Budget Resolutions

Roger Gale Excerpts

Tuesday 12th March 2024 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

May I say to the hon. Member for Wakefield (Simon Lightwood) that there is no point in Labour Members banging on about unfunded Tory tax cuts, when Labour is not going to do anything different and says it will not reverse them?

Productivity is an almost abstract word that is bandied about all the time, but the one point of consensus is that the UK’s productivity rates lag behind those of comparable countries. We keep hearing pronouncements about the need to improve productivity, but nothing changes. The last Prime Minister—the one of just 45 days—believed that tax cuts, especially for the richest, somehow boost the economy and productivity. Despite that ideology, the Government never show how the rich getting richer boosts outcomes or increases manufacturing productivity, or how tax cuts for the richest transform the productivity of those paid the least, who are doing the real work. Productivity certainly is not boosted by trying to force the long-term sick or those with disabilities into jobs they are not suited for.

The reality is that increased productivity stems from good planning and strategic investment. The Chancellor’s decision to make full expensing permanent at the autumn statement might drive forward investment but, even so, there are still questions to be asked about how the UK went into recession. Indeed, despite what the Government always tell us about global factors that affect all other countries, such as the war in Ukraine or global inflation rates, the reality is that within the G7, the UK is only outperforming Germany in GDP growth compared with pre-pandemic levels. Over a four-year period, the UK’s GDP growth—at just 1%—is a third of the eurozone, and miles behind US growth at 8.2%.

Of course, it is no coincidence that the US has its Inflation Reduction Act or that the eurozone is covered by the EU’s green deal industrial plan. It is no coincidence either that the UK has the lowest levels of investment in the G7—further proof that the Government should be providing schemes and investment to counter the EU and US measures. Instead we heard from UK Ministers at the time the blasé attitude that these other countries were simply playing catch-up with the UK. It was blinkered British exceptionalism at its worst. Indeed, the Government still do not recognise that they have fallen further behind; not only that, but they failed to listen to renewable energy developers about the strike rate for offshore wind being too low in the last contracts for difference auction, which has lost investment in renewable energy and thrown the 2030 deployment targets into doubt.

Until the failure of auction round 5 for offshore wind, the contracts for difference process was at least a success for deployment of renewable energy. However, it still represented missed opportunities for UK-based supply chain development, for investment to be targeted at UK manufacturing and for increased UK productivity. Instead, the UK Government made it a race to the bottom in terms of price, so we saw billions of pounds of investment offshored in that process. The Government hid behind EU directives but now, post Brexit, the procurement strategy still does not sufficiently incentivise local content.

On Brexit, being outside the single market and the customs union—completing additional paperwork and products undergoing additional checks—clearly affects productivity. The OBR has confirmed that the UK is still on track to see a 4% hit to GDP and a 15% reduction in EU trade as a result of Brexit. Goldman Sachs estimates that Brexit has cost the UK 5% in GDP against comparable countries, so it is undeniable that Brexit is a large contributing factor to the UK’s performance within the G7—another issue completely avoided by Labour in today’s debate.

Greater investment is required in infrastructure, but the Budget did not allocate additional capital moneys. Indeed, the Scottish Government’s capital budget is suffering a cut of close to 20% in real terms this year; yet somehow the Scottish Tories demand ever more construction—ever more deployment from the Scottish Government—while standing by as Westminster slashes our budget. That said, the Scottish Tories now see at first hand the Westminster respect agenda, as their wishes were overridden by the extension of the windfall tax. That is a further £1.5 billion of revenue from Scotland that is not being used for reinvestment. It is not propping up Scotland’s capital budget; it has been used for a tax cut. That is shameful—and yet, we are supposed to doff our cap and be grateful for £300 million of additional Barnett consequentials.

We know, though, that cuts to the Scottish Government are coming down the line, given the £19 billion of departmental cuts associated with the autumn statement and now baked into this Budget. Of course, as was pointed out earlier, Labour is effectively sticking to the Tories’ spending rules, so Labour will introduce austerity 2.0 if it comes into power. It is no wonder that the IFS says there is a “conspiracy of silence” from both Labour and the Tories on the scale of cuts coming down the line.

One cut that has been delivered is to the higher rate of capital gains for property sales. There has been enough analysis to show that charging capital gains tax at the equivalent rate of income tax would realise an additional £10 billion to £15 billion for the Treasury, yet somehow we are meant to believe that lowering the upper rate will magically bring in more money. It defies logic.

Labour likes to talk about Norway and the taxes it raises from the North sea. I like to talk about Norway, too, and the fact that it has a $1.5 trillion sovereign wealth fund, which is the biggest in the world. We look at Norway as what we might have been. It is not a change of Government that we need at Westminster—

[Mr Deputy Speaker (Sir Roger Gale)]

Order.

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[Fleur Anderson (Putney) (Lab)]

I know that the residents of Putney, Southfields, Roehampton and Wandsworth town will be watching this debate, because they tell me all the time as I go out and about in the constituency that they watch the Parliament channel. I also know that they will be very, very disappointed by the Budget. They will have seen nothing for our declining high streets, nothing for youth centres, and nothing to tackle the cost of living crisis that means that there are higher bills but less money for my constituents week after week after week.

The theme of this debate is productivity, which is fundamental for our competitiveness, wage growth, ability to attract investment and overall future economic wellbeing —in fact, our wellbeing as a whole. Without growth, we cannot have the hope for the future, the hope for our young people and the boost for our economy that we need. I will focus on one area of under-investment which has meant a chronic lack of productivity across the UK, an area of investment that is essential to tackle the climate crisis, boost our economy and give young people hope: green skills.

I was disappointed to hear in the Budget that there were no new policies to help boost the roll-out of low-carbon technologies such as electric vehicles or heat pumps. There is a clear need for better alignment between net zero investments and the skills and employment system. That is the problem that leads to our poor productivity at the moment. Solar Energy UK called the Budget “virtually nude” of anything to bolster that sector. We cannot begin to move in the right direction on green productivity without having the processes in place to embed green skills within our economic infrastructure, but we need a whole industry and skills approach. There is a massive shortage of heat pump engineers. We currently have 3,000, but we will need 27,000 by 2028. Offshore wind industry engineer numbers need to triple to just over 104,000 to meet our current targets, let alone our future ones.

Political choices have led to that under-investment and under-skilling. The Institute for Public Policy Research found that the UK employs fewer people in renewable energy as a proportion of the working age population than most other European countries. It does not have to be that way. In my constituency, South Thames College offers courses in green skills and solar panel fitting. It is taking proactive steps, responding to the wide range of green jobs arising across the economy. By helping students to move into apprenticeships or jobs, South Thames College shows that it is ahead of the curve in adopting a joined-up approach. Also in my constituency is Treadlighter, a solar energy company in Southfields. It is booming, but it cannot keep up with demand because it needs more skilled trainees and staff to fit panels.

Matching skills with green businesses is essential, but Government inaction is currently holding back productivity. A whole new approach is needed throughout the economy to secure a seamless transition between training, education, manufacturing, supply and services, but we do not see any of that in the Budget. We see no new boost, and nothing about the new revolution in green skills that would be so exciting for our economy and would give us hope. The Government’s green jobs delivery group has been meeting for a year and plans to publish its green jobs plan soon, but the Budget has given nothing to the green energy industry, so I have no high hopes for that plan.

We in the Labour party know how important to our success investing for the future will be, which is why we have committed ourselves to spending £23.5 billion during our first Parliament in government in order to deliver green power by 2030. Green British Energy, a publicly owned energy company, will invest in green energy projects including offshore wind, hydrogen, carbon capture, tidal and nuclear. If we can match that with the green skills revolution, we really will have the productivity that we need to change the amount of money in the pockets of people across my constituency.

The No. 1 mission of the next Labour Government is to get our economy growing so that Britain will be better off, and we will do it through stability, investment and reform. That means bringing stability back so that we can protect family finances with tough fiscal rules and a long-term plan for our economy, it means investing in British business so we can unlock tens of millions of pounds of private sector investment for our towns and cities, and it means reforming planning so we can boost growth and get Britain building again. The Conservatives are missing in action. They have run out of ideas, they have run out of ambition and hope, and they have run out of all the ways in which growth can be boosted. It is time for a new approach: it is time for a Labour Government.

[Mr Deputy Speaker (Sir Roger Gale)]

To make the last Back-Bench speech of this Budget debate, I call the ever patient Ruth Jones.

[Ruth Jones (Newport West) (Lab)]

Thank you, Mr Deputy Speaker. I knew my patience would be rewarded in the end.

I am pleased to be able to say a few words on behalf of the people of Newport West. I am just sorry that those words will be about such a bad Budget—a missed opportunity, and a let-down for my constituents. I congratulate the Leader of the Opposition on his powerful and compassionate response to the Budget on Wednesday. I also congratulate all my right hon. and hon. Friends who have spoken in recent days, especially the shadow Chief Secretary to the Treasury, who, earlier this afternoon, called out so powerfully and forensically the lack of a Government plan.

Week in and week out, real people come to my office, write to me, email me and call my team to describe their struggles to heat their homes, feed their families and pay their mortgages. Since my election to this place in 2019, my brilliant team have dealt with people in desperate need throughout my constituency. With each fiscal event from this tired Tory Government, my constituents have been moved from getting by to struggling, or, even worse, from struggling to absolute poverty. Since I was elected, absolute child poverty in Newport West—the percentage of children living in households with incomes below 60% of the median income—has remained at about 15%. That is shocking, and nothing has changed. The UK rate is also 15%, so this is a British problem, and nothing in the Budget will make things better for working people.

The people who have all the power to help are sitting right over there on the Government Benches. The Chancellor, who seems to be feeling the pressure in his constituency, could have delivered a Budget that invested in this country. He could have taken meaningful action to mitigate the cost of living crisis, and he could have genuinely helped people. I know, we all know and, worst of all, the Conservatives know that they could have done far more to help ordinary people, but they made the political choice not to. One of my constituents who had had problems with obtaining the warm home discount wrote to me recently that

“people have to beg for help, and they get fed up with the long drawn out process. Many are not getting the help that is promised by the government.”

That is the real-life experience of people in my area, and I urge Ministers to wake up and take action.

