(4 days ago)
Lords ChamberTo ask His Majesty’s Government what assessment they have made of the latest estimates of the current GDP per capita, and of the factors contributing to it.
My Lords, the latest data from the ONS shows that GDP per capita has risen by 0.9% over the past year, in line with the OBR’s forecast, and this is the second fastest in the G7. This compares with a fall of 0.1% during the previous Parliament. The increase in GDP per capita in the past year is due mainly to the strong rebound in both private consumption and investment. Of course, we want to go further, which is why economic growth is the Government’s number one priority.
Indeed so, but the Minister will be aware that the ONS’s latest figures show that in the most recent quarter, economic growth per capita grew by only 0.2%—less than half than in the previous quarter. Will he accept that this is entirely due to the Government’s policies on the national insurance increase, the lack of business confidence because of the Employment Rights Bill, and the wholly unnecessary delay in the Budget? Would he like to clarify his previous remarks about the effect of Brexit being 4% on growth and productivity, when he knows very well that the OBR said that that would be over 15 years? This means that on a per annum basis, the effect is teeny and within the margin of error.
The answer to all the noble Lord’s questions is no. He points out that GDP per capita grew by 0.2% in the second quarter of this year; that compares with 0.1% over the entirety of the previous Parliament. If he wants to make comparisons, I am more than happy to do that. I do not accept the points he makes about the Government’s other policies. We are currently the fastest-growing economy in the G7. On his points about Brexit, the OBR has been very clear that Brexit has permanently reduced the size of our economy by 4%. Its calculations are absolutely clear on that point.
(1 week, 4 days ago)
Lords ChamberWould the Minister like to confirm that, without Brexit, his Government would not be able to put VAT on private schools?
Without Brexit, GDP would be 4% higher, so we would not need to.
(1 month, 1 week ago)
Lords ChamberTo ask His Majesty’s Government what assessment they have made of the growth figures for July 2025.
My Lords, UK GDP grew by 0.2% in the three months to July 2025, following an increase of 0.3% in the three months to June. Overall, the economy grew by 1% in the first half of this year, well above the OBR forecast of 0.6%. This means the UK was the fastest-growing economy in the G7 over this period. Of course, we want to go further, which is why economic growth remains the Government’s number one priority.
Indeed it is, but the ONS said that there is zero growth in GDP. Of course, that means that GDP per capita will be negative, partly because productive people are leaving and less productive people are arriving. The markets have made their view of our economy clear, as our borrowing rates are higher than in any other country in the G7. Will the Minister agree to meet the Growth Commission, which has some excellent ideas on growth? As Treasury Minister, will he persuade his new colleagues of what every employer is saying, that the Employment Rights Bill will severely curtail growth? Now is the time to amend it.
I am very grateful to the noble Lord for his question and for his thoughts on growing the economy. After his success in advocating for a Brexit deal that reduced GDP by 4%, it is always very helpful to get his advice on economic growth.
The noble Lord mentioned the monthly growth figures. I do not know whether he is an avid reader of the Office for National Statistics blog posts, but he may have seen that the ONS announced this week that it will be reverting to leading with the three-monthly growth figures, which are less volatile and provide a clearer picture of underlying economic momentum. He may therefore have seen that UK GDP increased in the three months to July. In that data released, we can see that the Government’s action to turn around the legacy of underinvestment from his Government, opposed now by the party opposite, is having an effect, and construction output increased by 0.6%, driven by 2.1% growth in new infrastructure work.
The noble Lord may also have seen that exports to the US increased in July. He may have seen that the UK economy grew by 1% in the first half of this year, and that as a result, the UK is the fastest-growing economy in the G7. He may have seen Lloyds Bank’s latest business barometer, which shows that business confidence rose for the fourth consecutive month to its highest level in 10 years.
(1 month, 2 weeks ago)
Lords ChamberI am afraid I do not know the specific answer to the noble Lord’s question. I will happily write to him to clarify.
If the Government are serious about growth, they need to encourage investment in private assets. When applying what many of us regard as retrospective inheritance tax to private defined contribution pension funds, HMRC has specifically excluded the opportunity to apply business property relief to assets. Given the exclusion of investment trusts in the pension Bill, which is regrettable, how are HM Government going to actively encourage and facilitate people to invest in private companies?
