Finance Bill

Baroness Winterton of Doncaster Excerpts

Committee stage
Wednesday 30th November 2022 Commons Chamber

Question proposed, That the clause stand part of the Bill.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Amendment 4, in clause 2, page 3, line 3, at end insert—

“(3) The Chancellor of the Exchequer must lay before the House of Commons reports setting out—

(a) an assessment of the revenue that is generated by the energy (oil and gas) profits levy in the period to which the report relates,

(b) an assessment of the revenue that would have been generated in the period to which the report relates if the investment allowance had not been in effect, and

(c) the names of companies that have made use of the investment allowance and the revenue that would have been generated by them during the period to which the report relates if the investment allowance had not been in effect.

(4) The first report under subsection (3) shall be laid as soon as practicable after the 1 January 2023, in respect of the period 26 May 2022 to 1 January 2023.

(5) Subsequent reports under this section shall be laid every three months thereafter, and in respect of the period since the last report.”

This amendment would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if the relief for investment expenditure had not been in effect, and to produce a quarterly report assessing how much revenue has been forgone because of the investment expenditure relief.

Clause 2 stand part.

Amendment 3, in clause 3, page 3, line 14, at end insert—

“(3) The Chancellor of the Exchequer must, within six months of this section coming into force, lay before the House of Commons an assessment of the revenue that would have been generated if, in section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (3) (which sets out the accounting periods by reference to which the tax is charged), in paragraph (a), for ‘26 May 2022’, there had been substituted ‘6 October 2021’.”

This amendment would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if it had been introduced on 6th October 2021.

Clauses 3 and 4 stand part.

Amendment 2, in clause 5, page 4, line 6, at end insert—

“(5) HMRC must contact every individual affected by the provisions of this section to inform them whether, as a result of the provisions of this section—

(a) they have become liable to pay the basic rate of income tax (when they were not previously so liable);

(b) they have become liable to pay the higher rate of income tax (when they were not previously so liable); and

(c) how much additional income tax they will pay as a result of the change.”

This amendment would require HMRC to contact every individual who become liable to pay standard tax or move from standard to higher rate, and how much additional tax they will have to pay as a result.

Clauses 5 to 9 stand part.

Amendment 5, in clause 10, page 7, line 23, at end insert—

“(8) The Chancellor of the Exchequer must, within six month of this section coming into force, and quarterly thereafter, lay before the House of Commons an assessment of the impact of the changes in this section on—

(a) the Secretary of State’s ability to meet the duty set out in section 1 of the Climate Change Act 2008,

(b) air pollution in the United Kingdom, and

(c) the provision of electric vehicle infrastructure and public transport in the United Kingdom.”

This amendment would require the Chancellor to produce quarterly assessments of the impact of the removal of VED exemption for electrically propelled vehicles on the UK’s climate change duties, air pollution and EV infrastructure and public transport.

Clauses 10 to 12 stand part.

New clause 1—Assessment of the impact of the investment allowance—

“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, publish an assessment of—

(a) the revenue that the energy (oil and gas) profits levy will yield,

(b) the revenue that the energy (oil and gas) profits levy would yield if the investment allowance did not have effect in respect of investment expenditure, and

(c) the revenue that the energy (oil and gas) profits levy would yield if the investment allowance did not have effect in respect of expenditure on decarbonisation by oil and gas companies.

(2) The assessment must cover the whole period that the levy is in effect and also assess the revenue in each tax year.

(3) The assessment must include an evaluation of the impact of the investment allowance on the United Kingdom’s ability to meet its climate commitments, including—

(a) the target for 2050 set out in section 1 of the Climate Change Act 2008,

(b) applicable carbon budgets made pursuant to section 4 of the Climate Change Act 2008, and

(c) the commitment given by the government of the United Kingdom in the Glasgow Climate Pact to pursue policies to limit global warming to 1.5 degrees Celsius.”

This new clause would require the Government to publish an assessment of the impact of the investment allowance on revenue raised by the Energy (Oil and Gas) Profits Levy, including investment by oil and gas companies in UK oil and gas extraction and upstream decarbonisation. The assessment should also cover the impact of the investment allowance on the UK’s ability to meet its domestic and international climate targets.

New clause 2—Review of revenue from the Energy (Oil and Gas) Profits Levy—

“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the revenue estimated to be generated from the Energy (Oil and Gas) Profit Levy in each of the financial years 2021-22 to 2027-28.

