value, can face vastly different tax outcomes purely on the basis of ownership structure. At that.

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At that. Point, I will give way. And I think that's an important point. I thank the Minister. Have to clarify, because the to clarify, because the government's advice online actually says it's not simply a married couple or a civil partnership. Government's online advice says two people, such as siblings who jointly own a farm, will be able to pass on a farm of up to 5.65 million tax free. So there's also

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clarity, I think, that the government has to provide. Clarity is needed and I trust we

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Clarity is needed and I trust we will get that clarity even in today's debate. So a single owned 5 today's debate. So a single owned 5 million farm could face a tax bill of around 500,000, while a farm of the same value owned jointly would face none at all. That is not fair. face none at all. That is not fair. It is arbitrary and discriminatory and Madam Chair farmers are asset rich but cash poor. Many family farms exceed 2.5 million in value, not because they are wealthy enterprises, but because land values have risen dramatically while margins remain tight and incomes volatile in Northern Ireland, as my hon.

Friend has outlined, an estimated 25% of farms fall above that threshold. These farms are the backbone of our economy. The move from 100% relief to 50% relief above the cap is not a minor adjustment. It is a fundamental weakening of Agricultural Property Relief. It risks forcing families to sell land, reduce the scale of their business, or take on unsustainable debt not because their farms have failed, but because their tax system has failed them. And I want to just move quickly to new clause one.

And whilst I acknowledge new clause one, which would require the Chancellor to publish a Northern Ireland specific impact assessment, indeed it shouldn't need an amendment. It should be done as a matter of course. But this sudden interest in farming by the Alliance Party is not lost on the folks at home, because farmers at home are not only battling the Labour government's farming policies, but they also have a Minister and Alliance farming Minister who is tone deaf to the needs of farmers, a Minister who is supporting climate change, extremism that is further regulating the industry, that is blaming them for the algae bloom, unlocking whilst ignoring the 200 million tonnes of waste from Northern Ireland water farmers in Northern Ireland are getting it from all corners and I, for one, make no apology for standing up tonight against this tax grab, but also against the policies in Northern Ireland that are damaging our farms.

Madam chair, there's also a clear principle at stake. People are taxed throughout their lives on their income, on their profits and on what they produce to them. Tax those same assets again. Simply because someone has died is a double whammy. It is double taxation in all but name, and it penalises families at the very moment of loss. That is a principle I cannot support. It is immoral. Death tax is immoral. Madam chair, this policy will drive despair, not prosperity, into farming communities.

If it is allowed to stand, the government still has the opportunity to do the right thing. Politics is about doing the right thing, and the Minister knows what the right and honourable thing to do is to consign this policy to the farmyard manure heap. It chooses not to. It must accept for the lasting, the lasting damage that this policy will inflict on family farms, rural communities, and our national security. It's on this government's shoulders. The outcomes of this.
21:36
Lizzi Collinge Portrait Lizzi Collinge MP (Morecambe and Lunesdale, Labour)
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Spelthorne Lynch. large semi-rural constituency, I'm glad to have the opportunity to speak about the changes to agricultural and business property relief and why they matter for farming families and for fairness in our tax system. I welcome these changes which recognise the reality of the asset rich but cash poor nature of farming, where land might be worth a lot of money by most people's standards. But that value isn't able to be realised in cash terms unless it is sold, particularly for non-farming use.

The aim of this inheritance tax policy is simple fairness for hard working family farms, but no open ended tax breaks for the wealthiest. The government is reforming outdated tax relief rules to ensure that the very largest estates make a fair contribution. Under these changes, small and medium sized agricultural estates will remain unaffected by inheritance tax, with full relief still applying up to £2.5 million for an individual, and this rises to £5 million for a married couple who will be able to transfer their allowances to each other, as is the case for personal inheritance tax.

And I'm slightly surprised that the conservative benches are only just discovering this concept, given that it's been standard for many, many years. What will change is the ability of the ultra wealthy and the very largest estates to use agricultural land as a tax planning tool, driving up land prices and shutting out genuine farmers whilst making little or no contribution in return. The farmers I spent time with over many meetings in village halls, at farmhouses and at the Westmoreland County show, which I highly recommend, were clear that they understood the need to prevent the ultra wealthy avoiding tax, but were concerned, rightly.

The original proposed threshold of £1 million would inadvertently catch what are actually ordinary family farms. Local farmers and solicitors were extremely generous in sharing their financial information with me, which was sent directly to the Treasury. It showed the reality of finances of farming. I must make special mention here. Madam chair of a local Labour Party member, Corinna Kern, who organised for that information to be gathered and who helped me to reach out to farmers and related businesses, particularly in the Lune Valley.

Now the NFU and others have already recognised that these changes materially improve the position for farming families. These changes have taken on board concerns raised by rural Labour MPs. But with these reforms targeted at the biggest estates, the government expects to raise about £300 billion a year by the end of the decade. That's money that we can put into local GP services, rural bus services, into village schools that give our children the best start in life. So yes, some of the largest estates will pay more after these changes.



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I'll happily give way. Member for giving way and I think I've listened and I think she may have mentioned maybe 2 or 3 times that ultra wealthy are going to be able to be exposed to this to be able to be exposed to this IHT liability, but I think the hon. Member may be mistaking the fact Member may be mistaking the fact that just because you have a huge asset base that may be worth a lot of money doesn't mean to say that of money doesn't mean to say that you've got a good level of income coming in and you could have a cash flow that is not generating any revenue to keep that business going.

Is she classifying those businesses and farming families in her constituency that may have an asset base over £1 million as being

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wealthy, wealthy people? I've heard the hon. Gentleman for his intervention. I suspect he for his intervention. I suspect he missed my third paragraph, which talked about the asset rich, cash poor nature of farming, where land poor nature of farming, where land might be worth a lot of money by most people's standards, but that value isn't able to be realised in cash terms unless this is solved for especially non-farming uses. And as he knows, I'm talking about the threshold, which is now being the threshold, which is now being set at £2.5 million for individuals and £5 million for couples, not the £1 million threshold which myself and many of my other colleagues tried to change and have succeeded in changing.

I make no apology for supporting a progressive policy that closes tax loopholes for the wealthy. And I am talking about people like James Dyson, who very proudly talked about buying up agricultural land to avoid tax. How can anyone defend multi-million pound estates paying zero inheritance tax? When we are digging ourselves out of the fiscal and social hole made by 14 years of conservative government, I will not. Our farmers have been battered by Brexit, with farmers incomes and standards of living falling drastically.

Since 2016, crop yields have been impacted by flooding. Trade deals from the conservatives sold them down the river. 14 years of conservative government was just as bad for my farmers as it was for the rest of us, and I'm afraid I'm not particularly inclined to take criticism from the benches opposite. The Liberal Democrats and the conservatives are going against taxing the largest estates. They are saying that estates that are worth over £2.5 million, over £5 million people. I have listened to the debate very closely, and I'm very confident in my quoting of the opposition benches.

Thank you. I thank the hon. Gentleman for his chuntering from a seated position. Madam chair, I grew up. I'm going to conclude here. I grew up in a tiny village in Cumbria with surrounding farms. It numbered about 300 people. We had no shop. We had one bus a week into Carlisle. We did have two pubs. We knew how to have a good time, but I'm now going to take any lectures from the opposite benches about what country life is really around.

I certainly won't take any lectures from the wealthy reform MPs who I see are not in their place today, and have taken no part in this debate. I won't take any lectures from wealthy reform MPs who seem to enjoy cosplaying as country folk in a display of what I think is really patronising political opportunism. Madam chair, we need to ensure fairness in our inheritance tax system, and that is why I am urging all members to support clause 62 and schedule 12.

Yes.
21:42
Sarah Dyke Portrait Sarah Dyke MP (Glastonbury and Somerton, Liberal Democrat)
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I. Madam Chair, clause 62 of this Bill shows this Labour government simply doesn't understand farming communities, preserving with the ill thought through family farm tax that treats businesses business assets as personal wealth. Even with the recent concession, will continue to harm investment in food security and rural growth. Rather, at the very least, it should be paused entirely until an independent impact assessment has been published, which identifies the true extent of the changes to farming livelihoods. I therefore support amendments 42, 43, 44, 45, 46 and 47.

These combined would ensure that the full inheritance tax relief remains in place for family farms. Madam chair, it is time that the family farming sector moves away from survival mode to becoming a thriving industry once more, but against huge cost pressures, farmers are being asked to do more with less. Farmers face input costs 30% higher this year than in 2020, while the £2.4 billion farming Budget has barely changed since 2007, this alone has presented difficult business conditions.