This Budget confirms that the UK has the highest tax burden in 70 years, which will rise in every year of the forecast period. The Office for Budget Responsibility’s figures show that for every 10p extra that working people will pay in tax under the Tories’ plan, they will get back only 5p as a result of the combined national insurance cuts. That includes the OBR’s revised estimate for the impact of tax threshold freezes, which will raise £41.1 billion over the forecast period, creating 3.7 million new taxpayers by 2028-29.

Given everything that was not in the Budget, we should all be very afraid. We should think about the £46 billion-worth of unfunded tax cuts that have been promised by the Chancellor and the Prime Minister. This reckless attempt to save their own jobs, with no regard for anyone else’s, exposes the clear risk of having five more years under the Conservatives. They will gamble with the public finances, and working people will be forced to pay the price yet again. This Tory Government clearly have not learned anything since the former Prime Minister crashed the economy and sent mortgages spiralling, leaving a real impact on working-class and middle-income people.

I am proud to stand for my party, because we know that with my right hon. Friend the Member for Leeds West (Rachel Reeves) in charge of the Treasury, Labour will never play fast and loose with the nation’s finances. I have heard nothing from the Government that improves the lives of ordinary people in Newport West. If they cannot or, worse, will not take the action needed to get our country back on track, they should make way for a fresh start from Labour.

This was a bad Budget, with nothing for Newport West. After 14 long years, it is time for change, time for a fresh start, and time for us to change course and get our country back on track. Let the public decide. Call the general election now—it is time for change.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the shadow Minister.

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[Tulip Siddiq]

rose—

[Mr Deputy Speaker (Sir Roger Gale)]

Order. I fully appreciate the orchestration, but it would be quite a good idea if one intervention was responded to before the next one was made.

[Tulip Siddiq]

Apologies, Mr Deputy Speaker. I will answer both interventions by saying that I know those on the Conservative Benches do not want to hear it, but if you make a pledge without the plan, you have to clarify where the money is coming from—[Laughter.] It is not a laughing matter. It is causing havoc in people’s finances.

Then again, nothing would surprise me from this clown show of a Government. Less than a week after committing to a British ISA, the Chancellor has apparently U-turned and ditched the plan until after the election, because he has apparently just noticed that he has no idea how he is going to pay for it. Another U-turn, another uncosted announcement, another promise without a plan from this clueless Conservative Government.

Turning to the other tax cuts in the Budget, Labour has consistently said that we want to reduce the tax burden on working people. That is why, when the current Prime Minister wanted to increase national insurance two years ago, we opposed it. Let us be under no illusions: we support the measures announced last week to bring national insurance down by an additional 2%, but that does not change the fact that this Government have raised the tax burden to record levels and taxes are continuing to rise. Under the Chancellor’s plan, households will be £870 worse off on average. His decision to freeze tax thresholds will create 3.7 million taxpayers by 2028-29.

As my hon. Friend the Member for Nottingham South (Lilian Greenwood) pointed out, OBR figures show that, as a result of last week’s announcements, for every 10p extra that working people pay in tax under the Conservatives, they will get only 5p back. And the Government expect the British public to thank them for it! However the Chancellor tries to spin it, his Budget means that Britain will go into the next general election with taxes at their highest level since 1949.

Although we will always call out the Conservatives for pickpocketing the British taxpayer, we welcome their recent pickpocketing of Labour policies. Labour has long argued that people who make Britain their home should pay their taxes here. Bizarrely, however, the Prime Minister said that scrapping the non-dom status would somehow cost Britain money. Even more bizarrely, the Chancellor previously tried to argue that the non-dom status supports jobs and that reforming it would cause long-term damage to growth.

I hope the Economic Secretary to the Treasury will explain what caused this road to Damascus moment. Is he personally responsible for finally getting his party to listen to us about the importance of closing the non-dom loophole, which the OBR estimates will raise £3 billion a year? As my right hon. Friend the Member for Walsall South (Valerie Vaz) and my hon. Friend the Member for Wakefield (Simon Lightwood) said, Labour first called for the loophole to be closed two years ago, meaning that the Government have cost the country £6 billion that could have been spent on precious public services.

I do not deny that the Conservative party has come a long way since their opposition to our windfall tax on oil and gas producers but, even after yesterday’s announcement of a one-year extension, the Chancellor is leaving loopholes that mean the energy giants will still pay billions less in tax. Surely the Government have learned by now that they would save themselves a lot of time, and the country a lot of money, if they adopted Labour’s policies in full.

This exhausted and directionless Conservative Government are out of ideas and out of time. All they had to offer last week were unfunded promises and an ever growing tax burden on working people. In contrast, our offer to the country will be carefully costed and fully funded, and it will always put working people first. The Conservatives have failed on growth, failed on living standards and delivered only stagnation and chaos.

Labour’s economic plan will build on the pillars of stability, investment and reform: stability brought about by iron discipline and guarded by strong fiscal rules and robust economic institutions. [Interruption.] Conservative Members love chuntering, but they would hear our plan if they listened properly. Investment—we will work with the private sector so that we can lead the industries of the future and make work pay. Reform—starting with our planning system, we will take on vested interests to get Britain building again.

Britain deserves better, Britain deserves change and the British people deserve an election.

Finance Bill

Roger Gale Excerpts

Report stage
Monday 5th February 2024 Commons Chamber

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Sir Roger Gale)]

With this it will be convenient to discuss the following:

New clause 1—Review of effectiveness of section 31 measures in preventing fraud involving taxpayers’ money—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, conduct a review of the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money.

(2) The review must evaluate the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money through comparison with the effectiveness of—

(a) other measures that seek to prevent fraud involving taxpayers’ money, and

(b) the approach taken in other countries.”

This new clause would require the Chancellor to review the effectiveness of measures in this Act to prevent fraud involving taxpayers’ money, and to compare them with other measures that seek to prevent fraud involving taxpayers’ money and the approach taken in other countries.

New clause 2—Review of reliefs for research and development—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the implementation costs of the measures in section 2 incurred by—

(a) HMRC, and

(b) businesses.

(2) The review under subsection (1) must include details of the implementation costs of all measures related to credit or relief for research and development that have been introduced since December 2019.”

This new clause would require the Chancellor to publish a review setting out the total implementation costs of all changes to research and development reliefs in the current Parliament.

New clause 3—Review of measures to tackle evasion and avoidance—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the measures in sections 31 to 33 to tackle evasion and avoidance.

(2) The review under subsection (1) must include details of—

(a) the average sentence handed down in each of the last five years for the offences listed in section 31;

(b) the range of sentences handed down in each of the last five years for the offences listed in section 31;

(c) the number of stop notices issued in each of the last five years to which the measures in section 33 would apply; an

(d) the estimated impact on revenue collected in each of the next five financial years resulting from the introduction of the measures in sections 31 to 33.”

This new clause would require the Chancellor to publish details of the sentences given and stop notices issued in each of the last five years to tackle evasion and avoidance, as well as the revenue expected to be generated from the measures to tackle evasion and avoidance in this Act in each of the next five years.

New clause 4—Review of public health, inequality and poverty effects of Act—

“(1) The Chancellor of the Exchequer must review the public health, inequality and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) The review must consider—

((a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK including devolved nations and regions,

((b) the effects of the provisions of this Act on socioeconomic inequalities, and on population groups with protected characteristics as defined by the 2010 Equality Act, across the UK including devolved nations and regions,

((c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK including devolved nations and regions, and

(d) the implications for the public finances of the public health and NHS effects of the provisions of this Act.”

New clause 6—Assessment of the impact of permanent full expensing—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the measures in clause 1 of this Act on—

(a) business investment, and

(b) economic growth.

(2) The review under subsection (1) must—

((a) assess the impact of full expensing being made permanent, and

(b) consider what other policies would support the effectiveness of the measures in clause 1 of this Act.”

This new clause would require the Chancellor to publish an assessment of the impact on investment and growth of the measures in this Act to make full expensing permanent, and to consider what other policies could support the effectiveness of permanent full expensing.

New clause 7—Review of multipliers used to calculate higher rates of air passenger duty—

“(1) The Chancellor of the Exchequer must, at the next fiscal event, publish a review of the multipliers used to calculate higher rates of air passenger duty for each destination band.

(2) This review must propose options for introducing a multiplier to link the higher rate and the reduced rate within the domestic band.

(3) The Chancellor must, at the next fiscal event, make clear what changes, if any, he will implement as a result of this review.”

This new clause would require the Chancellor to publish a review of the multipliers used to calculate the higher rates of air passenger duty, and to propose options for introducing a multiplier to link the higher rate and the reduced rate within the domestic band.

Government amendments 1 to 6.

[Nigel Huddleston]

The Government’s aim is to grow the economy for the good of everyone, and our tax system is a key part of that. For households, higher taxes mean less financial freedom and less choice in how they spend their money. For businesses, they can mean less growth and investment, and that means fewer jobs for workers. That is why we need to grow our economy to create jobs and give ourselves the financial headroom to reduce taxes and remove the barriers to private sector investment. We must have a tax system that is supportive of business.

At spring Budget 2023, the Chancellor set out his approach for a highly competitive business tax regime. By announcing generous tax incentives combined with a rate of corporation tax that remains the lowest in the G7, the Government ensured that the UK is one of the best places in the world for businesses to grow and invest, but we should not be satisfied with simply being one of the best. This Bill therefore marks our next step in making the UK the best place in the world to do business.

We are taking huge, ambitious steps to make that a reality in the autumn statement and in the Bill. For example, no other major economy has made full expensing permanent. That is a major step in encouraging more investment by giving a huge tax relief to those who invest. Alongside that, we have introduced a generous new regime for research and development carried out by companies. We are now going further to encourage even more investment by introducing new clause 5, which will exempt receipts from new electricity generating projects from the electricity generator levy.

I will address each amendment in turn, looking first at the details of new clause 5. The electricity generator levy was introduced following the energy crisis to ensure that energy companies with extraordinary returns contribute more towards vital public services and support for households. However, we must balance that against ensuring that the UK remains a brilliant place to invest in renewables. The new clause makes changes to the EGL that will exempt receipts from new electricity generating projects from the levy. It will ensure that all generators in scope of the levy will benefit from the exemption if they choose to proceed with investments in new generation capacity and make a substantive decision to go ahead with a project on or after 22 November 2023—the date of the autumn statement. That will help support continued investment in the UK’s renewable generation capacity by removing new investments from the tax and providing businesses with the confidence to make such new investments.