Our entire agenda is built around encouraging exactly what the noble Lord states. He mentioned inheritance tax. I want to clarify that pensions, and the considerable tax reliefs on them, are designed to provide income for retirement, rather than acting as a tax-planning vehicle for transferring wealth free of inheritance tax. That is an important principle to maintain. Equally, he asks how we are going to encourage investment in private assets. That is exactly what these reforms are designed to do.
(3 months, 1 week ago)
Lords ChamberTo ask His Majesty’s Government whether they plan to take action to tax imported goods worth below the £135 threshold for value added tax.
My Lords, VAT is already due on all imports into the UK. The Government are reviewing the customs arrangements for imports under £135 and are exploring the merits of reform to the online marketplace rules.
My Lords, I am glad the Government are reviewing it; as the Minister is aware, the noble Lord, Lord Lucas, RAVAS, the British Retail Consortium and many others have been campaigning on this issue for many years. Now that President Trump is reducing the exemption tariff for goods into the US, there will be extra pressure on Chinese suppliers to send goods VAT and duty-free to the UK. I understand that the EU is minded to reduce the exemption to zero in 2028. Can we be assured that the United Kingdom will not wait for the EU in reducing our exemption to zero?
I am grateful to the noble Lord for his question. Just to be clear, again, VAT is already due on all imports of goods into the UK, regardless of their value. Since 2021, VAT on imports below £135 is collected at the point of sale. There is some evidence of non-compliance, so the Government announced in April that we will review the online marketplace rules. We are engaging with stakeholders to understand the impact of any potential changes. On customs duty, given the concerns of domestic retailers about the lack of a level playing field, we have also announced a review of those arrangements. Since the Government announced the review in April, both Ministers and officials have engaged with a wide range of stakeholders on the impact and operation of the regime. The findings from that engagement will help determine the review’s next steps.
(3 months, 2 weeks ago)
Lords ChamberI thank my noble friend for his question, and I pay tribute to his expertise in this area; I know it is something he is deeply passionate about. He speaks about the importance of scale-up in this country. For many years, we have been very good at start-up, but much less good at scale-up. That is something we are seeking to do. As I have already mentioned, the reforms and increased capital for the British Business Bank will be crucial to that. Throughout our work to develop the industrial strategies, we have seen that access to finance has been a central challenge for many companies. He talks about our pension reforms and the Mansion House compact. Those reforms aim to generate up to £50 billion of additional capital to help companies to start to scale up and for crucial funding at that stage of their life.
My Lords, I declare an interest as a senior partner of Cavendish plc, the largest nominated adviser to listed companies on the stock exchange. We asked our clients why they are going to America. They give us two reasons: the multiples are higher in America—so be it—and the net remuneration package. Both founders of Wise and many directors of AstraZeneca were born abroad. The non-dom rules are driving away entrepreneurs in droves. This is why many companies are choosing to list abroad. We know that Labour is going to change its policy on non-dom tax—it is not a question of if; it is a question of when. Can I implore the Minister to speak to Treasury to make it as soon as possible?
I commend the noble Lord for knowing more about government policy than I do. He talks about those companies listing abroad. It is interesting, just to look at some evidence, that IPOs on US exchanges show that non-US companies tend to perform much less well than US ones, suggesting that from a valuation perspective it is better for firms to list on their home market. In the last 10 years, of the 20 British companies that listed in the US, nine have already delisted, only four are trading above their IPO price and the rest are trading down on average by 80%.
(3 months, 2 weeks ago)
Lords ChamberI am grateful to my noble friend for her question. As part of the action we are taking to close the tax gap, HMRC is recruiting an additional 5,500 compliance officers by the end of the Parliament; 400 of them will work specifically on wealthy offshore risks. HMRC has also created a new team focused specifically on tackling offshore non-compliance cases and is expanding its counterfraud capability, targeting those who facilitate wealthy individuals hiding money offshore. In the report that my noble friend mentions, the National Audit Office recognises that this Government are scaling up compliance activity to tackle serious offshore non-compliance and have committed further funding to do so. Looking ahead, we will take further action to close the tax gap; we have published consultations on strengthening HMRC’s ability to act against tax advisers who facilitate non-compliance and to close in on promoters of marketed tax avoidance. Finally, my noble friend asked about timescales. We will set out further plans in the Budget and will shortly publish a road map setting out HMRC’s strategic ambitions and the transformation required to achieve them.