But in addition, during 2025, farmers were forced into making plans towards a gloomy future. Surrounded by all the family farm. Tax uncertainties. As a result, many have delayed making any investment in their businesses at all. Farmers, like those in Glastonbury and Somerton, are the catalysts of growth in rural areas, but they now need confidence to make the investments they have put off. After 14 months of angst and frustration, of course I would. I thank my hon. Friend for giving way, and I also thank her for her determined and dedicated advocacy on behalf of the farming community, especially around mental health.

While I and my farmers do welcome this U-turn, I do wonder how much damage has been done not just to the farming sector directly, but also the many, also to the many businesses that surround the farming sector, the suppliers of equipment and grain and so on. I wonder how much damage has been done to the economy of our country. I wonder how many irrevocable decisions have been made And does my hon. Friend agree with me that the government must get it right this time around? I thank my hon.

Friend for intervention. Indeed. Absolutely. There is no doubt that the agricultural supply chain has been affected by these torrid 14 months of uncertainties faced by the family farm tax. The Prime Minister and the Chancellor speak consistently of growth, but their damaging policies have crippled family farms. 49% of farm businesses paused or cancelled investment, 10% downsize the scale of their operations, and 21% intend to do so before April this year. Madam chair, our farmers pride themselves in being resilient and just getting on with the job.

But the long awaited and delayed publication of the Farming Profitability Review summed up the impact of the family farm tax well by stating the sector was bewildered and frightened due to the government's last minute concession. I am pleased that some farmers, such as David, who farms in Compton Dundon in Glastonbury and Somerton, are now fully exempt. But this comes after over a year of sleepless nights and we know that David is not alone. So it begs the question then, that if the reforms are only expected to raise around £500 million a year, why has this government been so willing to impose the level of disruption and uncertainty on family farms for a relatively small return to the Exchequer? Madam chair, the government's whole attitude towards family farming communities has been hugely disappointing, to say the least.

At the end of last week, after months of silence, we finally heard details for SFE 26. But despite this announcement, England is still on course to be an outlier in Europe because English farmers will not receive any direct support to fulfil their primary mission and motivation to produce food. So after being taken, taken for granted and ignored by the conservatives for so long, it is no wonder that half of British farmers have little confidence in this government's vision for farming, and many do not believe this government takes food security seriously at all.

Madam chair, I want to be clear that while the Liberal Democrats broadly welcome this concession and raising the thresholds will go some way to mitigating the devastating impacts on the industry, it doesn't negate the year of stress and anxiety that farmers have endured, and there are many that will still be hit by this tax. Many farmers in Glastonbury and Somerton and across the constituency run their businesses in multi-generational partnerships or in extended family partnerships. It is totally outdated that this government believes that farm businesses are managed by married couples.

So many businesses will not benefit from the combined spousal allowance of up to £5 million, and it seems grossly unfair that of two farms valued the same, one would pass free of IHT, while the other would be landed with a huge tax burden. In addition, while the anti forestalling rules remain in place, these deny over those over 65 or anyone who dies within seven years of making a transfer. The ability to manage their tax affairs in a sensible way.

It also puts a massive burden on those who are over 75. The Liberal Democrats are clear that this is an unfair measure, and it is why we have proposed new clause 75 that would ensure that a review of these provisions takes place. Madam chair, whilst the environment sector has declared there will be no more changes to the family farm tax, I hope the government have recognised the scale of damage they have done to British agriculture. British farmers produce a public good.

They are the lynchpins of our country's food security and so our national security in an ever more volatile world, this is more important than ever. This government must not let British farmers down again. Thank you. Chair.
21:50
Markus Campbell-Savours Portrait Markus Campbell-Savours MP (Penrith and Solway, Independent)
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Marcus. Campbell-savours. >> Marcus. Campbell-savours. >> Thank you. >> Chair. I rise to speak in favour

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Chair. I rise to speak in favour of government amendment 24 and the other associated amendments that increase the 100% relief allowance increase the 100% relief allowance for agricultural property relief from 1 million to 2.5 million, I believe. In December, I closed my last speech on this issue with a plea for the government to listen to my more reasonable rural colleagues to change course, and that it was not too late. Chair, it was a plea that for many of my constituents, it was a prayer.

And much to the relief of many farmers, it was a prayer answered on the 23rd of December. Now, I feel it would be churlish of me not to thank the government for seeing sense. Also not to thank the members across the House who raised this issue consistently over the last year. While this amendment falls short of the full U-turn, I would have preferred today I will be voting with the many Labour rural MPs who lobbied Ministers for many months to see this change.

They may not have joined me in the no lobby to vote on resolution 50, but I have no doubt that we would not have seen a change. Of course, without what I believe the government has called their constructive engagement. I know what many of them did, and I hope in time their constituents and their farmers know what they did to. I regret being placed in a position where I voted against the government not to do so. Would have broken a promise, but I believe the government had more than ample time to reconsider this policy, to see colleagues whipped to vote for the measure.

Days before the government proposed amendments that some colleagues had called for over a year ago caused unnecessary pain on this. I hope lessons are learned. And now, whip or no whip, I look forward to supporting this government in its important task of helping all working people thrive.
21:52
Seamus Logan Portrait Seamus Logan MP (Aberdeenshire North and Moray East, Scottish National Party)
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Yes. >> Madam Chair. I rise to address clause 62 on schedule 12. Madam clause 62 on schedule 12. Madam Chair. I, for one, cannot believe the self-congratulatory tone of so many contributions from across this chamber. The Shadow Minister pointed out that hon. Members opposite had five opportunities to change these rules, and only one member, the Member for Penrith and Solway, chose to do so. But the initial change to April in 2024 was described by the NFU Scotland as devastating to the vast majority of farms and crofts.

The concerns raised by farmers across Scotland has a significant number in my constituency were ignored, ignored by Labour government, who appeared to be completely blind to the fundamentals of rural life and rural communities. That, when defending the decision in response to the Select Committee's first report on the government's vision for farming, published in May last year, this is what the UK government said. Ministers from multiple government departments have had several meetings with agricultural organisations on this matter since the autumn Budget in 2024, including National Farmers Union, the Tenant Farmers Association, the Country Land and Business Association.

The Central Association of Agricultural Valuers. The Ulster Farmers Union, NFU Kymry, NFU Scotland and the Farmers Union of Wales. And here's the kicker after listening, the government believes the approach and timescales set out for these reforms is an appropriate one. And the 2025 Budget. Just a few months ago, the spousal transfer allowances were changed and this was welcomed. But there was nothing further for farmers. So as in so many areas where this government have been forced to U-turn, why didn't it listen from the start, is everything we say in these benches to be dismissed as political rhetoric was arrogance.

Look where this has led to a Prime Minister and a government regarded by the public as the worst ever. We do not need a government that listens later on if it feels like it. We need a government that listens from the start. We need an end to the sound of screeching tires from the government machine as it performs another U-turn that it could have avoided. If, as you said in your manifesto, if food security is national security, why did Labour feel it was acceptable to make farmers face insecurity regarding their livelihoods and the country face food insecurity in the face of a growing international crisis, with the recently announced threshold changes.

It was very disappointing to see the failure of the Exchequer Secretary to the Treasury, failure to offer an apology to the people who produce our food. Now, turning to the anti forestalling clause within the bill. This continues to maintain a perverse incentive she will turn to now. The clause penalises anyone who transfer the transfers to foreign but dies within seven years, creating a substantial IHT bill potentially triggering capital gains tax. If no transfer is made and the farmer dies before April 2026, the estate passes tax free.

This creates an appalling situation for terminally ill or elderly farmers, especially those unlikely to live for a further seven years. Face perverse choices. Either keep the farm and hope to die before April of this year, or sell the farm with a potential loss of food production to the nation, or transfer the farm in the usual way and settle their children with a huge tax bill. No set of tax measures should, nor should this bill before us create such a situation.

Of course, these rules apply elsewhere, but this is where we see Labour failing to understand what they are dealing with. A working farm is like no other business. What it produces concerns everyone, not some segment or niche area of the economy. Now in conclusion, the NFU Scotland president Andrew Connon, when commenting on this clause, stated that the anti forestalling clause in particular is morally indefensible. No tax policy should ever place a terminally ill, terminally ill farmer, terminally ill farmer in the position of being financially better off dead than alive.