I turn to Government amendments 1 to 3. To ensure that the research and development tax relief clauses in the Bill work as intended, the Government are proposing technical amendments to the R&D clauses. The Bill introduces a new enhanced support for R&D-intensive small and medium-sized enterprises, such as those in our vital life sciences sector. From April 2024, the R&D intensity threshold will be reduced from 40% to 30%.

Amendments 1 and 2 make changes to ensure that R&D-intensive companies get the relief as intended. Amendment 1 removes two situations where a company would appear less R&D-intensive than it actually is. These issues were raised with us by an industry stakeholder, for which I am grateful. To avoid abuse and to protect the scheme for genuinely R&D-intensive companies, the ratio is worked out at a group level. Currently in the legislation, companies within groups that charge each other for services could have costs double counted and therefore reduce their R&D intensity. The amendment will fix that. The Government do not want to exclude companies from relief because of legitimate commercial arrangements that do not affect the underlying true R&D intensity of the business.

On top of providing more support for R&D-intensive companies, the Bill will simplify and improve our R&D reliefs by merging the R&D SMEs scheme with the R&D expenditure credit. To ensure that those clauses work as intended, the Government propose technical amendments to the R&D clauses. Companies and accountants wanted the merged scheme to be implemented on an accountancy period basis as that makes claims simpler and delays the merged scheme for the majority of current R&D expenditure credit claimants. It therefore gives them a bit more time to prepare.

The new rules for contracted-out R&D will ensure that the company making the decision to do the R&D and bearing the risk is the one that gets the relief. However, that means that, as currently drafted, there could be temporary situations when two companies are in a contractual relationship and one moves into the new R&D tax credit system ahead of the other. For a limited period of time, that could result in situations where both parties could claim on the same R&D or neither could claim, as was raised by stakeholders. Amendment 3 ensures that the legislation works as intended. For temporary double claims, the R&D credit will go to the claimant in the old system until both have started new accounting periods. To avoid a temporary gap where no company can claim, the legislation will be amended to ensure that subcontractors can claim where their customer is still in the old system.

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[John Redwood]

That is an interesting point of debate, but my understanding of the constitutional position is that it is not as bad as my hon. Friend is suggesting because all the bonds were acquired with the express permission of the then Chancellor of the Exchequer. The Bank of England’s website says that the bond portfolio is held on behalf of the Treasury. Successive Chancellors of the Exchequer—beginning with the Labour Chancellor who first undertook quantitative easing and carried on by successive Conservative Chancellors—all signed an agreement with the Bank to say that they would indemnify against loss. So, given that the Government and this Parliament empowered the purchase of the bonds and now take responsibility for any losses on them, it seems perfectly reasonable for there to be a proper conversation about whether we want to take the losses.

I see nothing wrong with us here challenging the idea that, uniquely among the big quantitative easing programmes, it is the Bank of England that not only insists on selling the bonds at big losses but gets reimbursed. The ECB does not sell them in the market at big losses. The Federal Reserve Board sells them in the market at big losses but gets no money back; it simply puts on its balance sheet that it has lost a lot of money and takes the view that, as it is a central bank, it does not really matter if it loses a lot of money, because central banks create money and it is therefore not like a normal commercial business. So I hope that Ministers will look at this as part of the general assessment that is being invited by these new clauses.

I hope also that Ministers will look at the expenditure items in the overall accounts covered by new clause 4 on the public finances, because there has been a marked decline in public sector productivity in the years 2020 to 2023. It was quite without precedent in my experience of following public finances over the years, and this very sharp decline represents at least a £30 billion loss to our system, in that it now costs at least £30 billion a year more to run the group of public services covered by these figures than it did before the collapse in productivity. On top of that, there has also been the need for much bigger sums to cover inflation. This is not the inflation figure; this is the real loss figure from the productivity.

We are all sympathetic to the difficulties that lockdown and the transition out of lockdown caused, and there was bound to be disruption. Our public services were badly affected by that, as children could not go to school and hospitals were disrupted by covid, but that is now some time behind us and it seems perplexing that we cannot get those public services back to 2019 levels of productivity. I hear comment that maybe artificial intelligence will do it and that there needs to be a big investment in computers. Well, that should be on top. All that I am saying to the Government is that we can surely get back to 2019 productivity levels using techniques from 2019, which was very much pre-artificial intelligence and before the latest round of computerisation. Again, this is a big area that needs to be looked at as part of any review of the public finances.

The third area, which is also very large and very much in the news today, is that even more people in our country do not feel they can go back to work and that they need help at home because they are no longer able to work. The Government are working on some important programmes, through the Department for Work and Pensions, to show people that through a combination of part-time flexible working and working at home with proper support and training, and maybe with additional financial support to help them, they could go back to work for part of the time and make a contribution. We desperately need them, and I think their lives would be more rewarding. They would also be better off because we now have a benefits system that means it is always better to work. This should be a cross-party matter, because it is a problem that our nation as a whole faces. We can enrich those people’s lives, help to reduce the burden on the taxpayer and improve the net income of those concerned. Again, this involves many billions.

My point in making these three simple points apparent to the House is that there are very large sums of money indeed involved in bond losses and productivity, which we need to review because that would help in the formation of the next Budget. It would create more headroom, both for the tax cuts that we need if we are to promote growth, and for improved public service provision in the areas where the shoe is still pinching. I trust that will be part of any review that might emerge from these new clauses, or from the spirit of these new clauses. I hope that my right hon. Friend the Chancellor is thinking about this, as we will have a Budget hard on the heels of this Finance Bill, which came out of the autumn statement. In these conditions of recovery, and given the need for faster growth, I welcome having more than one Budget a year, and the fact that we may have three fiscal events quite close to each other, if all goes well. They must promote growth and reduce taxes, and this is a good start.

I welcome new clause 5, but can we please have more? Can we please look at the headroom that I think I have helped to identify?

[Mr Deputy Speaker (Sir Roger Gale)]

I call the SNP spokesperson.

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[Drew Hendry]

The hon. Gentleman is absolutely right, and I welcome his support for the campaign I am trying to start in order to get justice for people across the highlands and islands. He mentions other costs; of course, rural properties are often larger and less insulated. That does not mean that people in those properties have more money; it just means that their property was built that way, centuries or decades ago. That brings higher costs. Many of the factors affecting people across the highlands and islands could be mitigated by a highland energy rebate.

New clause 4, tabled by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), would require the Chancellor to review the public health, inequality and poverty effects of the Bill, and to publish a report within six months of the Bill being passed. It is regrettable that it looks as if the new clause will not be pressed to a Division tonight, but the SNP would have supported it. We believe that a requirement to consider the implications for equality, poverty and health should be included in every Bill for which that would be relevant.

As I said, people are suffering from a cost of living crisis fuelled by decisions made in this Parliament. Mortgages are going up as a direct result of the disastrous mini-Budget, and now food costs are going up. Of course, there is more to come, as the Brexit regulations kick in at the end of April. Not only are prices going up, but they will rise even higher from May as businesses across the UK face more red tape. Of course, we are already seeing our highest energy bills ever. Meanwhile, we are doing what we can with our limited powers in Scotland. We already have lower council tax and, of course, we are introducing a council tax freeze. A poll out today shows that nearly 70% of the public approve of this policy.

New clause 6 would require the Chancellor to publish an assessment of the Bill's impact on investment and growth and of the impact of making full expensing permanent, and to consider what other policies could support the effectiveness of permanent full expensing. Given that full expensing is expected to cost £1 billion to £3 billion a year, after an initial £10 billion a year for the first three years, the policy deserves some scrutiny.

Since full expensing was announced in the autumn statement, the SNP has supported its being made permanent, as this would give business greater certainty and would simplify the tax system. However, it is vital that Members be fully informed, so that this Parliament can assess the effectiveness of this policy and whether it encourages investment in assets such as plant and machinery, as it is designed to do, or whether that is at the expense of other forms of investment. Full expensing is a rare point in the autumn statement on which we agree, but as I have said time and again, the Bill has failed. People are struggling through a cost of living crisis, and they want to know what help they will get now, while they are struggling because their household expenses are going through the roof.

People want investment in clean energy, and a just transition from oil and gas. We will need oil and gas for a period, but that transition should be safeguarded. The United States is providing hundreds of billions of dollars in initial support for new green technologies, such as hydrogen. The European Union has made similar high-level investments, yet the UK Government and the Labour party are dawdling on the issue, wasting the opportunity for us to lead across the world. Like so many Bills, this Bill ignores the needs of the people of Scotland, so it is little wonder that they are on the inevitable path to independence.

[Mr Deputy Speaker (Sir Roger Gale)]

Order. May I take this opportunity to associate myself with Mr Speaker’s remarks? I am sure that all our thoughts are with King Charles and the royal family this evening.

[Anthony Mangnall (Totnes) (Con)]

I associate myself with your remarks, Mr Deputy Speaker, and those of the Speaker, and I wish His Majesty a speedy recovery.

It is interesting to take part in such a debate. It is disappointing to hear Labour describe itself as the pro-business party, given that it is asking businesses to increase wages, recognise unions, accept collective bargaining and restrict labour flexibility, as well as increasing bureaucracy and telling businesses where to invest. To me, that is a wolf in sheep’s clothing.

Turning to the Bill and the amendments, it is extraordinary to hear the spokespeople on both Opposition Front Benches talk about expensing becoming permanent. That is exactly what the Bill intends to do; the minute we get Royal Assent, expensing will be permanent. On Second Reading, the Minister said it would be permanent and, as soon as the Bill is enacted, that will be in place and on the statute book, which is welcome.

Amendments 1 and 2 make points about full expensing. Those amendments will ensure that the UK’s plant and machinery capital allowances will increase and there will be a tax cut of about £10 billion a year, which will help to drive up growth across the whole United Kingdom, specifically in our manufacturing sectors. From the point of view of those in south Devon, that tax cut is worth having. It will help to drive growth and attract investment and innovation across the country, not just in the industrial heartlands we speak about so often.