My Lords, I welcome the Minister’s response—heaven knows, after last week the Government will have to raise a hell of a lot of tax to compensate for the extra expense they are incurring. On offshore tax avoidance, he will be aware that 3 million parcels a week arrive in the UK from offshore suppliers containing goods below £135 in value and therefore exempt from VAT. It is estimated that roughly £1 billion of additional VAT—that is not even in the tax gap—could be recouped. A number of actors, including RAVAS, have ideas on how to cure this. Will the Minister agree to a meeting with the Treasury and HMRC, which keep batting us away, to discuss how we can stop this tax gap?
I am grateful to the noble Lord for his question. I know that he has been in touch with my colleague the Exchequer Secretary to the Treasury and has discussed having a meeting. I am sure that he will be in touch in due course.
(4 months, 2 weeks ago)
Lords ChamberI do not think I can give a positive answer to the main thrust of the noble Baroness’s question. As she will know, and as I said already, the Government are making available £3.7 billion of additional funding for social care authorities in 2025-26. We will set out future years’ allocations in the spending review on Wednesday. As she knows, the Government will provide support for departments and other public sector employers for the additional employer national insurance costs.
My Lords, in Committee on the national insurance Bill we put an amendment down to exempt hospices specifically from national insurance increases. The CEO of Thames Hospice, to which I declare I am a donor, said that, as a result of the proposed changes, more people will die in pain and agony than would otherwise need to be the case. What assessment have the Government made of the cost of these national insurance increases on hospices specifically, and what advice would he give to the chief executive of Thames Hospice?
As the noble Lord knows, the Government recognise the vital role hospices play in supporting people at the end of their life and their families. The Government are determined to shift more healthcare into the community and ensure that patients and their families receive high-quality, personalised care in the most appropriate setting. Hospices will have a very big role to play in that shift. The Government are supporting the hospice sector with an additional £100 million for adult and children’s hospices, to ensure that they have the best physical environment for care, and £26 million revenue to support children and young people’s hospices.
(5 months, 3 weeks ago)
Lords ChamberTo ask His Majesty’s Government what assessment they have made of the loss of tax revenue from wealthy individuals leaving the country following recent tax changes.
My Lords, the OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue over the five-year forecast period. That figure accounts for some non-doms who are ineligible for the new regime choosing to leave the UK in response to these reforms. The Government will continue to work with stakeholders to ensure that the new regime is internationally competitive and focused on attracting the best talent and investment to the UK.
The ideologically driven decision to include overseas assets in IHT for both non-doms and former non-doms is described in the national press as Rachel Reeves’s biggest mistake. Despite what the OBR says, capital gains tax receipts have fallen by 10% and, as we heard on Friday, the national debt is ballooning. Does the Minister agree with me that, given that 30% of income tax receipts come from 1% of taxpayers and they are leaving in droves, it is a question not of whether this policy is reversed but of when? It is time to put country before party.
I do not agree with the substantive bulk of the noble Lord’s question. He mentions the capital gains tax figures. The latest outturn data for capital gains tax relates mainly to capital gains tax liabilities in the 2023-24 tax year, so pre-dates the announcement of non-dom reforms by the previous Government and this one. This Government’s tax reforms to the non-dom regime and to capital gains tax keep the UK an attractive place to live and to invest, while ensuring that everyone who is a long-term resident pays their taxes here, helping to fairly fund our public services. The UK’s main rate of capital gains tax is lower than in any other European G7 country, as is our corporate tax rate, and our new residence-based regime is simpler and more attractive to new arrivals than the non-dom regime it replaces.
(7 months ago)
Lords ChamberI absolutely recognise the issues that the noble Lord raises. The Government’s view is that now that they have temporarily removed investment trusts from cost disclosure requirements, implementation is a matter for the industry. I recognise that there are some frustrations among the sector, but we believe that operationalising this legislation is a matter for the industry and the regulator.
My Lords, I declare my interests as an investor in investment trusts and as a senior partner at Cavendish, which has written in to the consultations. It is quite clear that investment trusts offer members of the public the opportunity to invest in assets that would not otherwise be available to them and should be encouraged. The problem is that the rules were set in Brussels, and Europe does not have investment trusts. We now have the opportunity to do something bespoke and specific for us. Does the Minister agree that that will not be possible with the current structure that we have with the FCA and that it is now time that the FCA and, for that matter, FOS, were brought within government so that the situation as my noble friend Lord Forsyth explained it can be resolved?
I do not think I can agree with the second part of the noble Lord’s question, but I absolutely agree that these vehicles do not exist in Europe and do exist in this country, which is exactly why the Government legislated to reform retail disclosure in the way that they did so that it is fairer, more proportionate and more suited for UK markets.