The House will have the opportunity later to protect farm production from this perverse incentive, as my amendment would have achieved. But the amendment in front of us tonight gives us an opportunity to change that. And if we fail in this regard, I will seek to bring back my amendment at Report stage.
21:57
Helen Morgan Portrait Helen Morgan MP (North Shropshire, Liberal Democrat)
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Helen Morgan, thank you very >> Helen Morgan, thank you very much, Madam Chair. I'm speaking this evening in favour of the amendments and new clauses tabled by my friend, the hon. Member for by my friend, the hon. Member for Saint Albans and against the changes to April in general and its lesser but less conspicuous but equally ugly twin sister. The changes to BPR because they're downright destructive to the economy in rural places like North Shropshire. Now, the conservatives showed that they took farming communities for granted.

Presiding over botched trade deals and unfair transmission from the old basic payment system to the Environment Management scheme, and leaving the farming Budget with an underspend of hundreds of millions of pounds. But the new Labour government has shown that they don't understand rural communities whatsoever. It's utterly inexcusable that family farmers have been put through over a year of uncertainty and anguish since the government first announced changes to agricultural property relief. Now I've had the pleasure of visiting many farms and attending roundtables with farmers in my constituency and the uncertainty, anxiety and fear that's been caused to them and their families.

Because of these changes has been appalling for Shropshire, not only because they are part of the economic backbone of the economy, but because they're part of the community as well. Now, as we have disputed with the with the official opposition, the Liberal Democrats were the first to call out and oppose the unfair family farm tax in last year's Budget. And we have been proud to stand alongside our farming communities to campaign against it ever since December's U-turn, increasing the farm inheritance tax threshold from £1 million to £2.5 million has been hard won, and we are grateful to all the farmers who have fought tirelessly to achieve this, and it is a step in the right direction and it would be churlish not to acknowledge that.

But from speaking to my farmers in my constituency, this change just doesn't go far enough. I'm going to focus in on the dairy industry because North Shropshire has a lot of dairy farmers. Dairy farming in the modern era is capital, capital intensive, and you need expensive assets such as automated milking systems, cooling units, feed systems, housing and slurry storage. These are all essential for operating the modern dairy farm, but their incomes are low and volatile, and the reality is that the industry is becoming increasingly increasingly unprofitable, with many smaller dairy farms having already sold up in north Shropshire.

To make matters worse, recently milk prices have fallen below the cost of production, while the prices of feed, energy and labour costs remain historically high. Last week, two dairy farmers outlined the crisis that their sector has been put in as partners in their farm. They told me that even with December's increase in the threshold, the family farm tax incentivises them to keep their business small, as they describe the tax as putting the dairy industry in a straitjacket because they borrowed to finance their assets and their capital expenditure.

These farms are in a position where they're worrying about servicing their debts, maintaining production and remaining viable. And yet the value of their land and machinery is in excess of this cap. There's already no money left for future capital expenditure, and now they have to be able to plan to pay off IHT in the future as well. That won't be achievable for them without selling parts of the farm to big players, whose methods will be far less sustainable and worse for the environment than their current low input model.

Ending capital investment doesn't just affect family farms and their growth, but it puts our nation's agricultural equipment producers and suppliers out of business too, damaging growth and reducing our food security. The government wanted to end the practice of agricultural land being bought up, and prices being driven up by super rich and super wealthy non-farmers just using land to avoid the inheritance tax. And that's a sensible idea. But its current cap and relief policy just fails to do that, leaving us with the worst of all worlds.

Now, turning to business property relief. Family owned businesses are feeling just the same squeeze. And in places like North Shropshire, there's a high percentage of family owned businesses. Last week, I spoke to the managing director of Ridgeway Rentals, a medium sized family run plant hire company whose head office is based in in the market town of Oswestry in my constituency. As a plant hire company operating nationwide, they're. Their assets include excavators, diggers, bulldozers and other large bits of machinery. And that means they have a very high asset worth.

They told me that the changes to BPR means they're and I quote, there is no point in growing as a business and believes that there must be countless others who have either closed or been sold because of the government's recent, multifaceted attack on business in this country. Whilst he did say that the recent increase in the threshold is an improvement, the managing director said that this slightly loosens the noose that sits around business's necks. For a government that repeatedly has one of its key missions as growth, these misguided policies are achieving the opposite.

In rural places like north Shropshire, we've demanded that the government scraps these unfair taxes in full, and if they refuse to do so, I will be joining others in the Liberal Democrats in voting against those changes this evening.
22:02
Jim Allister Portrait Jim Allister KC MP (North Antrim, Traditional Unionist Voice)
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Jim Allister. >> Jim Allister. >> Madam Chair, I speak to clause

**** Possible New Speaker ****

Madam Chair, I speak to clause 62 and schedule 12. I certainly welcome the fact that, though belatedly, the government did get belatedly, the government did get to the point of climbing down on the £1 million threshold, they should have gone much further in that there should not be this tax at all. Or if there is, it should be at a viable threshold level. And though the climbdown was not delivered with great grace, indeed it followed a debate in this House where this Minister doggedly defended the £1 million threshold, told us it was fair and necessary.

The very words that he uses now to defend the 2.5 million. But even though that was the manner of the delivery, they climb down so far as it goes is welcome. But we need to be very aware of the limitations on how far it does go, because this is a concession which will be very swiftly diminished with time because of the lack of indexation. This is a diminishing win, a win secured by our farming communities through their determined campaigning.

But a win which is melting away as each year goes by. Take my part of the United Kingdom, Northern Ireland in the last five years, land values have increased by 40%. If that trajectory continues for the next five years, then in today's terms, the threshold will only be worth £1.5 million. It will lose 40% of its value. So unless the government is willing to face up to the need to index link this threshold, then the bona fides of their conversion on this issue is very suspect indeed.

And that is the real challenge to this Labour government going forward. If you have genuinely realised that £1 million was wholly inadequate and 2.5 million as a minimum was necessary, then you need to sustain the value of that going forward. You cannot simply sit back and wait for the Treasury to increase its tax take, because land values rise and the value of the 2.5 million diminishes every time that happens. So that is the real test of the bona fides of this government on this issue.

If it's only a tactical move to buy time, then time is on their side because in due course, this will fritter away to the point where it is of very little value indeed. So my plea to the government tonight is demonstrate that this is a genuine realization of the need to protect farming families by committing to index linking this concession, because without that, it really is something that is going to diminish very severely with time.

And surely those who feed us, those who keep bread and food on our tables, are the people that this government should be thinking about, and they are not thinking about them. If they insist on a de minimis threshold, which will diminish out of sight almost as time goes

**** Possible New Speaker ****

government. Yeah. Sarah Olney, thank you very much, Madam Chair. I want to speak to amendments 42 to 47. This bill fails to recognise the specific way fails to recognise the specific way in which family businesses are different from businesses whose shares can be traded. The tax changes announced at the 2024 changes announced at the 2024 Budget treats family businesses as though they are a liquid asset, or as if their underlying value is expressed in tradeable shares. But family businesses are neither.

Shares in a family business only have a nominal value, and it's this nominal value that's transferred upon death. No cash arises from the transaction, unlike the sale of
22:07
Sarah Olney Portrait Sarah Olney MP (Richmond Park, Liberal Democrat)
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shares on an open market, which means that money to pay any tax charges arising on the transfer charges arising on the transfer must be made out of the business's current assets or by disposing of its fixed assets. Now, the value of a family business is often in their fixed assets, typically land, buildings, plant and machinery also buildings, plant and machinery also painted copyright and goodwill. Now, the purpose of business property relief was to enable these assets to pass intact from one generation to pass intact from one generation to the next, to enable the business to be transferred as a going concern, to maintain those steady revenues that guarantee employment and supply chains.

So removing BPR from the inheritance tax regime would mean that assets will need to be sold to pay the inheritance tax. Now, this not only reduces the overall value of the company, it will also limit its ability to generate future revenue. Asset sales will already be subject to CGT before the net value can be released to the shareholder by way of a dividend to pay their individual IHT liability, and this dividend itself will be subject to tax. So the asset sale has to realise sufficient cash to pay three separate taxes.

Now, members might argue that assets disposed of by one company doesn't necessarily take them out of the economy, and indeed, our tax system should ensure that assets are allocated to wherever they can be most efficiently exploited. But this change to BPR doesn't ensure the efficient reallocation of assets from one business to another. It forces the sale of productive assets that were being efficiently used, and there are no guarantees that the asset can be put to its most productive use under its new owner.