There are often international comparisons made on research and development. Amendment 3 offers us the opportunity to drive innovation and economic growth. Merging the research and development expenditure credit scheme and the small and medium enterprise research and development relief scheme achieves that rare thing that we so often fail to do in Government: simplify the tax code and provide greater support for UK firms. We should all welcome that.

It is worth stating the impact of the changes in the Bill that will support loss-making small and medium-sized enterprises by reducing the intensity threshold by 10%, from 40% to 30%. That is expected to help 5,000 further SMEs, and they will receive £27 per £100 of qualifying research and development funding invested. That is an extraordinary amount of support—in the region of £280 million a year by 2028-29—and it will be welcomed by small businesses across the country. The Bill also extends the sunset clauses until April 2035 for two more programmes—the enterprise investment scheme and the venture capital trust—which is welcome.

Clauses 4 and 5 outline support for the creative sector. One of our unsung success stories is how well the UK creative industries have done because of this Government’s extraordinary tax cuts, which have helped TV, film, music and video games thrive in this country. Between 2010 and 2019, that industry has grown by an extraordinary one and a half times, creating thousands of jobs across the country and attracting millions—if not billions—of pounds of investment and spurring on growth. That sets the benchmark.

As a Government, we need to help all industries, not just the creative industries, by reducing the tax burden and ensuring we can find ways to support them. I make a plug for the tourism and hospitality sector, which the Minister knows I often mention. In the future, I hope we will be able to do the same for the tourism and hospitality sector as we have done for the creative industries through a VAT reduction.

I support the Government amendments to the Bill. I welcome the intent of this Finance Bill, which is helping to ensure that work pays, ensuring that the tax burden for businesses is going down, and creating a landscape that will attract the investment and opportunities that we so desperately need in this country.

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[Jim Shannon (Strangford) (DUP)]

I concur with the comments made by others about King Charles, on my behalf and that of the Democratic Unionist party and his loyal subjects in the United Kingdom of Great Britain and Northern Ireland—especially Northern Ireland. I pray, as I know you do, Mr Deputy Speaker, as well as others in the Chamber, for King Charles and for the royal family. I pray for a speedy recovery to his health. I pray, as we all pray, to the great healer, omnipotent over all, that his family will know the peace of the Lord as they support him at this time.

I thank all those who have contributed to this Bill debate, and I thank you, Mr Deputy Speaker, for giving me the chance to participate. Understandably, much of the Bill focuses on the measures that are needed to deliver the autumn statement. The Minister understands that—I would like to welcome him to his place. As he knows, I hold him in great respect, and look forward to his responses at the end of this debate.

For every public sector pay rise that is rightly awarded, money must be raised, and therefore we all support the principle of this Bill in theory. However, in practice, not many of us want to sign off on a Bill that raises taxes for those who are struggling at present. Obviously, as prices have risen, obligations have gone up correspondingly. Northern Ireland has been seeking a complete removal of the air passenger duty as a way of enhancing our connectivity and our attractiveness to international business investment. As a result, the rise in APD is disappointing. I know what the Minister’s response will be. We are all aware of what the renewal of Stormont means: it means that we can look at this matter ourselves. None the less, the renewal of the Assembly has also highlighted the issue of the allocation of finances. It is clear that an overhaul of the funding formulas for Northern Ireland is necessary to meet the need in the long term.

Before I left the office this morning, I heard the Secretary of State for Northern Ireland on the radio saying that he hoped that a new funding formula would be found for Northern Ireland. We on the Northern Ireland Affairs Committee have also put forward that view. It is matter that involves all parties. The hon. Members for Belfast South (Claire Hanna) and for North Down (Stephen Farry) join us in wanting the same. That is three of the political parties in Northern Ireland that want that formula. There are also labour Members who support the view, along with a number of Conservatives with some concerns. We are all pushing for a formula similar to the Welsh system. If that comes into place, we in Northern Ireland would benefit, and that is only fair and right. I am highlighting this because if we as a party wished to do something about air passenger duty in the Northern Ireland Assembly, or if a cross-party group were wishing to do the same, we would need to have that formula in place. As I say, we are looking for fair funding for the future.

The £3.3 billion that has been made available now is money that many of my constituents believe has been withheld, and that is welcomed. Ever mindful of the positivity that came out of the debate last week, I say let us be positive in looking forward—

[Mr Deputy Speaker (Sir Roger Gale)]

Order. The hon. Gentleman understands that he has caught my eye and I have caught his. May I gently remind him that we are talking about the Government’s new clauses and amendments at the moment? There is a Third Reading debate ahead in which more measures can be raised if necessary, but, at the moment, will he please concentrate on the matter in hand?

[Jim Shannon]

I knew when I saw you looking at me, Mr Deputy Speaker, that you were going to tell me to get back on to the subject. I was about to do so. I thank you for that very kind reminder. You spoke to me in a very nice way, which was much appreciated.

I did refer to new clause 7 and air passenger duty, so I will quickly return to that. When I looked at a number of these issues addressed in the Bill, I could see a very clear and obvious theme: air passenger duty to rise in line with the retail price index; plastic packaging to rise in line with the consumer prices index; aggregate levy in line with RPI; tobacco levy in line with RPI plus 2%; and vehicle excise duty for cars, vans and motor bikes in line with RPI. So it continues and, to be honest, that seems to be understandable.

However, what is clear in the Finance Bill is that, although these things rise by RPI or CPI—I understand how the system works—the Government have again chosen to ignore the needs of the working middle class. I wish to make this point. I have done so in every finance debate, Mr Deputy Speaker. I have taken every opportunity I can to bring up this matter. I am seeking the support of the Minister on this. Indeed, I have asked the Minister about this on a number of occasions, so he knows about the issue. It is about the middle-class families who need that extra bit of help. They are paying their tax, but the £40,000 and £50,000 a year threshold is not helpful. If we wish to address the issues of new clause 6 in relation to permanent full expensing and the issue of air passenger duty—the things that people want—then we also have to address the issue of the threshold as well.

I gently say to the Minister that, when it comes to how we help our squeezed middle class—I am not talking about the very wealthy—can he look at changing the threshold? I ask the Minister for a direct response on that. I do not want him to talk about the higher income benefit charge or any other mitigation. I just want him to help us understand why those who pay into the tax system do not get as much as they should when they are struggling in a way that families back in 2013 could not have imagined. The Government know that to be the case—I think the Minister knows it to be the case—so when it comes to legislation that helps us to represent all of the people of this United Kingdom of Great Britain and Northern Ireland, let this Bill tonight be one that does just that.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the Minister.

[Nigel Huddleston]

Thank you, Mr Deputy Speaker. May I join you, Mr Speaker and the whole House in wishing His Majesty a speedy recovery following the announcement this evening?

I wish to thank right hon. and hon. Members for contributing to this debate. I shall respond to as many of the points as I can, and also talk to the amendments that have been moved. On new clause 1, I agree that we must prevent fraud and ensure that all taxpayers pay their fair share. To help achieve that, the new maximum sentences for the most egregious examples of tax fraud, the new criminal offence on the promoters of tax avoidance, and enhanced director disqualification powers will come into force on Royal Assent of this Bill. That will all help.

At 4.8% of total liabilities, the UK’s tax gap is at the joint lowest rate ever recorded and has remained low and stable. The UK’s tax gap compares favourably with that of our international partners. HMRC has already published performance updates that provide information on its compliance performance every quarter, so we believe that this new clause is not necessary.

New clause 2 is pretty much the same as the new clause 1 rejected in Committee of the whole House. As I have said previously, we believe that the provision is unnecessary, as the information has been published in the tax information and impact notes alongside each policy change. That gives a clear explanation of the policy objective together with details of the implementation costs for both HMRC and businesses.

New clause 3 would require the Government to publish details of sentences given and stop notices issued to tackle evasion and avoidance in the past five years, as well as revenue expected to be generated by measures in this Bill to tackle evasion and avoidance in each of the next five years. However, HMRC publishes information on the number of custodial sentences received for tax compliance offences and the average sentence length in its annual reports and accounts. The 2023-24 annual report and accounts will be published this summer, providing a full overview of HMRC’s performance. The Government also publish a list of tax avoidance schemes subject to a stop notice on gov.uk, with the most recent report published on 7 December. HMRC has issued more than 20 stop notices since issuing the first one in 2022. The Government also published revenue estimates for the next five years of the clauses in this Bill in the tax information and impact notes. Therefore, as the information requested by new clause 3 is publicly available in routine HMRC publications, the publication requested by new clause 3 is unnecessary.

New clause 4 would require the Government to report on the likely impact of the measures in the Bill on public health, inequality and poverty—matters that concern us all and that we discussed in Committee. Existing mechanisms already effectively monitor and assess Government policies in those areas, rendering the amendment redundant. Departments such as the Department of Health and Social Care and its arm’s length bodies diligently evaluate policies to enhance health up and down the country. Through the Office for Health Improvement and Disparities and the National Institute for Health and Care Research, they address health inequalities and provide robust evidence for policy development. Various Government units, such as the Cabinet Office equality hub, contribute to levelling-up opportunities and ensuring fairness. The Government Equalities Office, the Race Disparity Unit, the Disability Unit and the Social Mobility Commission all focus on different equality dimensions to guide and support inclusive policy development across the country. We therefore do not believe that new clause 4 is necessary.

On new clause 6, I agree that it is important to regularly review and evaluate policy, and to be transparent, which my right hon. Friend the Member for Wokingham (John Redwood) also highlighted. His Majesty’s Revenue and Customs has published a tax information and impact note setting out the impact of the measure, including the economic impact, and the Office for Budget Responsibility has already conducted and published extensive analysis on the investment and growth impact of full expensing. That is available in its “Economic and fiscal outlook—November 2023”, which therefore negates the need to publish a separate assessment in six months’ time. The impact of permanent full expensing will be monitored through information collected from tax returns, and through regular communication with businesses and representative bodies.

Public Services in Cornwall: Funding

Roger Gale Excerpts

Monday 15th January 2024 Commons Chamber

[Steve Double]

I see the hon. Member for Strangford (Jim Shannon) wishes to intervene and I will happily give way.

[Mr Deputy Speaker (Sir Roger Gale)]

Order. I trust the hon. Gentleman will adhere to the subject of the debate.