(2) In addition to an evaluation of the revenue forecast to be raised by the Levy, the assessment must include an evaluation showing the estimated revenue that would have been raised if each of the following had been the case—

(a) the qualifying accounting period specified in section 1(3) of the Energy (Oil and Gas) Profits Levy Act 2022 had begun on 3 January 2022,

(b) the rate of the levy had been increased to 38% under this Act, and

(c) the amount of additional investment expenditure had been reduced to 0% by this Act.”

This new clause would require the Chancellor of the Exchequer to publish an assessment of estimated revenue from the energy (oil and gas) profit levy in financial years 2021-22 to 2027-28, and set out how these figures would be affected if levy were backdated to 3 January 2022, and if the rate of levy was increased to 38%, and the amount of additional investment expenditure reduced to 0%, by this Act.

New clause 3—Research and Development tax relief policy—

“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of research and development tax relief for small or medium-sized enterprises.

(2) The assessment must include the Chancellor’s assessment of the effectiveness of R&D tax reliefs and plans he has to further reform of R&D tax reliefs.”

This new clause would require the Government to publish an assessment of their view on the effectiveness of R&D tax reliefs for small and medium-sized enterprises and their intentions for any further reform.

New clause 4—Research and Development tax relief fraud and waste—

“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of research and development tax relief for small or medium-sized enterprises.

(2) This assessment must include the following, in respect of each tax year since 2018–19—

(a) an evaluation of the amount of money that has been incorrectly deducted as a qualifying cost, or incorrectly paid as a tax credit, as a result of—

(i) fraud, and

(ii) error,

(b) set out, in relation to sums incorrectly deducted as a qualifying cost, or incorrectly paid as a tax credit—

(i) how many investigations have taken place,

(ii) how many prosecutions have been brought,

(iii) how many prosecutions have resulted in a conviction, and

(iv) how much money has been reclaimed.”

This new clause would require the Government to publish a statement on error and fraud in the SME R&D tax reliefs, including details of what actions they have taken in response.

New clause 5—Assessment of the impact of changes to the basic rate limit and personal allowance for tax years 2026-27 and 2027-28—

“The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the expected impact on an average earner of the provisions of section 5 (Basic rate limit and personal allowance for tax years 2026–27 and 2027–28).”

This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact on average earners of the decision to freeze the basic rate limit and personal allowances for tax years 2026/27 and 2027/28.

New clause 6—Impact assessment of measures in the Act—

“(1) The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the impact of the provisions of this Act.

(2) This assessment must consider the effects of the provisions of the Act on—

(a) different regions and nations of the United Kingdom,

(b) people with different protected characteristics under the Equality Act 2010, and

(c) people with a range of different incomes.”

This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact of the measures in this Act on people in different parts of the United Kingdom, and on groups of people with different protected characteristics and incomes.

New clause 7—Assessment of the impact of measures in the Act on growth—

“(1) The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the impact of provisions of this Act on economic growth.

(2) This assessment must consider the forecast impact of measures in this Act on growth of—

(a) the UK economy as whole,

(b) the economy of different regions and nations on the UK, and

(c) average incomes in the UK.”

This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact of measures in this Act on growth in the UK economy, as well as its impact on growth in different regions and nations of the UK, and its impact on growth of average incomes.

New clause 9—Assessment of investment relief on compliance with the climate change target for 2050—

“The Chancellor of the Exchequer must, within six months of this section coming into force, and quarterly thereafter, lay before the House of Commons an assessment of the impact of the effect of the relief for investment expenditure provided in sections 1 and 2 of the Energy (Oil and Gas) Profits Levy Act 2022 on—

(a) the Secretary of State’s ability to meet the duty set out in section 1 of the Climate Change Act 2008, and

(b) the additional quantity of carbon dioxide that will be generated in the United Kingdom.”

This new clause would require the Chancellor to produce an assessment of the impact of the relief for investment expenditure in relation to the Energy Profits Levy on the Secretary of State’s ability to meet the target of ensuring that the net UK carbon account for the year 2050 is at least 100% lower than the 1990 baseline. And produce a report each quarter detailing how much additional CO2 has been produced because of the investment expenditure relief.

New clause 10—Review of effect on small businesses—

“(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review of the impact of the measures contained in this Act on small businesses.

(2) The review must consider in particular the impact of those measures on the ability of small businesses to—

(a) meet their energy bills,

(b) minimise their debt,

(c) pay their rent,

(d) remain solvent, and

(e) employ staff.

(3) The review must include an assessment of the number of small businesses which will become liable to register for VAT as a result of the measures contained in this Act.

(4) In this section, ‘small businesses’ means any business which has average headcount of staff of less than 50 in the tax year 2022-23.”