Recent experience has shown that UK assets are increasingly being picked up by foreign investors, increasing the risk of job losses, restructuring and head office operations being moved abroad. Forced sales that need to be completed within IHT timescales are unlikely to make their full market value, and in a specialised market in which there are few annual sales, one depressed sale value can influence the valuation of other assets in the same class, having a knock on effect on all company balance sheets. Death comes to us all in the end being the only certainty in life apart from taxes.

The IHT regime recognises and allows for assets to be passed down. The generations without being taxed as long as seven years has passed between the date of the gift and the death of the bequest. So for many family businesses, the change in BPR rules will just mean that they have to actively plan for an orderly transition of shares to enable them to take advantage of this provision. But for some families, it's already too late to plan effectively. The largest employer in the London Borough of Richmond upon Thames is a family owned business, with the majority of shares being owned by the founder, who is aged in his 90s.

So there seems little chance that even if the shares were to be transferred now, seven years will elapse before his death and every risk, therefore, that the firm will need to be broken up in order to pay this IHT liability and that will put hundreds of jobs at risk. And of course, tragically, there is always the risk of unexpected death while not being its principal purpose. One of the advantages of BPR is that it relieves the families of the deceased from involving themselves with complicated business transactions, while mourning their unexpected loss.

I welcome, of course, the announcement of the raising of the threshold of BPR from 1 million to 2.5 million. This merely reduces the number of companies that will be liable for this tax rather than addressing these issues. And there's currently no certainty on either the number of businesses that will be affected or on the amount of additional tax revenue that will be raised by the measure. The OBR has not delivered a costing based on the change to the policy announced in December, and given that the policy will trigger behaviour change, it is unlikely.

It is unclear to me that the benefits of this measure will outweigh the potential harm to employment in otherwise thriving businesses up and down the country. I am sympathetic to the Chancellor's instincts in this matter. I too, think that we should be prioritising the needs of entrepreneurs over the protection of inherited wealth. But the likely meagre returns to the Treasury as a result of this policy do not justify the likely impact on employment that will occur if otherwise thriving businesses are forced to be broken up.

Thank you, Madam Chair.
22:11
Sorcha Eastwood Portrait Sorcha Eastwood MP (Lagan Valley, Alliance)
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Eastwood. to speak on clause 62, schedule 12, and I want to speak to my amendment new clause one. As we've heard from the benches, represent Northern Ireland already tonight. This is really about listening and recognising Northern Ireland's unique circumstances. I want to acknowledge from the outset the deep anxiety and distress caused by recent proposals to the inheritance tax by many farmers across Northern Ireland, including in Lagan Valley. Farming in Northern Ireland isn't just an economic activity, it is a community.

It is a way of life, and it is something that is deeply special and rooted in the land across Northern Ireland for generations, as many others have raised tonight, it is also central to our food security. And I can't for the life of me understand. At a time of ongoing and increasing geopolitical insecurity, that we would take this step. Farmers in Northern Ireland responded with the united, constructive and responsible voice, and I want to pay tribute to the Ufu, the Young Farmers Clubs of Ulster and any farmer who took a stand on this important issue, that unity mattered and it forced movement from the government.

And I'm not going to again say that I'm not going to try and nitpick. I welcome the U-turn. We should never have been in this position, but I do welcome the change. The original 1 million threshold was never fit for purpose for Northern Ireland. Data analysis showed it could have killed around 50% of Northern Ireland farms. Inheritance tax, compared with around 5% of estates generally across the UK. That level of impact was clearly disproportionate. I therefore welcome the increase in the threshold from 1 million to 2.5 million, and the decision to make the allowance transferable between spouses credit is due to the farming community alone.

For the United Front that secured this long overdue change. But while many families will feel relief, real uncertainty remains, particularly as others across the House have outlined tonight. For older farmers and those who cannot simply plan around sudden policy changes, I want to place on record my thanks to my colleague Andrew Muir, MLA, the agriculture Minister in Northern Ireland, and his officials. He has been steadfast, evidence, led and relentless in standing up for Northern Ireland's farmers. That included repeated engagement with the Treasury.

A joint letter in November with the First Minister, deputy First Minister and finance Minister. That letter called clearly for a higher threshold and spousal transferability. This is devolution working at its best, no matter what others may say. But it also shows why Westminster must listen when Northern Ireland speaks with one voice. Northern Ireland is different. One size fits all policy does not work for Northern Ireland. Farms in Northern Ireland are smaller on average, intergenerational and family run, and often land rich but cash poor land values, as others have elucidated tonight, continues to rise faster in Northern Ireland, even with a £5 million transferable threshold, Daera estimates the number of impacted farms would fall to around 5%, but those farms account for around 27% of the total area farmed.

I am clear eyed about this. Not every farm will be able to avail of a 5 million threshold, and poorly calibrated tax policy can force land sales, break succession, and undermine the long term viability of family farms. As I have said at the outset that there is a huge argument here around food security, northern Ireland's food and drink sector is the cornerstone of the UK's food supply. It is worth 8.4 billion. It employs around 113,000 people, and I am proud to say that it feeds 10 million people every year.

Northern Ireland represents just 3% of the UK population, yet we produce 25% of the UK's food. By comparison, Britain produces enough food to feed around 40 million of a 70 million population. Undermining farming in Northern Ireland is not simply a regional issue, it is a whole UK food security risk. My amendment new clause one is the necessary evidence based and common sense amendment. I'm calling to properly assess the real impact on Northern Ireland, publish a Northern Ireland specific assessment within six months of Apr coming into force, and examine how many Northern Ireland states are affected.

The case for exempting agricultural land, the cost to the exchequer, the impact on farm succession, land retention and viability, and the implications for UK food security. It also explicitly excludes land banking schemes. This is about real farmers, not tax avoidance. There is also the importance of consultation. The amendment mandates meaningful consultation with dairy farmers and land based businesses. This is about policy made with people not done to them. Farmers must never again be an afterthought in Treasury decision making.

The amendment requires the Chancellor to respond formally to the assessment, set out what action will follow. Keep the policy under review with a further assessment within 18 months. That creates transparency, accountability and ongoing scrutiny, and it is particularly important and timely given rising land values and ongoing uncertainty. In conclusion, this amendment is about fairness, realism and respect. It recognises Northern Ireland's disproportionate contribution to the UK, which I'm very proud of. It gives government the evidence it needs to get this right.

Supporting it means supporting farmers, protecting rural communities and safeguarding the UK's food supply. And I just want to raise something that is of psychological value. We are having this discussion and this debate tonight, and not one of us has said something in terms of the psychological impact on the body blow that this has caused to farming communities across the UK. They felt genuinely unneeded. They felt undervalued. In fact, they felt a burden. They felt that this tax rate was being done to them.

I'm not sure what they ever did to deserve it. And this is why I will continue to impose the family farm tax in its entirety. Caroline Boden.
22:17
22:17
22:17
Caroline Voaden Portrait Caroline Voaden MP (South Devon, Liberal Democrat)
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farmers across the country rallied their tractors outside this place to get their voices heard. Other family, other family owned businesses have gone through the same agony over the last 14 months, same agony over the last 14 months, but without the tractors and with perhaps less of a voice. Fearing for the future of businesses that for the future of businesses that have been built up over generations, businesses that form the bedrock of local communities and economies, employing local people and supporting local suppliers.

As one constituent business owner told me, even with the recent lifting of the threshold, the reforms to BPR could still lead to family businesses like his having to break up their underlying assets just to survive and the resulting loss to the Treasury in economic activity will far outweigh the amount of tax raised. This attack on family run businesses is particularly damaging in a constituency like South Devon, where the family run hotels and holiday parks are the foundation stones of the local economy passed down from generation to generation.

They are more than just businesses. They are woven into the fabric of our communities. The director of one popular holiday park has been left questioning the long term viability of their business due to the inheritance tax that will be due. This family run business was founded over 65 years ago and employs over 180 staff in the summer season, which is a large number in a constituency like mine that has few large employers, they use an abundance of local suppliers and make a significant contribution to the local economy.

But I'm told that when the 81 year old majority shareholder passes away, it is likely that the family will have to sell up completely after at least five generations of ownership to pay an inheritance tax liability of approximately £2.5 million. You can't chop off a section of a holiday camp and sell it to pay the tax, and be left with a viable business. It just doesn't work like that. And this illustrates perfectly how this tax is not merely a financial burden.