[Jim Shannon]

I hope you will be impressed, Mr Deputy Speaker, by the significance and interest of my comments, and how much they tie in with what the hon. Member for St Austell and Newquay (Steve Double) has said. I congratulate the hon. Gentleman on securing the debate. He is my Gaelic cousin, which means that his interests are similar to my own. Has he ever considered working with other regions in the United Kingdom of Great Britain and Northern Ireland to help address the matter of public services funding? We have Gaelic cousins in Wales, Scotland and, of course, in Northern Ireland. We are united by culture, history and language, and we have mutual interests. Does the hon. Gentleman agree that our Gaelic strength is better within the United Kingdom of Great Britain and Northern Ireland?

[Mr Deputy Speaker (Sir Roger Gale)]

Order. Nice try, but this is an intervention not a speech.

[Steve Double]

The hon. Member makes a good point, which I will probably come to later. Cornwall has a great deal in common with what gets called the Celtic fringe of the United Kingdom. To pick up on his point about working together, there is a group of local authorities called Britain’s Leading Edge, which represents areas on the coastal fringe of England that work together, because we recognise that the challenges that coastal areas face have some similarities across the country. Clearly there is a lot in common that we can share.

Having said that, our coastline in Cornwall is unique. We are almost an island. I know that we enjoy a bit of banter with Devon from time to time, but they are our only mainland neighbour, which impacts the delivery of services. Counties in the middle of England are surrounded by other local authorities, police forces, fire services and health services that they can share resources with. If there is a particular challenge in one area, it can draw on services from the surrounding counties to help it with that specific incident. We do not have that in Cornwall. In most of Cornwall, we have to provide our own resilience because there is no one else nearby to come and help. I am not sure that that is always understood by Government. It certainly does not seem to get reflected in the funding allocation.

We have the longest coastline in Cornwall: 422 miles. I have not walked all of it yet, but I have walked a great deal of it over the years. We have literally hundreds of small coastal communities. Nowhere in Cornwall is more than 25 miles from the sea, and the vast majority of people live an awful lot closer to it than that. It is just common sense that when delivering a public service in a coastal community, there is not as big a population to deliver that service to, and there is not as much land for people to live on. More sites are therefore needed. By definition, we need more schools, health facilities, police stations and fire stations because we have a smaller area for the station or facility to service. That means that it costs more to deliver services in a coastal area such as Cornwall. I have tried to make that point throughout my time in this place, but I am not sure that the particular challenge that Cornwall faces in delivering services because of our geography and being a narrow peninsula really gets appreciated. It is certainly not reflected in the funding formula.

We are not just a coastal area but a rural one. Cornwall Council is the second biggest by land mass of any local authority in the country—1,375 square miles—yet we have a relatively small population of just over half a million people. We have no towns with a population of more than 25,000. In fact, nearly half of all people who live in Cornwall live in communities of fewer than 3,000. That rurality and sparsity presents real challenges for delivering services because of the additional travelling that has to take place. Our police and fire engines have to travel further to reach those communities.

School travel is a very big challenge in Cornwall. With such large areas to cover, pupils with special educational needs in particular have to travel much further to get to the facilities that we have. We face a huge challenge in adult social care, partly because of the rurality and being a long, narrow peninsular, and the distance that domiciliary care workers have to travel to reach those who need their services.

About 10 years ago, we thought that we had won a big victory on funding for rural services within local government. After a great deal of pressure and arguing from MPs with rural constituencies, the Government introduced the rural services delivery grant. That was really the first time that the emphasis under the Labour Government—when most of the money went into urban and densely populated areas, because they seemed to think that those were the only places in which deprivation took place—had been corrected, with an acknowledgment that rural areas have particular needs and particular costs in delivering those services.

Unfortunately, although we won the argument in principle, when it came to allocating money, it was dampened down and we did not get as much as we should have. In the past 10 years, we have never fully put that right. I suggest to the Government that we really ought to look at that. With the current proposed local government settlement, I know that many rural authorities will face huge challenges. Cornwall is certainly one of them. One way that we could correct that is by increasing the rural services delivery grant to the level it really should be at, rather than the dampened-down level.

We have also been promised a review of police funding in rural areas, but it has not yet happened. Sadly, during that time the gap for Cornwall has actually become bigger. We were 9p per person below the average; we have now dropped to 10p per person below the average for funding. There is therefore a real need to bring forward the review of police funding and ensure that Cornwall gets the funding that it needs. The two factors of being a coastal community and being a rural community really put pressure on the delivery of our services in Cornwall. That needs to be reflected when it comes to funding.

The other element that I will mention is, again, something that I have talked about numerous times: the impact of tourism on Cornwall. Tourism is really important to the Cornish economy, and we welcome it. Typically, 5 million people a year come to Cornwall on holiday. In the UK, we are second only to London in terms of the number of visitors that we welcome every year. To put the impact of that in perspective, I am privileged to represent the town of Newquay, Cornwall’s premier tourist destination, which has a population of about 24,000. In July and August, we have 200,000 people in any given week in Cornwall, so there is eight times the population when tourists come in the peak season.

The pressure that that puts on our infrastructure and services cannot be overestimated. We particularly feel it in the pressure on the NHS. We often say in Cornwall that we have two winters every year in terms of pressure on the NHS. At this time of year, the NHS is under pressure just about everywhere because of seasonal viruses and the impact that cold weather has on people, so there is great pressure on the NHS in Cornwall at this time of year. Then in the summer, when all the tourists come, our NHS is also under huge pressure because of the sheer numbers of people who are there. While most hospitals and NHS services around the country typically have a bit of respite in the summer because all their residents go on holiday, they all come to Cornwall, so we have to pick up the pressure. I do not think that gets reflected particularly in the funding.

The demand on our ambulance services in the summer is also significant. I acknowledge that a lot of work has been done in recent years through the 111 service and Pharmacy First, which we piloted in Cornwall, to get people to think a bit more smartly about where to go to get NHS treatment and advice, rather than turning up at Treliske or trying to see one of our local GPs. That has certainly helped, but there is no way of avoiding the pressure that the NHS in Cornwall faces every summer because of the tourists. Our police face huge pressures in the summer. Crime goes up, and there are more road traffic accidents and cases of antisocial behaviour, all of which the police need to respond to, but that is not reflected in our funding.

Another area, which I recently talked about in a debate, is the impact of tourism on our housing supply and the number of Airbnbs, which push prices up beyond the reach of many people. That means that we struggle to recruit the people we need for our public services because they cannot afford to buy a house to live there. When we talk to NHS managers in Cornwall in particular, they repeatedly say that housing is one of the biggest reasons why they often struggle to recruit the doctors and nurses they need, because they cannot find anywhere to live. The impact that tourism has on our housing market is equally significant.

The final factor I want to mention is our demographics. Cornwall has a rapidly ageing population. Our number of elderly people is 6% higher than the UK average, and the number of over-70s in Cornwall has gone up by 52% in recent years. Some of that is just because everyone is getting older, but it is also because people see Cornwall as a great place to retire to. Again, I do not blame them—I want to retire in Cornwall; it is a great place to retire—but that number of people of retirement age moving to Cornwall puts huge pressure on our health and social care services.

The inverse of that is that we do not have enough people of working age willing to work in the health and social care sector to provide the services they need, so the impact of our demographics is significant. This financial year, Cornwall Council will spend over £250 million on providing adult social care. That is one third of its revenue budget just on social care, and that will only increase as the years go by. We need that to be reflected in the funding settlements we are provided with.

Each of those factors—our geography, the impact of tourism, and the impact of an ageing population—in and of themselves would present significant challenges to Cornwall. The combined effect of those factors is that public services in Cornwall face a unique set of challenges, and nowhere else in the UK faces them to the degree that we do. I want to make the case that, because of that unique combination of pressures and challenges, we need to look again at the funding that Cornwall receives and make a special case for Cornwall.

The Government have already acknowledged that Cornwall is a special place that requires special treatment. We referred earlier to the fact that the Cornish have been recognised as a national minority and receive protected status as a national minority. In 2014, the Council of Europe recognised the Cornish in that way, and the UK Government have acknowledged that. Actually, the UK Government said that they give the Cornish people the same recognition as the Scots, the Welsh and the Irish within the United Kingdom. That is very welcome, but it does not seem to have any impact on Government policy when it comes to funding. If we are going to say that Cornwall is a special place and that the Cornish are a specially recognised and protected people, that should have an impact on the way that Cornwall receives its funding.

Cornwall was the first county to receive a devolution deal back in 2015. Again, the Government at that time recognised the particular uniqueness of Cornwall. That devolution deal was recently upgraded with a new devolution deal. I am personally disappointed that we did not manage to get a level 3 deal, which would have given Cornwall a great deal more and certainly would have shifted the focus much more on to Cornwall. I am disappointed that we did not secure that, but we have had a new level 2 deal. That, again, is the recognition that the Government have given to Cornwall.

The other way the Government have recognised the challenges that Cornwall faces, particularly with regard to our economy, is through the shared prosperity fund, which replaced the European regional development fund. Cornwall received £137 million—far more than any other part of the UK—through the shared prosperity fund. That shows that the Government recognise the particular challenges we face in Cornwall, especially in growing our economy and upskilling our people, and it has been hugely welcome.

We are in the middle of the current round and projects in my constituency have received significant funding, such as essential infrastructure work at the harbour at Charlestown, one of our historical sites. Newquay has also received funding to support its tourism industry and extend the season, which will really help the economy there. We have found that the shared prosperity scheme is much easier to allocate and to access than the old ERDF programmes, which were hugely bureaucratic and always required matched funding. The shared prosperity fund money that has been provided to Cornwall has been very welcome and is doing a lot of good.

However, I want to raise with the Minister the fact that the current round runs out in 2025. That will come around very quickly, so we need to start the conversation and understand what the process will be for the allocation of the next round of shared prosperity funding. I hope the Minister will be able to confirm that, in the allocation of that funding in the next round, the Government will continue to recognise the specific challenges that Cornwall faces and continue to support the Cornish economy as they have done over the last few years.