This new clause would require the Government to produce an impact assessment of the effect of the Act on small businesses.

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to represent the Government in this important Committee. At the autumn statement, my right hon. Friend the Chancellor set out the significant economic challenges that we face and our plan to ensure that we have economic stability, encourage growth and protect our public services. Securing fiscal sustainability in a responsible and balanced way inevitably requires some difficult decisions. We do not shy away from that, but we have sought to ensure that the heaviest burden falls on those with the broadest shoulders.

The Bill’s first three clauses relate to the energy profits levy. Clause 1 increases the rate of the levy and addresses consequential technical matters. It will ensure that oil and gas companies benefiting from extraordinary profits due to exceptionally high prices will continue to pay their fair share of tax. As hon. Members will know, the Government introduced the levy in May this year as a temporary surcharge on the extraordinary profits being made on the oil and gas sector, driven by global circumstances.

--- Later in debate ---

[Victoria Atkins]

We introduced the expensive car supplement some time ago, and a great many of the cars that the hon. Gentleman has described would fall into that category, particularly if they were bought new. Notwithstanding his assertion, there is no ideological reason for this. We are very conscious of the pressures on the majority of road users, and although, as the hon. Gentleman fairly pointed out, the use of SUVs has increased, that certainly does not mean that everyone who buys a third-hand or fourth-hand SUV is among the wealthiest in society. So we have tried to balance the rights and interests of those who are already paying car tax and also of those driving electric vehicles, who we think, after a certain period of time, should be contributing more towards the tax system than they do at the moment.

As I was saying, clause 11 deals with company car tax rates in order to provide businesses with the certainty they need to plan in relation to vehicle provision. Finally, clause 12 simply sets out the short title of the Bill in the usual manner for such legislation. I hope that hon. Members will not have anything to say about that, but I look forward to any comments on clause 12. I have stuck to the Bill itself because I want to listen to those hon. Members who have kindly put down amendments, which will be debated now. I will attempt to answer some of those challenges, questions and points as I wind up the Committee stage of the Bill in due course.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the shadow Minister.

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for this opportunity to consider the details of the Bill and speak to the amendments and new clauses in my name and that of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).

As we have heard from the Minister, the first three clauses of the Bill relate to the energy, oil and gas profits levy—or, as everyone in the country apart from Conservative Ministers calls it, the windfall tax. It has been a painful journey to get this windfall tax on the statute book. As I set out on Second Reading, it took five months for the Government to finally support the principle of a windfall tax after my right hon. Friend the Member for Leeds West (Rachel Reeves) first called on them to introduce one in January this year.

The current Prime Minister, who was Chancellor at the time, was dragged kicking and screaming into introducing a windfall tax before the summer, but even then he decided to couple it with a massive tax break for oil and gas giants. We do not believe it is right to let that large untargeted and unnecessary tax break continue. It is a tax break that the current Prime Minister introduced and that has left some oil and gas giants paying no windfall tax at all this year. That is why we have been pressing the Conservatives to remove that loophole.

We have also pressed the Government to strengthen the windfall tax by raising its rate from 25% to 38%, a move that would align the overall rate with the taxation of oil and gas profits in Norway. We have also pressed them to extend its period of impact by backdating it to January 2022, the month when the shadow Chancellor first proposed it, and by extending it to 2027-28. We therefore welcome at least some strengthening of the windfall tax in clause 1, which increases its rate to 35%, and clause 3, which extends the period it affects to the end of 2027-28. These clauses do not go as far as we have proposed. They fall short of our plans to increase the rate of the windfall tax to 38% and to backdate it to January 2022, but they do confirm a frequent and recurring pattern when it comes to the windfall tax: Labour leads with the ideas while the Tories object, only ultimately to be dragged kicking and screaming into a U-turn.

Clause 2 highlights one respect in which the Government are still resisting following our lead. In that clause, they have made changes to the rate at which additional investment expenditure is calculated. As the explanatory notes make clear, this rate has been carefully set to

“maintain the overall cumulative value of relief for investment expenditure”.

Let us be clear what this means. The rate of the windfall tax might be going up, but the Government are making sure that the tax break for oil and gas giants is safe. As we see time and again, even when the Government are forced to legislate on a windfall tax, they cannot bring themselves to do it properly.

It is for this reason that we have tabled new clause 2, which would require the Chancellor to publish an assessment of the revenue that is estimated to be generated by the windfall tax and show how much more it would raise if it were backdated to January 2022, if it were increased to 38% and if the additional investment expenditure were reduced to zero—a move that would remove at least some of the oil and gas giants’ tax break. We urge hon. and right hon. Members from all parts of the Committee to support this new clause and help us to push the Government for a stronger and more effective windfall tax that no longer includes such a huge giveaway to the oil and gas giants.