It threatens the very survival of these businesses, and the ripples will spread out across the pond, with scores of people losing their jobs and the knock on effect that will have on the local economy, the community and the mental health of all those people left high and dry. Examples such as this are why my Liberal Democrat colleagues and I support amendment 42, which would maintain 100% business relief where the property has been owned by the transferor for at least ten years as part of a business that is actively operated by the transferor or a member of their family.

This is the least this government could do given the plethora of financial challenges these family run businesses are already facing and whatever loophole the government was looking to close with this business property relief, they've gone way beyond that. And the implications are going to be an economic and a personal tragedy for so many. I also could not stand to speak today without again mentioning our family farms. I am pleased the government has finally listened and made the adjustment to the threshold, which will end the agony for many farmers.

However, I am concerned that in areas where land prices are particularly high, such as the South Hams, the £2.5 million threshold will still be too low. There are also a significant number of farms which are owned by a single person rather than a couple, meaning they will not benefit from the spousal allowance. When this April was originally introduced, I surveyed all the farmers in the South Devon constituency, of which there are many hundred 85% of them said they would be affected.

Of those who responded, 44% said they would have a bill of at least £300,000. The average bill was going to be £637,000 across my constituency, and the highest inheritance tax expected by one of my farms is £3 million. I therefore support amendment 48, which would make the resulting inheritance tax liability chargeable only if agricultural land is sold or ceases to be used for farming within ten years of the relevant transfer. I also urge the government to support new clause seven to ensure the relief allowance is uprated annually.

According to the change in the value of agricultural land. And I would also urge the government, as many of my colleagues have also done, to consider extending the spousal allowance to siblings who co-own a farm so that they, too, can benefit from this relief. Why should one family be penalised because a brother and sister own a farm compared to another family, where it's a husband and wife? It's incredibly old fashioned to design a policy which benefits people who are married, but not people who are co-owning within the same family.

I hope the government will now provide meaningful support for farmers who have been through so much over the last 14 months, starting with a £1 billion increase in the farming Budget as promised by the Liberal Democrats. If we were sitting over there, if we undermine British farming, we also undermine our ability to feed the nation and in turn compete in an increasingly uncertain world. Our farmers have been through an agonising 14 months. They should never have been subjected to this fear and stress, and it's a disgrace that the government took more seriously a prospective revolt from their own backbenchers than the committed, desperate, passionate campaigning of farmers, countryside organisations and rural rural communities right across the country for the last 14 months.

This policy still retains huge unfairness. As colleagues have explained so clearly this evening, and I urge the government to pause and think again. While a proper impact assessment of even the new April as proposed now is carried out. Thank you. Holly Glover.
22:23
Olly Glover Portrait Olly Glover MP (Didcot and Wantage, Liberal Democrat)
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Madam Chair, I've stand to speak in favour of various Lib Dem in favour of various Lib Dem amendments, particularly new clause seven to clause 62. Farmers in this country continue to be hammered country continue to be hammered both by our last government and now the current one, from poor funding of rural public services to botched trade deals which undercut British farmers, rural communities have been left behind. Despite the fact that this industry is vital to delivering our food supply and a key pillar in our fight against climate change, food is not some luxury or niche commodity.

It is essential and important part of our heritage and culture. And in an increasingly volatile world, it is important that we recognise the value of domestic production. Now. Many speakers this evening have discussed the problems with the Labour government's changes to agriculture and business, property tax relief and indeed it is welcome that they have to some extent listened to that. But Madam Chair, for me in my constituency, the key thing speaking with farmers is that these proposed changes in their original form were the final straw for them on top of so many other challenges and headwinds.

And that is why the reaction has been so strong. They face the uncertainty and impact of Brexit trade deals based on proving the so-called benefits of Brexit. No matter the impact on our farmers constantly changing government incentive and payment regimes, the impact of recent worldwide inflation on fertiliser prices and equipment costs. Labour shortages also partly as a result of Brexit and the dominance of large supermarkets seeking ever lower prices. Our farmers also face rural crime, which, as the hon. Member for Lagan Valley quite rightly stated, has a significant impact on their mental health and wellbeing.

Even with Thames Valley Police as best efforts, farms being remote make them easy targets for thefts or hare coursing. Flooding has also affected many farmers across my constituency, such as George Gayle's Manor Farm in Appleford or Paul Caldwell's Shropshire Farm in Drayton, increased rainfall and a lack of river maintenance, both being contributing factors to wider flooding incidents, plus runoff from new developments during the general election. It was the National Farmers Union hustings that was by far the toughest of the campaign.

But I've also been warmly welcomed by farmers who have been very patient and generous in explaining their trade to me. As someone who couldn't possibly have less of an agricultural background. Matt Lane of Grange Farm, David Crittendon of Estate, and also Alan and Richard Binnings, who put so much work into the Truck Fest festival, which as well as being an amazing concert experience on their land, raises tens of thousands of pounds for local charities each year. But I want to talk in particular about Ben Smith from Manor Farm near Wantage.

Now. When I met him last winter to hear his challenges, he explained how he's a third generation arable farmer. At that time, his mother was 90 years of age and owns the farm, and his big concern was that when she dies, he and his family would be significantly hit by the inheritance tax, with revenues revenues from their arable farming barely able to cover the liabilities. Now, at that time, his mother was saying that she would rather die than leave Ben and his sister to deal with the situation later, whereas Ben wants his son and daughter to have the farm, but he will be in a financial mess.

There are 6 or 7 staff who he might need to lose, some of whom have worked for him for between 10 and 45 years. Inheritance tax, of course, is a big worry to him, but it's also been hit by other increases in tax and national Insurance. Madam chair, all the farmers I've met have been welcoming, tolerant of my agricultural ignorance, forgiving of my vegetarianism patient in educating me about their work, and profoundly passionate about what they do. I've been surprised to find parallels between my experience of working in railways before coming to this place and farming.

Both are subject to the stop and start whims of government policy, and the decisions of people who have little knowledge or experience of the sectors concerned, and who often do not take the time to listen and learn. In contrast, the Liberal Democrats are proud of our advocacy for farmers and are calling for the farming Budget to be raised by £1 billion, a renegotiation of trade agreements to protect British farmers in line with our objectives for health, environmental and animal welfare standards and strengthening of the Groceries Code Adjudicator to ensure farmers can keep farming in fair circumstances, it is welcome that the government has started to listen, but we must always remember that we need food, we need countryside and our farmers do so much to look after both and they deserve our support.
22:28
Dan Tomlinson Portrait Dan Tomlinson MP, The Exchequer Secretary (Chipping Barnet, Labour)
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Yes. Minister.

**** Possible New Speaker ****

Madam chair, let me extend my thanks to hon. Members for their thanks to hon. Members for their thoughtful contributions during this session in particular, which I appreciate has been a topic of appreciate has been a topic of discussion publicly and in this place over a number of months. As I place over a number of months. As I have said, the government has been listening carefully to feedback from the farming community and family businesses and their representatives, and we on this side of the House are proud to represent the national interest with strong representation from rural, semi-rural and urban constituencies, too.

I think it's a it's a fantastic vote of confidence in our Prime Minister and in this government that there are pretty much as many Labour MPs who represent rural constituencies on this side than there are the total number of conservative MPs on the other side. Madam chair, the government is going further to to protect more farms and businesses while maintaining the core principle that more valuable agricultural and business assets should not receive unlimited relief. That is why we have introduced an amendment to this finance bill, such that the allowance for the 100% rate of relief will be increased from 1 to 2.5 million.

Madam chair, if I can, although I'm aware of the hour, I will just briefly run through some of the contributions that members on all sides have made in response to some of the questions that have been asked of me. In closing, I would like to thank members on these benches. The chair of the Welsh Affairs Committee, the hon. Friend, the Member for North Northumberland. The Member for Ribble Valley, the Member for Morecambe and Lunesdale. And I welcome the contribution to from the Member for Penrith and Solway.

It was helpful to hear from members on this side about the positivity with which the changes that were announced late last year have been received as a result of the listening and the engagement that this government has done, and also to hear about the renewed focus that can now be placed on broader issues affecting the farming community, be that profitability, prices and the fiscal support that this government will provide, making sure that we can spend our budgets in full rather than underspending them by hundreds of millions as the previous government did.

I want to thank those members who engaged with me on this topic in the weeks after I was appointed to this role, just on the 1st of September last year, I'm looking for the Member for North Northumberland. I really appreciate his engagement, in particular on the on some of the points raised by the Shadow Minister and some opposition members. The figures used on the number of estates that are affected by these changes come from HMRC tax data itself, and at many members on opposition benches raised the syntax report with Ministers repeatedly in recent weeks.