The unique combination of challenges we face in Cornwall, and the fact that the Government already recognise Cornwall in a number of ways as being special and having particular challenges, now need to be reflected in the way our public services are funded—particularly our health service, education, local government and the police. We need the true cost of delivering those services in Cornwall to be reflected in the amount of money we receive. I hope the Minister has got the message that we have particular challenges in Cornwall and that the Government will reflect on those points, continue the conversations with MPs from Cornwall and look again to ensure that Cornwall gets the funding it needs, so that the people of Cornwall can get the public services they deserve.

Economic Growth

Roger Gale Excerpts

Tuesday 14th November 2023 Commons Chamber

[Mr Deputy Speaker (Sir Roger Gale)]

I inform the House that Mr Speaker has selected amendment (m) in the name of the Leader of the Opposition. I call Rachel Reeves.

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[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

Order. Some 40 Members are seeking to contribute to the debate, and we have until 6.30 pm. After the Scottish National party spokesperson, I propose to introduce an immediate time limit of six minutes, which may have to fall to five. I call the SNP spokesperson.

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[Mr Deputy Speaker (Sir Roger Gale)]

I call the Chair of the Treasury Committee.

Environmental, Social and Governance Developments

Roger Gale Excerpts

Monday 23rd October 2023 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Andrew Stephenson.)

[Mr Deputy Speaker (Sir Roger Gale)]

I am not sure whether the hon. Gentleman is aware, but one of the arcane practices is that because the Adjournment debate started before 10 o’clock, we had to move the motion again at 10. The hon. Gentleman has the Floor.

[Alexander Stafford]

Thank you for that guidance, Mr Deputy Speaker, and for explaining some of the wonderful aspects of this House.

I ask the Minister whether he will ensure that investors have a framework to separate the sustainable from the spurious, and whether he will take this chance to outline the full timetable for the taxonomy. He will have plenty of time to do so, as we have more time for this Adjournment debate. I look forward to a full and detailed timeline of when we will get this taxonomy. I am willing for him to intervene now if he so wishes. Clearly he does not.

Perhaps another, less discussed difficulty facing ESG is imbalance. The heavy focus has been on environmental considerations as being the most important, often at the cost of social and governance factors. Let me refer to one recent example of the consequences of failing to take that holistic approach. Dame Alison Rose is clearly a champion for socially sustainable business, particularly around gender equality. She is a torchbearer for women in business, having smashed the glass ceiling to become the first woman to lead a major UK bank. However, despite her very strong credentials in social sustainability and the progressive environmental policy of NatWest Group as a whole, under her leadership there was a clear failure in governance when discussing a customer’s private banking details with a journalist—I think that we all know the gentleman I am referring to.

I am sure that all Members will agree that it is right that Dame Alison resigned over that abject failure of governance, but I also know that many will join me in expressing our disappointment that the further empowering of women in business and entrepreneurship will suffer because of that failure of governance. Excelling in one area does not absolve someone from indiscretions in others. The E, S and G cannot and should not be separated; a failure in one is a failure in them all. Clearer metrics and frameworks, both within each strand of ESG and encompassing all three elements, will allow for better reporting and therefore better understanding for investors and companies. That will, in turn, return the trust that ESG has been lacking.

It is easy to oversimplify the true impact of more data and disclosures, and we cannot ignore the practical implications of such policies, particularly on smaller businesses and individual investors. Since the turn of the millennium there has been a 647% increase in ESG regulations, alongside miles of other red tape in all shapes and sizes. The disclosure burden on investors and businesses is bigger than at any previous point, leading to whole sectors and teams devoted to auditing every aspect of a business. The EU’s own research indicates that its disclosure requirements will cost large firms upwards of €100,000 a year in paperwork alone.

Likewise, the UK green taxonomy, when it is eventually published, will join about 30 other environmentally focused taxonomies across the globe, each needing different types of disclosures. Large companies may be able to absorb that, but it is a potentially lethal issue for small and medium-sized enterprises, which make up 99% of British businesses and have a far more limited staffing and budgetary ability to process those types of disclosures. In pushing for more comprehensive reporting frameworks, we should not bury small businesses under piles of paperwork.

Over the course of my time chairing the all-party parliamentary group, I have been delighted to meet many small businesses that want to integrate ESG into their practices. Many of them, however, have expressed to me their nerves about how to keep up with a continually changing regulatory landscape, and the addition of further disclosures hangs like a dark cloud, so how do we achieve better ESG reporting without overburdening businesses and, perhaps more importantly for those businesses, why should they engage in this space? How do we make ESG work for businesses rather than making businesses work for ESG?

In this debate, I have mostly spoken about ESG as a risk management tool that investors can use as part of their normal investment analysis. There are, however, many upsides for both businesses and the UK as a whole. I have already outlined how a business might utilise ESG to increase efficiency or improve its workforce. For the UK as a whole, though, SMEs are the perfect vehicle for public policy objectives to be achieved without the need for public sector financing or burdensome legislation.

The all-party parliamentary group’s latest report—on women in business, to be published tomorrow—is perhaps a good example. It is a sad fact that women are still under-represented in business today. That is not only a social problem; it also represents a £250 billion gap in our economy. Luckily, as in other areas, the private sector is far ahead of policymakers here. Thanks to private firms and independent groups, the UK has one of the highest levels of female representation on boards in the world; it is beaten only by countries that have legislated to force companies to adhere to quotas. Top-down government can make serious strides, but the home straight will always require us to rely on great British businesses. We cannot let them down.

ESG adds value to business, but it cannot become a barrier. Many Members will, like me, have heard concerning reports about some companies, particularly those involved in defence, being excluded from access to investment and capital on ESG grounds. As the Government’s defence Command Paper points out, there is no contradiction between investing along ESG principles and the defence industry.

I have already spoken about the concerning anti-ESG movement, much of it stemming from the view that a movement for divestment in such contentious businesses is because of a political stance. Again, I argue that that is a mischaracterisation of ESG. Instead, and like the Government, I believe that ESG allows investors to factor in the environmental, social and governance impacts of these firms into their decision-making process and helps firms to take action that will result in better returns. These factors should not be unduly taken out of context for political reasons.

Governments need to create an environment where businesses can disclose problem areas without the fear of backlash, so long as they are responsible. Good investors can be a driving force behind companies cleaning up their acts. We must continue to ensure that all businesses have access to the capital they need from reputable, interested investors. We have seen continued protests as part of an environmental campaign, calling for businesses to divest away from oil and gas. But that would actually be detrimental to the world’s overall climate ambitions.

Once contentious industries such as oil and gas, defence, tobacco or alcohol can no longer rely on investment from large, public companies that are open and clear about their business ethos, they will most likely leverage finance from less savoury investors. It is in our interests to engage, not divest, and make sure that trusted investors retain a hand on the wheel of these industries, to steer them to a more sustainable and better future.

The issue is not just about a handful of industries. When faced with challenges that may bring public and investor backlash, all firms need to feel secure that they are able to disclose bad practices and work to rectify them, rather than quietly divesting of the malpractice. I will give one example: the International Labour Organisation estimates that there are nearly 50 million modern slaves across the world today. It is almost impossible, therefore, for any large company not to use modern slavery at some point in its supply chain. As much as 20% of worldwide cotton production stems from slave-labour—Members in the Chamber today could be wearing slave-manufactured clothing.

What should a responsible clothing business do if it discovers that it has been accidentally buying slavery-produced goods? Should it quietly switch suppliers and hope that the next one does not have the same problem, or should it work with the supply chain to end the practice of slavery? Divestment for fear of repercussions will not solve environmental, social or governance problems, and companies should not be penalised for bringing accidental wrongdoings to light.

Making ESG work for businesses requires that they should be able to show investors what they are doing to tackle poor business practices without fearing that they will be left without access to capital. The frameworks we build must include room for transitional sustainability improvements, allowing investors and companies to own up to their failings and work to improve them, rather than divesting and passing the problem along.

Having outlined why we should be encouraging ESG, what problems we face in doing so and how it can help business, investors and the UK as a whole, we must now ask what real action we can take to achieve this. I have in this debate referred consistently to frameworks or metrics, which will give certainty and clarity, but what form should they take? Any framework needs to be credible, useable and, importantly, international. What is more, we need to act quickly to ensure that the UK is the go-to place for ESG. Will the Minister be sure to look into speeding up the publication of frameworks and regulations designed to restore trust in ESG?

The importance of credibility in a framework was confirmed by the EU’s recent green taxonomy failures. As Members will know, the EU decided to include natural gas in its green taxonomy, effectively allowing any product using energy derived from fossil fuels to claim it was “green.” That is perhaps the most serious and egregious example of greenwashing, and it completely undermines any pretence that the EU’s taxonomy can be relied upon to build the trust that I have been so clear we need. Our own framework, and certainly our own green taxonomy, must not have the same problem. Can the Minister assure me that any framework will be science-led, and that ensuring trust will be a key consideration in the design of those frameworks? We may be delayed in our green taxonomy, so ours may not be the first, but let us make it the best. Let us learn from the mistakes made by other countries so that the UK is the gold standard.

Going further, if the UK is to be the ultimate home for ESG, we need to create metrics for ESG criteria that are currently unquantifiable. Much of the work that has already taken place has gone into fleshing out areas with existing data, but in order to ensure that greenwashing cannot happen across any element of ESG, we need to drive forward progress on creating standardised metrics for areas such as biodiversity, community impacts, management structures and so much more. To ensure that the UK is truly world-leading, will the Minister be sure to speak to his colleagues at the Department for Environment, Food and Rural Affairs and the Department for Work and Pensions to create cross-governmental taskforces that will be able to create those types of framework?

Usability is also vital. As I have mentioned, particularly in reference to SMEs, burdening investors and businesses with extra regulation should not be the objective of any Government, let alone a robust Conservative Government. Any framework must allow for companies to disclose failures and work hard to redeem themselves. Companies’ work to achieve better results should be what they are judged by, rather than their failures. To encourage businesses to use ESG to their advantage along the lines that I have described, and so that the UK can leverage the firepower provided by our booming private sector, will the Minister ensure that making the UK an ESG hub will not have negative impacts on businesses and investors? We must look after SMEs.

