Oral Answers to Questions

Debate between James Cartlidge and Stewart Hosie

Tuesday 7th February 2023 Commons Chamber

[Mr Speaker]

I call SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I have a constituent with a number of shops. He has seen his four-weekly energy costs rise from £12,000 last October to £27,000 today. Moving on to lower tariffs, but with the reduced energy support, he will still see that £12,000 every four weeks doubled, to £24,000. What advice would the Minister give to my constituent? How would he find the £140,000 off the bottom line in a business already operating on tight margins?

[James Cartlidge]

With great respect to the right hon. Gentleman, he was there when I gave the statement about the new scheme. I was clear with him about the fiscal position overall. He is welcome to write to me on that specific case. Obviously, I cannot comment on the detail of that individual case. What I can say is that we continue to put in place up to £5.5 billion of support with the energy bills discount scheme. That is a significant intervention and it remains a universal scheme with targeted support for the most energy and trade-intensive sectors.

[Stewart Hosie]

Therein lies the problem: this will go to high energy users. The Federation of Small Businesses described the changes as “catastrophic” and

the beginning of the end for tens of thousands of small businesses”,

the British Chambers of Commerce said that

“an 85% drop in the financial envelope of support will fall short for thousands of UK businesses who are seriously struggling”,

and UKHospitality criticised the sudden and sharp drop in support, estimating the move would cost that sector £4.5 billion in the next 12 months. Why does the Minister think they were all wrong and he is right?

[James Cartlidge]

As I said to the hon. Member for Airdrie and Shotts (Ms Qaisar), we were clear when we created the scheme to support businesses with their energy bills that it had to be time limited because of the generosity of the support—£18 billion over six months. We were absolutely transparent about that. But we have maintained a universal scheme covering businesses, charities and the public sector. Yes, it is less generous, but it remains significant. As I said, he is welcome to write to me with the specific case he raised.

IMF Economic Outlook

Debate between James Cartlidge and Stewart Hosie

Tuesday 31st January 2023 Commons Chamber

[Mr Speaker]

I call the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I suppose that it is apposite that there is an urgent question on a potential recession on the third anniversary of Brexit.

The IMF has said that the economy of the UK—the only G7 country facing recession—would face a downgrade reflecting, it says, tighter fiscal and monetary policies and the still high energy retail prices weighing on household budgets. There is no getting away from it: with even sanctioned Russia forecast to grow, that is a gloomy prognosis. Given that the Government expect to meet their own new fiscal rule on public sector net debt by a paltry £9 billion in 2027-28, according to the Office for Budget Responsibility, the Government’s own strictures mean that there is no fiscal headroom to provide more support. Is this not the time, therefore, to reduce the energy companies’ investment allowance, which allows them to reduce the tax that they pay by 91p in the pound, to start to generate a meaningful windfall tax that is required to further support households and small and medium-sized enterprises—two of the main drivers of the IMF forecast for the economy—which will otherwise see their energy costs rocket this year?

[James Cartlidge]

The right hon. Gentleman talks about tight fiscal monetary policy. We are faced with inflation; it is higher in the UK than in 14 countries in the EU. Inflation is a global challenge, so he is right: we do need to have that stance. Obviously, we want to get inflation down. The cost of energy bills is precisely why, this winter, a typical household in the United Kingdom will have received £1,300 of support, £1,400 in cost of living payments, and the energy price guarantee, estimated by the OBR to be worth £900 for the typical household. That support is provided to every single part of the United Kingdom.

The right hon. Gentleman’s specific suggestion—to be fair, he is making a specific fiscal proposal in relation to the allowance—will hurt one particular sector: the North sea and investment in UK energy. Does he know what the long-term answer to this is? It is not supporting families—we are doing that very generously at the moment—but energy security, investing in nuclear and in the North sea as part of our transition to net zero.

Alcohol Duty

Debate between James Cartlidge and Stewart Hosie

Monday 19th December 2022 Commons Chamber

[James Cartlidge]

I am grateful to the Father of the House for his question—I do not think that I will ever get another that mentions both elasticity and high-strength cider; it was an interesting combination of points. He made a very good point about wine. I have enjoyed engaging with all the main alcohol sectors, mainly in November, in the run-up to the making of this decision. As he knows, we are requiring all wine between 11.5% and 14.5% ABV to be treated as though it were 12.5% ABV for the purpose of calculating the duty rate. That will apply for 18 months, so there is a transition. We have to ask ourselves: if that were made permanent, would it not undermine a regime that is ultimately based on taxation by strength? I understand my hon. Friend’s point and will continue to engage with the sector on it.

[Stewart Hosie (Dundee East) (SNP)]

I welcome the statement. I have long supported an alcohol content duty regime, and I hope that it delivers the fairness that the sector needs. As a gentle aside, may I say that we did not need Brexit to bring in this regime? The UK could have applied for a derogation, but it chose, over decades, not to do that.

I have some technical questions. The previous Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), announced a one-year freeze on alcohol duty in “The Growth Plan 2022”; that was due to cost £545 million in 2023-24. The current Chancellor scrapped that, but anticipates an additional yield of £1.3 billion in 2023-24; that was in the autumn statement 2022. First, how can a one-year freeze cost £500 million, while its cancellation in the same year suddenly generates £1.3 billion of additional yield? Also, we have been told that the freeze is being reintroduced and will last until August. How much will that cost the Exchequer?

The proposals following the post-2021 Budget consultation have been reported as having a modest cost of only £25 million next year—that was in the autumn statement Green Book. But this statement seems to suggest that the cost to the Exchequer of the draught beer relief scheme alone will be £100 million a year. Will the Minister explain what the net cost of this measure will be either to the Exchequer, or to the industry? As things stand, the numbers are not clear and in some cases do not add up.

[James Cartlidge]

I am glad that the right hon. Gentleman supports the principle of the reform package that will come into place next August. I hope Members across the House can do so. The cost obviously depends on what decision is made in the Budget next year. That is a matter for the Chancellor at the time. We know that that will be on 15 March, so there is not too long to wait.

The right hon. Gentleman made the point that it was not necessary to leave the European Union to make these changes. To be clear, EU law does not allow member states to differentiate beverages on qualitative characteristics such as whether the product is on draught. EU law actively discourages any attempt to support the on-trade through the duty system. That is also true for a system based on ABV; by and large, that would have been very difficult as well. The fact is that this is a radical reform and it has been made possible by Brexit.