That report, which was carried out by independent analysts from the government, came to very similar conclusions to the government's figures published after the Budget. In terms of the number of estates affected. That is some robust analysis that has been published and I and the government stand firmly behind it on the point around investment, which members opposite have raised both in relation to agricultural property and business property. It is just worth noting that a inheritance tax system that was less generous than one that will be implemented in April was in place throughout the whole of the 1980s, and I don't believe that members opposite think that we had a problem with growth and investment in the 1980s from businesses and farmers.

Maybe, maybe they do think we had significant problems with wealth creation in the 1980s and the tax system that inhibited it, but I don't think that that is the argument that members opposite are making on the on the on the broader impact of the changes, the OBR confirmed at the Budget that they are not forecast to have a significant macroeconomic impact. And I will give May to the hon.

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Member. I thank the Minister for giving way and I hope it is something up. He's going to answer the questions He's going to answer the questions I asked now twice in this debate to give indexation and the issue of give indexation and the issue of having a scenario where you've now got two estates that will be valued at £5 million, one subject to an IHT at £5 million, one subject to an IHT liability, one not depending on the ownership structure. But could the ownership structure.

But could the Minister also say why on earth did the Chancellor, given this issue is so important not only to our farming community but our wider family businesses announce this change at the Budget. This seems very peculiar to make a very big fiscal change outside of a Budget

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announcement. I will come to the questions that he raised shortly. I would just like to turn to the Liberal just like to turn to the Liberal Democrat spokesperson who mentioned the costs of administrating these tax changes. Those costs were tax changes. Those costs were published in a tax impact information note. Alongside the information note. Alongside the changes, at 9.2 million is the figure which the government published. And on the Sustainable Farming Incentive, which he and others have mentioned.

He may have missed the news that last week, the Secretary of State in Defra was able to provide an update on this, which the NFU said showed real ambition for a thriving agricultural industry. The Member for Keighley and Ilkley, the the Member for Keighley and Ilkley and the Member for Upper Bann and others mentioned the the the way in which the allowance is only transferable between spouses. That is in line with the long standing approach to Inheritance Tax, the inheritance Tax, nil rate band and the residence nil rate band are also only transferable between spouses and civil partners, and just on the specific point that was made around siblings and co-owners who are.

I'm just going to respond to this point and siblings or those who aren't spouses who jointly own a farm as the example which the member opposite raised on the government website sets out. Of course, it's still the case that each individual has a £2.5 million allowance which they can use, which means that a farm that's jointly owned, even if not by spouses, yes, it can't be transferred between spouses, but can still be passed on on an individual basis up to £2.5 million.

A range of members on the opposition benches raised the question of whether or not the government should set different thresholds for different parts of the country, and I would gently say to members on the conservative benches in particular, that when it comes to inheritance tax, of course, they're very different property prices across the country. And yet they and the 14 years they were in power didn't set different thresholds for different parts of the country. Madam chair, I look forward to further contributions on this topic over the passage of this bill.

Overall, this finance bill, including the clauses debated today, are an essential part of the government's broader economic plan to manage our public finances well, to bring down borrowing and every year to fund our public services and provide the underpinnings for higher growth and living standards across the country. We have the right plan for the country, and this finance bill helps us to deliver it. I therefore, urge the House to reject amendments 3 to 23, 31 to 36, 40 to 48, new clause one, six, seven and 17.

And I beg to move that clause 62 and schedule 12 and government amendments 24 to 29 stand part of the bill.
22:37
None Portrait Division: Finance (No. 2) Bill, Committee, Clause 62 Stand Part
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The question is that clause 62 stand part of the bill. As many as stand part of the bill. As many as of that opinion say aye. Of the contrary, no. >> No.

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No. The question is that clause 62 stand

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part of the bill. As many as of that opinion say I the contrary. No. No.

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No. The tellers for the eyes are Jake Richards and Imogen Walker, the tellers for the nos, Alicia the tellers for the nos, Alicia Yes. Yes. Yeah.

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Order, Order, order!

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Order, order! The ayes to the right. 344. The

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noes to the left 181. The ayes to the right were 344.

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The ayes to the right were 344. The noes to the left 181. So the ayes have it. The ayes have it ayes have it. The ayes have it unlock. With the leave of the house. I shall put a single question on government amendments 24 to 26. I call the Minister to move government amendments 24 to 26 formally.

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Formally. The question is that government

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The question is that government amendments 24 to 26 be made. As many as of that opinion say aye. Of many as of that opinion say aye. Of the contrary, no. I think the ayes the contrary, no. I think the ayes have it, the ayes have it. We now come to amendment three to schedule come to amendment three to schedule 12, which has been selected for separate decision. I call Victoria Atkins to move amendment three

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formally. Formally. The question is that amendment

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The question is that amendment three be made. As many as of that

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three be made. As many as of that No. No, no. Division.
22:52
None Portrait Division: Finance (No. 2) Bill, Committee, Page 451 Amdt. 3
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Question Question is Question is that

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Question is that Question is that amendment Question is that amendment three

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be made. As many as of that opinion say I. I of the contrary. No. No. The tellers for the eyes are

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The tellers for the eyes are Alicia Kearns and Lincoln. Jot the tellers for the nos. Jake Richards Order, Order, order! Order, order!

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The ayes to the right. 185. The noes to the left 344.

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noes to the left 344. The ayes to the right for 185.

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The ayes to the right for 185. The noes to the left 344. So the nos have it. The nos have it unlock.

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It. With the leave of the house, I

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With the leave of the house, I shall put a single question on shall put a single question on government amendments 27 to 29. I call the Minister to move government amendments 27 to 29

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formally. Formally. The question is that government

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The question is that government amendments 27 to 29 be made. As many as of that opinion say aye. Of the contrary, no. I think the ayes have it. The ayes have it. The question is that schedule 12, as amended, be the 12th schedule to amended, be the 12th schedule to the bill. As many as of that opinion say aye. Of the contrary, no. I think the ayes have it. The ayes have it. New clause seven has been selected for separate decision.

I call the Liberal Democrats formally.

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Move formally. Uprating of allowance amounts

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for agricultural property. The question is that new clause

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The question is that new clause seven be read a second time. As many as of that opinion say aye. Of
23:05
None Portrait Division: Finance (No. 2) Bill, Committee, New Clause 7
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many as of that opinion say aye. Of the contrary, no. >> No. The question is that new clause seven be read a second time. As many as

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of that opinion say I. I of the contrary. No. No.

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No. The tellers for the eyes are Zoe Franklin and Claire Young, the tellers for the nos, Jake Richards tellers for the nos, Jake Richards

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Very Very good. Very good. How Very good. How are Very good. How are you? Very good. How are you? And Very good. How are you? And then? Those. Those. Of. Those. Of. Not Those. Of. Not only.

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Order,

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Order, order! The ayes to the right. 188. The

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The ayes to the right. 188. The noes to the left 341.

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The ayes to the right for 188. The noes to the left 341. So the The noes to the left 341. So the nos have it. The nos have it unlock. nos have it. The nos have it unlock. Order. Order! That concludes proceedings for day one in

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committee. I beg. Leave to report that the committee has made progress and committee has made progress and asked leave to sit again.

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That. Order whip to report.

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Order whip to report. I beg leave to report that the Committee has made progress and asked leave to sit again.

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Committee to sit again? What day? Tomorrow?

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Tomorrow? Committee to sit again tomorrow.
23:17
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23:20
Bayo Alaba Portrait Adjournment: Government support for higher education Mr Bayo Alaba MP (Southend East and Rochford, Labour)
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I beg to move that this House do now adjourn. >> The question is that this House do now adjourn, Mr. Bayoh. Alba. >> Thank thank you, Madam Deputy

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Thank thank you, Madam Deputy Speaker. I am pleased to bring forward this debate on government support for higher education. The support for higher education. The UK is home to some of the world's most respected universities, and we all benefit from the opportunities, knowledge and growth they create. Whether you're a young person pursuing exciting academic ambitions, a member of staff, supporting students through their studies, or a small business capitalizing on the busy trade of a university city, the value of our higher education institutions is undeniable.

In my own constituency, residents have enjoyed the opportunities for social mobility and the economic contributions of the University of Essex's campus in South Bend for the past 18 years. During that time, thousands of students have graduated, gone on to fuel regional and national economies, and finding fulfilling careers in the process. The university's nursing, midwifery, dental hygiene and social care courses are particularly popular and often oversubscribed. Many of those enrolled grew up in in south Essex and go on to work within the area after graduating.