Today’s supply chains, employees and financial flows span the world. It is our duty as policymakers to help British businesses and investors benefit from being part of the global economy. When it comes to ESG, that will mean working with the frameworks of our international partners and using our Brexit freedoms to design a system that allows for international co-operation. The Government’s signal earlier this year that we will be adopting wholesale the international financial reporting standards created by the International Sustainability Standards Board is a great start and will ensure that we remain international players, but I want us to be international leaders, especially as the EU will continue to build its own full disclosure system. Can the Minister confirm that we will continue along this path whenever possible?

ESG is not going away, and the UK should not be concerned about or discouraging of it. I must again pay tribute to the Government for already being proactive in creating a welcome environment for ESG, of which I know the Chancellor is already a keen advocate, but if we are to become the global home for ESG, we must move faster and do ever more. I hope that this place sees many more debates on the topic, and that we continue to open lines of communication and inquiry on one of the fastest growing sectors across the UK. As a home for ESG, we have strong foundations, but before we can fully welcome ESG inside, we must make sure that the structure is solid, or it risks total collapse.

Public Sector Exit Payments (Limitation) Bill

Roger Gale Excerpts

2nd reading
Friday 20th October 2023 Commons Chamber

Question (3 March) again proposed, That the Bill be now read a Second time.

[Mr Deputy Speaker (Sir Roger Gale)]

I call Sir Christopher Chope.

[Sir Christopher Chope (Christchurch) (Con)]

Mr Deputy Speaker, I had already finished speaking, and I think the Minister’s predecessor was in the middle of responding.

[Mr Deputy Speaker]

That is entirely my error. I did not have the pleasure of being here for the first part of the debate. I call the Minister.

Finance (No. 2) Bill

Roger Gale Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Craig Mackinlay]

My right hon. Friend highlights the problem that different countries could indeed game the system. The peculiarity here is the domestic top-up tax. Even if, under the UK calculation of profit, a business had a profit rate of more than 15%, it could be under 15% using the OECD way of calculating profit and therefore there would be a top-up tax. That is truly perverse. In accordance with UK tax law, perfect rates of corporation tax are being paid, but because it does not comply with these new strictures, of which there are hundreds of pages in this legislation, someone could find themselves paying a domestic top-up.

My concern is whether we will see a rash of new statutory instruments, as we have new external nation-UK tax treaties needing to be looked at and unwound. I wonder, too, whether any thought has been given to potential trade deals; I am given to understand that the US is looking quite negatively at countries that are looking to implement the OECD pillar 2 proposals.

I am just about to conclude, which I am sure will be a great relief to many. What would I like those on the Treasury Front Bench to look at carefully before we get to Committee stage, Report and beyond? I recommend that we strip out the multinational top-up tax clauses, or implement what other hon. Friends have suggested, a start date more in accordance with when the rest of the world thinks this is a great idea as well. Otherwise, as I have said before, we could be buying the Betamax when we should be waiting for VHS.

These measures occupy half of the Bill. I would like to hear assurances that for 2024-25 we can have the £1,000 as a general disregard threshold applied to dividend taxes under a simplification measure. However, given that the Bill runs to such a huge volume, I would like to hear more about how we are going to replace the Office of Tax Simplification. I think it would be fair to say that I know many of the characters in there—there were a number of ex-presidents of the Chartered Institute of Taxation. I do not know quite how wide a remit they had, but one has to assume they did not really get very far with tax simplification.

When I qualified as a chartered accountant in 1991, there was big talk about the tax law rewrite to change seven pages explaining first in, first out with perhaps one word, FIFO. We have a lot of verbiage in our tax system, and to address and simplify the 23,000 pages would aid everybody. Those are my brief observations on the Finance Bill.

[Mr Deputy Speaker (Sir Roger Gale)]

I notice that my two predecessors in the Chair this afternoon have paid tribute to Baroness Boothroyd, and I would like to do the same. Betty was one of the two great Speakers of my parliamentary lifetime, the other being Jack Weatherill—that is excluding the current Speaker, of course, who will no doubt take his own place in those annals. Not all Speakers have a facility with names and faces, and Betty freely admitted she was one who did not—something you may have noticed I sometimes suffer from myself. She just used to say, “You, lovey—no, no, not you, lovey; you, lovey.” Happily, I can remember Stewart Hosie’s name.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

Order. A significant number of right hon. and hon. Members still wish to take part in the debate. The debate is open-ended, but bitter experience has taught me that if you wish to retain the attention of the House, brevity is the order of the day.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

Order. There are still four Members waiting patiently to speak. We hope to start the winding-up speeches at 5.40 pm. It is a big ask. I expect you to be able to say what you need to say, but do your best.

Energy Trilemma

Roger Gale Excerpts

Thursday 23rd March 2023 Commons Chamber

[Ian Blackford]

I have talked about the Skilling report and the ability to get to 80 GW. There is the opportunity with tidal to provide the baseload. I argue on that basis that we probably do not need the investment in nuclear to get to where we need to get. One thing I referenced was that I did not believe there is any fantasy in the numbers we have from Skilling. They are eminently achievable on the roadmap that we talk about.

Let us look at some of the choices and where the money has to come from, and put that in the context of the debate we are having over the trilemma and the choices that many people are having to make because of the cost of energy. We know that a number of producers have made eye-watering profits as a consequence of high energy prices over the past year. This Government have rightly introduced a windfall tax. If we had wanted, we could have hypothecated some of that to make sure we were speeding up investment in renewables. We could have provided the £50 million that I am asking for on an annual basis so that we could fulfil that potential in tidal.

One aspect of the events of the past 12 months has been the enormous increase in share buy-backs from energy producers. In essence, what are share buy-backs? They are in effect a return of capital to shareholders. We have taxed the profits of the generators to some extent, but we have not taxed the return of cash to shareholders—windfall gains. On a one-off basis, we could have taxed share buy-backs in the same way that we tax dividends, and provided the ability to generate the investment that we need in our energy transition. That would have been the sensible thing to do.

Let me come back to the European Union, because there is already an €800 billion NextGenerationEU post-coronavirus pandemic recovery scheme. EU member states must reserve 37% of their spending for that green transition. About €100 billion of the EU’s 2021 to 2027 cohesion fund, which is dedicated to regional development, goes to green spending. Horizon Europe, the EU science and innovation programme, allocates €40 billion to green deal research and innovation, and industry partnerships. The investment I am asking for and that I believe we need in tidal has to be seen in the context of the scale of that investment.

On a subject that many of us discuss, carbon capture and storage, the EU has commenced its third round before the UK has come close to completing its second. We are all aware of the promises that have been made about carbon capture and storage in the north-east of Scotland. There are Members in this Chamber who are as passionate as I am about making sure it happens, and let us remember why. If we are serious about getting to our net zero targets—whether 2045 in Scotland or 2050 in this place—then carbon capture and storage has to happen.

We have failed to back carbon capture and storage, and the harsh reality is that the renewable energy budget has been cut by a third and there has been the cut to the ringfenced budget for tidal stream. We need to make sure that we create competitive advantages out of the bounty that we know is there. Let us come back again to the green industrial strategy, because if we are able to develop our green energy sources to the extent that I believe we can, we need to make sure there is a competitive advantage for our industries and the industries of the future.

We also need to make sure that our communities benefit from the investment that is taking place. To take my own home island of Skye, an enormous increase in investment is coming down the line over the next few years in wind generation. We will be producing many times the amount of energy that the island of Skye can absorb by itself, yet there is an additional cost to access the network from producing in such remote and rural areas. There is a double whammy: because of the nature of the regional distribution market, we pay the highest prices to get the electricity back again. It simply is not good enough, and the communities making legitimate sacrifices in producing that energy have to be compensated effectively.

While we are talking about onshore, offshore and tidal, we should not forget the opportunities we have with pumped hydro storage. I delighted that, this week, SSE has announced a £100 million investment in the biggest pumped hydro storage scheme in the United Kingdom for 40 years. The Coire Glas scheme will power over 3 million homes, more than doubling the United Kingdom’s electricity storage capacity. Again, it is demonstration of what can be done in providing the baseload that is so necessary.

We need to pose the question why—in what is, for Scotland and arguably for the UK, an energy-rich country—people are facing the kind of costs that they have done over the last year. The average household bill in Shetland, if I may refer to that, in October 2022 was £5,578, more than double the UK average of £2,500, according to evidence submitted to the House of Commons Scottish Affairs Committee by Shetland Islands Council. The latest available figures show that a third—33%—of households in remote and rural areas in Scotland are in extreme fuel poverty. That statistic has not been updated since 2019 due to covid, and therefore does not reflect the current cost of living crisis. There will have been a massive increase in the percentage of our households that are not just in fuel poverty, but in extreme fuel poverty.

The only place where the UK Government seem to be increasing investment is in nuclear energy, which is far more expensive than the renewable alternatives. The Institute for Public Policy Research said:

“If the Government are serious about reaping the benefits of the transition and levelling up, it should learn from Joe Biden, scale up public investment, and bring forward a serious strategy to build an economy that is prosperous, fair and green.”

The CBI said:

“The UK is falling behind rapidly—to the Americans and the Europeans, who are outspending and outsmarting us.”

The world faces an energy trilemma, but the UK faces a simple binary choice: will it continue to be left behind, or will we collectively work in humanity’s self-interest to tackle climate change and embrace the opportunity for green growth?

[Mr Deputy Speaker (Sir Roger Gale)]

I call David Duguid.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

I shall need to start the winding-up speeches at about 4.30 pm. Three Members are still waiting to speak. So far the speeches have been running at about 13 minutes, but I am afraid I must ask Members to confine themselves to about seven minutes if everyone is to get in.

Energy

Roger Gale Excerpts

Tuesday 7th March 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

I beg to move,

That the Alternative Fuel Payment Pass-through Requirement (England and Wales and Scotland) Regulations 2023, dated 19 February 2023, a copy of which was laid before this House on 21 February, be approved.

[Mr Deputy Speaker (Sir Roger Gale)]

With this we shall take the following motion:

That the Non-Domestic Alternative Fuel Payment Pass-through Requirement and Amendment Regulations 2023, dated 22 February 2023, a copy of which was laid before this House on 23 February, be approved.

[Amanda Solloway]

The instruments were laid between 11 January and 23 February 2023, and their purpose is to ensure that benefits from the alternative fuel payment, both domestic and non-domestic, are passed through to consumers. Throughout this winter, the Government have delivered critical support to households, businesses and other non-domestic consumers in response to the unprecedented rise in energy prices. The Government brought forward emergency legislation on energy support, paving the way for this support package to be delivered rapidly across the entire United Kingdom.