The campus is also a major employer of residents, some of whom have worked across catering, student support services and teaching for almost two decades. But that is soon set to end. Just before Christmas, the university, the University of Essex, announced that it would be closing its Southend campus this summer, throwing the futures of the the 4000 enrolled students into uncertainty and putting 400 jobs at risk. That proposed closure will see a direct loss of £101 million from the city's economy.

In the wake of the announcement, I spoken to dozens of staff, students and stakeholders impacted by this decision. I've heard from students like Lulu, a first year marketing student who was just two months into her course when she was informed of the closure. Lulu describes herself as a bright individual who has always enjoyed studying and does not want to. Educational journey to end. There are also stories of dedicated student support staff like Judy, who has worked in the campus accommodation department for the past eight years and now faces a devastating prospect of redundancy.

And I've spoken with internationally headhunted lecturers, many of whom came to the UK on skilled worker visas, which could be revoked if their roles disappear. One Brazilian lecturer lecturer I met with spoke about the impending impact that the threat of compulsory emigration would have on her young family. If her job was lost, she would have just 60 days to leave the country. To her, the threat of deportation is a frightening reality. The forum, Southend Central Library and well-used community hub could also be at risk following the closure of

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the campus. I will give way. Can I commend the hon. Gentleman for Southend East Rutherford for bringing this forward? I spoke to bringing this forward? I spoke to him beforehand just to to get his trust of his comments. And does the hon. Member not agree that Budget cuts means that universities must cuts means that universities must cut domestic undergraduate numbers to absorb the funding cuts limiting to absorb the funding cuts limiting local access to higher education, which is exacerbating the existing trend of young people leaving for university.

Leaving university university. Leaving university across the United Kingdom of Great Britain and Northern Ireland, depriving the economy of skilled graduates. And this cannot be allowed to continue if we are to reap the benefits of our first class education system for future

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employees and workers. Thank you. Thank you. I thank the Member

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Thank you. I thank the Member for his contribution. Yes, the business model that a lot of universities have focused on over the last sort of 14 years has meant the last sort of 14 years has meant that they've focused on international students. And and it's one of the reasons why we're it's one of the reasons why we're here today, this having that discussion. So I welcome his comments. Passionate staff fear comments. Passionate staff fear that if the university share of the library is sold, the result would be significant financial pressure on the remaining partners.

They understandably fear the knock on impacts of the campuses closure. East 15, one of the UK's leading performing arts schools, is also set to cut its Southend campus or Southend courses as a result of the closure. Students training with East 15 contribute to the cultural character of the city long after they have graduated, providing Southend with links to arts and entertainment industries further afield. I share residents pride in the success of talented Southend East 15 alumni such as the comedian Maisie Adam.

There are also significant concerns that the suggestion that 800 students are able to relocate to the university's main campus in Colchester has been overstated. What's more, what's more, through dialogue with students and staff, the suggestion that 200 students will be unable to complete their courses at all appears to be an underestimation. This is simply not good enough. I'm working with the leader of Southend Council, Councillor Daniel Cowan, as well as my hon. Friend, the member of the South and Western Lea, to ensure that if an alternative provider can be found for courses not available in Colchester, that students will be able to complete their studies in Southend, can the Minister provide any reassurance to these students who rightly feel confused and concerned about the future of their studies? Well, whilst questions remain unanswered about the university's decision making and communication in the lead up to this announcement, the planned closure is not an isolated event.

It is a devastating symptom of 14 years of underinvestment in higher education by the previous conservative government that left universities and colleges across the country struggling to stay afloat. The government slashed direct teaching grants for universities, making tuition fees the primary source of income for institutions. At the same time, it capped tuition fees, leading to an unsustainable business model that saw income tied to an ever increasing number of enrolled students. And the impact of that cannot be ignored. Elsewhere in the UK, Nottingham University is planning for job losses of 350 staff members.

The University of Strathclyde is looking for 35 million in savings, and the University of Edinburgh is also set to move towards a suite of compulsory redundancies. I will give.

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I'm devastated to. Hear of the situation in Southend, but I know in York the Southend, but I know in York the financial pressures are also very prevalent and it's very clear that prevalent and it's very clear that the financial model is failing and this is impacted not only by the resourcing that universities are resourcing that universities are able to generate, but also the change to international student visas. Does he not agree with me visas. Does he not agree with me that the government need to undertake a complete review of higher education funding and ensure that the model works to invest not only in education but also into our

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local economy? I thank my hon. Friend for her

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I thank my hon. Friend for her contribution. Yes, I do believe that some work needs to be done in terms of sort of how we look at the terms of sort of how we look at the business model to make sure that it's a sustainable certainly in terms of sort of higher education, it's a huge, significant asset of it's a huge, significant asset of our country, and it's something that we need to sort of look at and comments.

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The hon. Gentleman give way. On that point. Yes. I thank the hon. Gentleman for giving way and for securing this debate. And I share his concern about the impact of these measures in Southend, which is a community I know very well. But would he agree with me that the community in Colchester would also be hard hit by that situation? With a number of redundancies happening in and

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around that campus as well? Yeah. I thank you. I thank my friend for her contribution. Absolutely. for her contribution. Absolutely. They are right. This closure affects the community in Southend affects the community in Southend but also the community in Colchester. 400 staff will be made redundant and that's across both redundant and that's across both campuses. But also another consequence of that is the uncertainty, how this sort of impacts the student community as well as the, the staff and the and the whole sort of wraparound community that supports this institution.

So yeah, absolutely. Understand I welcome this government's actions to support students and universities financially, including through an inflation based increase to both

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maintenance loans and tuition fees. I will I. Thank my hon. Friend for giving

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Thank my hon. Friend for giving way. I am also desperately sad to hear the news about Essex University as a former student, and gave me the platform to get here gave me the platform to get here and speak today. On the subject of student loans, though, I've got Doncaster Sheffield Airport in my Doncaster Sheffield Airport in my area at the moment. If you want to become a pilot on a formal course, you can't access student loans. For you can't access student loans.

For me, in areas where there is great deprivation and disadvantaged students. It's really, really difficult then to become a pilot and fulfil your ambition. Does he agree with me that we need to be looking at the future courses and how we support and fund students to do those to.

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I thank my hon. Friend for the for his contribution. Yes, I, I've for his contribution. Yes, I, I've met with members of the aviation community in my constituency of Rochford. We have London Southend Rochford. We have London Southend Airport, so I've met with senior the senior leadership team there. And again they've expressed the sort of the need to sort of get sort of the need to sort of get more talent, more, more, more pilots through. But it's it's it's hard, it's expensive and it's prohibitive, prohibitively prohibitive, prohibitively expensive for people from particular socioeconomic backgrounds.

So absolutely, I, I do think sort of more work needs to be done to sort of enable people from all backgrounds to access all courses and career opportunities. So I thank him for that. It is also encouraging to see the efforts being made to help our world leading higher education institutions work with industry partners to capitalise on the research they produce. On that note, I am hopeful that the £30 million of funding recently awarded to universities and research experts will incubate growth and create jobs for the future.

These measures, paired with the rejoining of the Erasmus study scheme, are expected to deliver a brighter financial outlook for our universities following more than a decade of under-funding. Given the scale of the challenge facing higher education providers, I urge the government to continue exploring additional support. Although I today focus on Southend, I think it is vitally important that we acknowledge and address the increasing pressures emerging across the nation. There are things we can learn from our international counterparts, where close ties between institutions and industry have often given rise to pioneering companies.

These relationships not only fuel innovation, but offer universities a reliable source of income that can shield their success from unpredictable financial pressures. We have the talent to do the same here and should support universities in commercialising their intellectual property through public investment and by encouraging private backing while I become the government. While I welcome this government's plans to streamline the Intellectual Property Office, I hope that universities and other education providers will be given adequate thought when carrying out these reforms. Beyond IP and investment, we should be supporting students to build industry connections during their time at university by offering a year of work placement on every course and skill building discovery modules.

I also believe it is worth expanding the investigation of the university grant reintroduction to reduce overreliance on finding an ever increasing number of international students. As I acknowledged, universities offer far more than research and economic growth and only plan for support, and any plan for support must be accompanied by engagement with the wider community. The issues posed by the planned closure of the University of Essex Southend campus continue to evolve and develop. I want to thank the residents who have been in contact with me in recent weeks to share their stories, and I share their very real concerns.

I'm also grateful for the support from unions such as unison and the UCU on this matter. Unison recently launched its Stop the Cuts campaign in the hopes of keeping the campus open and avoiding compulsory redundancies across Essex University. My colleagues and I are committed to continuing to push the senior leadership team to achieve a solution that works for staff, students and the whole of Southend. Can the Minister speak to how the government is supporting higher education providers across the UK to prevent situations similar to the one facing the University of Essex in Southend? Thank you.
23:32
David Burton-Sampson Portrait David Burton-Sampson MP (Southend West and Leigh, Labour)
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David. and I thank my hon. Friend for Southend Eastern Rochford for bringing forward this debate. He knows that this is a matter that we both care passionately about, especially given the impact the closure of the Southend campus of Essex University will have on both our constituencies and our constituents. It really is a great shame for the students of today, for the students of tomorrow, and a great loss for the city itself. Let me begin by expressing my backing for my hon.

Friend's positive moves to support students who have expressed concerns to both of us in recent weeks. I understand, and I share those fears, which is why my hon. Friend and I, together with the leader of Southend City Council, are pursuing the university's leaders to create a workable plan to at least alleviate the worst effects of this deeply disappointing decision and find some kind of resolution for the staff, the students and the city of Southend. My own university experience has told a very different story.

I was so fortunate. It said that education opens doors to worlds you never knew existed. I look around me now, and when I started out as a child of a working class single parent family, the first to ever attend university, I could never have imagined standing here today, the opportunities afforded to me by attending university and completing my degree, I believe, have helped shape the career that I have today and make me the person I am, both personally and professionally. In my come as a surprise.

Madam Deputy Speaker, when you look at the shrinking violet I am now that I trained as an actor, taking a degree in performing arts at the world renowned Lippa in Liverpool. So the end of the acclaimed East 15 Acting School in Southend, a casualty of this campus closure, is a loss very close to my heart. I spoke to a course lecturer over the weekend who is devastated at the loss of this facility, not just for her as she will not be able to transfer to Colchester, but for the students and also the city as it loses the Cliff Down Theatre, a much loved cultural resource.

I, like the rest of my generation, was lucky enough to get a grant for my degree. That experience changed my life, gave me lifelong skills and abilities, and expanded my horizons. The days of grants are sadly long gone, but the ambition should not be. And that is why the closure of the South Campus is just a disaster. Denying the students of the future opportunities of training in their chosen area. Many of these are key worker courses, vitally needed nurses, dental technicians and midwives all trained in Southend for the past 18 years at that campus.

Now all that is to end and local youngsters will have to go elsewhere to fulfil their dreams. But if you don't have the means to do so, this could snuff out your ambition. Deny your potential with

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all of its lifelong repercussions. I will give way briefly. I thank the hon. Member for giving way. Would he agree with me giving way. Would he agree with me that it's a desperate situation when so many of our universities are heading into deficit? A very are heading into deficit? A very large number, about 40 to 50%, judged by the Office of Students. judged by the Office of Students. And would he agree that we really need to see some action here to put our universities back on a secure financial footing?

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financial footing? I would agree with my hon. Friend and her analysis of this. We have been left this situation by the last government, and this government has a job to get universities back on a good foot, but I know the government will do all they can. I will hope the government will do all they can to to answer her concerns, but I have grave concerns over the impact the closure will have on the future pipeline to those skills and much needed jobs within South Essex in particular for future generations to come.

If, if, if a if a facility is no longer in existence here, then how will we ensure that we can attract people to train in these vitally important areas? So will the Minister give me an assurance that promotion and attraction to these vital skills skills courses elsewhere in Essex for young people in my constituency and the wider South Essex area will be considered, including how we make sure the ease of access to them to participate now that the campus won't be there in Southend.

The challenges the the students in the middle of their courses now face are obvious and too numerous to expand on here from having the expense of commuting to the campus in Colchester to being forced to abandon caring duties for their families, the future of this cohort is fundamentally at risk, and we are fighting hard to make sure no one is forced to drop out. My hon. Friend and I have heard terrible stories about students quitting mid-course already, despite being in deeper debt.

And this must not happen. So can the Minister give me assurances that the Department for education and the Department for Health and Social Care will do all they can to ensure that no one is forced to abandon their courses because of this closure? My hon. Friend for Southend Eastern Rochford has outlined the work this government is doing to bolster higher education after 14 years of Tory neglect. I am delighted to see the government will reintroduce targeted means tested maintenance grants by the end of this Parliament for disadvantaged students on priority courses.

These grants will provide financial support that does not need to be repaid, helping to remove barriers to opportunity and making sure no one is left behind. I want to see opportunities retained locally for my constituents in Southend Western Lea. So even though the university campus may not, may be no more with us, the crucible of ideas that were forged there for so many futures here must not be lost. Thank you.
23:39
Josh MacAlister Portrait Josh MacAlister MP, The Parliamentary Under-Secretary of State for Education (Whitehaven and Workington, Labour)
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Madam Deputy Speaker, I would like to begin by expressing my gratitude to my hon. Friend, the Member for Southend East and Rochford for securing this debate. My hon. Friend's dedicated record of 15 years of service as a youth mentor, alongside his work as a school governor, overseeing the education of young people, provides an invaluable perspective on these matters, and in particular on the transition into higher education. I would also like to note the contribution and efforts of the Member for Southend West and Lea in this matter, as well.

The work of both Southend members in supporting students in their area demonstrates their clear commitment to the principle that education must be the primary engine for breaking down barriers to opportunity. This government shares that ambition and we are focused on delivering the structural changes required to make that a reality. I was personally struck by my hon. Friend's remarks during the Second Reading of the English Devolution and Community Empowerment Bill, where he stated that his constituency of Southend East and Rochford is a proud coastal community that has too often been left behind when it comes to connectivity, education outcomes and investment in skills.

Our post 16 Education and Skills white paper sets out our vision for a world leading skills system, which breaks down barriers. We are determined to ensure that, as the hon. Member said, where someone lives should not negatively impact their future. Our Skills White Paper provides the blueprint for delivering the Prime Minister's new target of two thirds of young people participating in higher level learning, academic, technical or apprenticeships by age 25, up from 50% today. But we can only deliver this by putting the sector on a secure financial footing.

That is why we will increase tuition fee caps for all higher education providers, in line with forecast inflation in academic years 26, 27, 27, 28. We will then legislate when parliamentary time allows to increase caps automatically for future academic years, and this is crucial for getting to the root of some of the challenges our higher education institutions face regarding sustainability. This increased investment must be matched by commitment to excellence. We will make future fee uplifts conditional on higher education providers achieving a higher quality threshold through the office for students Quality regime, and restrict fee income where that cannot be demonstrated.

This protects taxpayers investment and rewards providers for higher quality. We are also committed to supporting the aspirations of every person who meets the requirements and wants to attend higher education. We will introduce targeted means tested maintenance grants up to £1,000 a year from academic year 2829, providing vital extra support for students from low income households without increasing their debt. These will be funded by the introduction of a levy on income from international students, to help students from the most deprived backgrounds will future proof financial support by increasing maintenance loans in line with forecast inflation every academic year? Furthermore, I am particularly proud that we will provide extra support for care leavers who will automatically become eligible to receive the maximum rate of maintenance loan from academic year 2627.

Now, turning to the situation specifically in Southend, I'm aware of the concerns raised about the University of Essex decision regarding its Southend campus, and I want to assure my hon. Friends that the department is working closely with the office for students, the university and local partners to understand and secure practical options that would affect students. The department's priority is to protect students interests by ensuring continuity of study and access to clear information, support and practical options. Where a campus closes, providers are expected to act in the best interests of students, including enabling transfers where this is their choice.

Hon. Members rightly expect good quality communications from the institution about how this change is being implemented. This change should support improved value for money for all, and should be backed by a stronger focus on increasing participation for disadvantaged learners. I know my hon. Friend's. The members for both Southend constituencies have spoken directly with my noble friend, the Minister for skills, and that they have been working proactively with the Department for Health and Social Care Ministers there. The NHS England and local partners to their local leadership on seeking early local collaboration will play a vital part in minimising disruption for students into the future.

My department will continue to work closely with the office for students, the university and others in the local area, including Members of Parliament, as the situation relating to the University of Essex develops. I want to thank the members for Southend East and West for their continued in championing the championing the needs of local students, and to reassure them that the government will support their efforts to manage campus changes in a way that minimises disruption for students and ensures that the area

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has a bright future. Thank you. The question is that this House

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The question is that this House do now adjourn. As many of that opinion say I the ayes have it. The opinion say I the ayes have it. The
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