The alternative fuel payments scheme provides support to households, organisations and businesses that do not use mains gas and use alternative fuels such as heating oil. Eligible domestic consumers using alternative fuels will receive a one-off fixed payment of £200. Non-domestic consumers will receive £150.

Charter for Budget Responsibility

Roger Gale Excerpts

Monday 6th February 2023 Commons Chamber

[Mr McFadden]

I suspect that the Bank of England will not be the only institution attacked by the right hon. Gentleman tonight, but I remind him that part of the purpose of the charter is to restore our faith in the economic institutions, after what happened less than six months ago.

The IMF has forecast that the UK will have the lowest growth among developed countries for the next two years: bottom of the league on the record and bottom of the league on the forecast. And yet still the Government come along tonight and table a debate supposedly designed to enhance their economic credentials.

Well, what will the effect on those credentials be of the re-emergence of the former Prime Minister at the weekend? I have to give her 10 out of 10 for timing. What better time to write an article saying that her mini-Budget was right all along than the day before the Chief Secretary has to come here and stand up for the Government’s fiscal stability record? What better moment for her to say to members of pension schemes that had to be put on life support as a result of her mini-Budget that it was not her fault? No contrition for trying to borrow from my constituents in Wolverhampton South East in order to pay for a tax cut for people earning over £150,000 a year; not a word of apology to the millions of mortgage holders left paying a Tory mortgage penalty because of the reckless irresponsibility of the Conservative party. Just when the Government were trying to bury the memory of that mini-Budget under 10 feet of concrete, up she pops—like one of those hands coming out of the swamp at the end of the film—to tell us it was all someone else’s fault.

For me, the best bit in the article was when, in a long list of culprits, other than the Government that actually introduced the mini-Budget, the former Prime Minister blamed the Treasury civil servants for not warning her about the impact on pension schemes. I had to ask myself, were these the same Treasury civil servants that she had spent the whole summer scorning and disparaging? Were they the same Treasury civil servants whose boss was shown the door on the first day of her premiership? In what world are we expected to believe that the former Prime Minister, her Chancellor and the Government would have listened to a word those civil servants said, when all along she defined them as being part of the problem and not part of the solution?

The real problem for the Prime Minister, the Chancellor and the Treasury is that this is not going away. The last Prime Minister is not a lone voice, and the more that Conservative Members realise the Government have nothing left in their tank and are resigned to managing decline, the louder the drumbeat will become; and it will be cheered on by the same newspapers that gave such a warm welcome to that mini-Budget in the first place. The Prime Minister, demonstrating the sureness of touch with which we have come to associate him by now, has labelled those on the Government Benches calling for tax cuts “idiots”. That is his phrase, not mine—about those on his own side. And yet today, fearful of them, the Prime Minister now says he will listen. Which is it? Are they idiots or is he listening? This weekend’s intervention, and those who cheer its argument, will have the Prime Minister and the Chancellor looking over their right shoulders every day between now and the election, when they should be focused on the needs of the country.

This debate is supposed to be about all of us swearing fealty to fiscal rules, but there is another problem: since this Government came to office, they have broken their fiscal rules 11 times. They have had even more sets of fiscal rules than they have had Chancellors and Prime Ministers over the past year. If you don’t like one set, don’t worry—there will be another one along in a while! The Chief Secretary himself outlined how these rules were different from the ones we debated this time last year in the George Osborne tribute debate of 2022, and each time we are expected to treat the new rules as though they were the ten commandments.

The second part of this is about respecting the role of the Office for Budget Responsibility. The document before us is very clear about that. It talks in great detail about the importance of that role. Indeed, when it was first launched, the Economic Secretary to the Treasury of the time set out the benefits of the OBR, making clear the value of its

“strong, credible, independently conducted official forecasts”—[Official Report, 14 February 2011; Vol. 523, c. 747.]

She said that the establishment of the OBR and its independence from the Treasury meant that

“Governments will be reticent about introducing policies that seem to take them off course”—[Official Report, 14 February 2011; Vol. 523, c. 749.]

Well, there was not much sign of that reticence last year as the Government crashed the economy, caused a run on the pound, caused mortgage rates to rise and put pensions on life support. Indeed, we had a real-time lesson in the cost of disparaging our institutions—institutions that the Conservative party used to care about. But tonight, even after that experience with chapter 4 of the charter, we are back to a hymn of praise for the OBR.

The real problem here is not just inconsistency, but credibility. I am afraid that the many-year record since the idea of this charter was first conceived a decade or more ago has meant that the Conservative party has now forfeited the right to call itself the party of sound management; it has forfeited the right to call itself the party of growth, because the record on growth has been abysmal; it has forfeited the right to call itself the party of low debt, because debt has rocketed; it has forfeited the claim to careful stewardship of the public finances, with billions lost in bounce back loan fraud, personal protective equipment waste and tawdry stories of one dodgy contract after another; and it has forfeited the right to call itself the party of low tax, because the tax burden is at its highest for decades.

What, after all that, has this been for? We have record waiting lists, trains that people cannot rely on, and delays and backlogs everywhere. In fact, there is not a single public service that runs better now than it did 13 years ago, when the Tories took office. Low growth and high tax for a worse outcome—that is the record. When people are faced with the question, “Are you and your family better off?”, the answer is no.

Two weeks ago, we had the Chancellor’s speech on the way forward. He had four Es, and more than one person said that the biggest E was for empty, because the real problem for the Conservatives is that, when it comes to growth, the only policy they reach for is unfunded and untargeted tax cuts, and when they tried that in September, it blew up in their faces. Growth is the right question for the country, but it does not come from the discredited idea of trickle-down economics. It comes from the efforts of all of us—from every businessperson with a new idea and the drive to make it happen, and from making sure we use the UK’s strengths to make the most of the green transition that is coming, rather than standing back and allowing those investments to go elsewhere. It comes from every teacher equipping a pupil with new skills and knowledge, and from not having 7 million people on NHS waiting lists, keeping many of them out of the labour market. Talking of former Prime Ministers, it does not come from saying “F*** business”, but from a modern partnership with business that brings in the long-term investment the country needs. Most of all, in a knowledge economy like today’s, growth has to come from everyone, not just from a tiny proportion of people at the top.

Fiscal stability is an essential foundation for what we have to do—I agree with the Chief Secretary on that—but it is not an end in itself. It has to be the foundation for meeting the challenges the country faces and for giving people a more prosperous future. After many years of this debate, we look less at the latest version of the rules and more at the gap between claim and reality, because after crashing the economy and leaving the British public to pay the bill, the Government have no credibility to come forward and claim to be the champions of fiscal stability.

The idea for this charter was born in another political time, as I said at the start, and if it did have a purpose, events since have rendered it an unconvincing exercise to say the least. It certainly has not kept the Government to their fiscal rules, which have been broken many times, and it is unlikely, particularly after recent months, to convince anyone outside this Chamber that the Government have got the economy back on track.

[Mr Deputy Speaker (Sir Roger Gale)]

If I may slightly abuse my position in this Chair, let me say that I only heard from the Minister on the Treasury Bench at the start of this debate of the death of Robert Key. He was a dear personal friend, an excellent and dedicated constituency Member of Parliament, and a first-rate Transport Minister. I know that those in the House who knew him will wish to share their thoughts with Sue and his family.

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

Thank you very much, Mr Deputy Speaker, and may I associate myself with those passionately expressed words from the Chair?

I did think there might be a few more people here this evening to talk about the charter for Budget responsibility, after we have had so much debate across the country about the Office for Budget Responsibility and its forecasts over the last year or so. This was the year when the Office for Budget Responsibility made it into the headlines on numerous occasions, so I thought there might have been a bit more of a heated debate. I listened to the words of the right hon. Member for Wolverhampton South East (Mr McFadden), and I am not sure I understand at the end of his speech whether the Opposition are in favour of tonight’s motion and of the charter. I am not sure whether they are in favour of Budget responsibility. In fact, I did not hear any suggestions at all for solutions to the criticisms that he raised.

This evening, I reiterate, for those who were not here in early 2010, the rationale for the setting up of the Office for Budget Responsibility. It was because, in the Treasury of 2008, 2009 and early 2010, it was far too easy for the Government simply to make their own forecasts and to mark their own homework. I think there is merit in having someone external to the Treasury and oblivious to ministerial pressure come up with a set of forecasts. We all acknowledge that none will be perfect, or have perfect foresight about the future, but that externality means there is a way of marking the Treasury work and the Treasury projections. A Chancellor can certainly make an argument about why they may take issue with some of the elements going into the forecast, and there is often a more dynamic quality to tax revenues than is perhaps put into some of the external forecasts referenced this evening. A Chancellor can certainly have a debate about the numbers, but we do need to remind ourselves of the importance of this process and its external nature.

The other point I want to raise is about the fiction, which the Treasury Committee highlighted in one of our recent reports, that clouds the Office for Budget Responsibility forecasts for fuel duty. Again, this practice goes back many Chancellors and many Governments, and it is about putting into the projections for future tax revenue a ratchet up every year of fuel duty, yet for the last 12 or 13 years, every Chancellor coming to the Dispatch Box has decided not to implement it. It would be astonishing—I note that the Chief Secretary gave me a little cheeky smile—to see what is currently projected for fuel duty in the Office for Budget Responsibility forecast, which is for an extra 12p to go on to fuel after the Budget if the Chancellor does nothing. I think we can all agree that that is fiction. I cannot see the Chancellor coming to the Dispatch Box on 15 March and increasing fuel duty by 12p—I would be astonished—because the temporary one-year reduction of 5p will expire and there is the cumulative impact of the ratchet over the years.

I just wanted to highlight that there is some element of a work of fiction in the Office for Budget Responsibility forecast. It would be healthier for all concerned if a more realistic approach could be taken to the forecast for fuel duty not just in the short term, but in the medium term, because I think we all recognise that there will have to be a change, as more and more people are buying electric cars, in how we tax transport and drivers. I also wanted to publicise how our Committee has come together on a cross-party basis to make that point.

[Mr Deputy Speaker]

I call the SNP spokesperson.