Clause 4 of the Bill concerns tax relief for expenditure on research and development. As we have heard from the Minister, the clause reduces the additional deduction for R&D costs incurred by small and medium-sized enterprises and reduces the rate at which qualifying losses can be surrendered by such companies. At the same time, it increases the rate of R&D expenditure credit, which is mainly claimed by large companies. On this side of the House, we recognise the need to support R&D as a crucial part of driving growth in our economy. It is critical for the Government to have in place a system of R&D tax relief that is effective, that provides as much certainty as possible for businesses to make the investments that our economy so badly needs, and that provides crucial support to key growth sectors in the UK.

--- Later in debate ---

[Sir Robert Syms]

I am glad the hon. Lady is irritated by my comments, because I think I am right. We want a very successful oil and gas industry. My constituency is on top of the Wytch Farm oilfield, which has been going for 40 years. Most of my constituents do not know they are on top of an oilfield, so they keep writing to me about oil and gas. The reality is that we will need oil and gas over the next 30 or 40 years. Apart from power, many products derive from oil and gas.

Oil and gas is a very successful industry for the United Kingdom. The hon. Lady and I probably disagree on most things, but we need to ensure that we keep the industry growing, which will create lots of jobs. This very successful industry creates a lot of wealth, which does not undermine the fact that many oil companies are now investing heavily in renewables. The North sea investments of Shell and many other major companies are consistent with decarbonisation. What we can do in producing more North sea oil and gas and in decarbonising a lot of that production is very exciting.

That is my main concern for the Minister. This has been a difficult year for the Government, partly because of worldwide factors. I look around the world and see shipping costs falling and inflation starting to tail off. I hope there will be peace in Ukraine, and I hope the Ukrainians win, which may well improve the economic situation over the next two years. The Treasury needs to be flexible in how it looks at the situation. When I listen to Opposition Members, I feel they have a very inflexible view of the oil and gas industry that I think would do us great damage. I am glad the Government are in listening mode, and I hope they listen further to the comments of Back Benchers.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I should have reminded colleagues that when we are in Committee I am to be referred to as “Chair” or “Dame Rosie”.

I call the SNP spokesperson.

[Richard Thomson (Gordon) (SNP)]

Thank you, Dame Rosie, for calling me at this point. We are discussing this Finance Bill still against a backdrop of problems with our energy security, the climate crisis and the cost of living crisis. Sadly, despite the rapid turnover in personnel in recent weeks and months at No. 10 and No. 11 Downing Street, there are still no signs in this Bill that the Government have any inclination to go about getting to grips with those three crises and challenges of our age.

Finance Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Monday 28th November 2022 Commons Chamber

Second Reading

[Madam Deputy Speaker (Dame Rosie Winterton)]

I must inform the House that the reasoned amendment in the name of the Leader of the Opposition has been selected, and I will call James Murray to move the reasoned amendment when he speaks in the debate.

--- Later in debate ---

[James Cartlidge]

My hon. Friend is an absolute champion of small businesses and of businesses of all sizes in his constituency. We and our colleagues believe in free enterprise. We knew that the pandemic was an extraordinary situation in which, to keep businesses and free enterprise going, we had to step in an extraordinary way and be a force for maintaining aggregate demand and expenditure. My hon. Friend is absolutely right. What did those businesses do by staying in business? They maintained employment in our communities and maintained the services that they provide. We should all be proud of the extraordinary effort that was made.

We have announced a reduction in the dividend allowance from £2,000 to £1,000 from April 2023 and to £500 from April 2024, as well as a reduction in the capital gains tax annual exempt amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. We have also announced that we are abolishing the annual uprating of the AEA with the consumer prices index and are fixing the CGT reporting proceeds limit at £50,000. The current high value of these allowances can mean that those with investment income and capital gains receive considerably more of their income tax-free than those with, for example, employment income only. Our approach makes the system fairer by bringing the treatment of investment income and capital gains closer in line with that of earned income, while still ensuring that individuals are not taxed on low levels of income or capital gains. Although the allowance will be reduced, individuals who receive a high proportion of their income via dividends will still benefit from lower rates of 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively. These two measures will raise £1.2 billion a year from April 2025.

We are maintaining the income tax personal allowance and the higher rate threshold at their current levels for longer than was previously planned. They will remain at £12,570 and £50,270 respectively for a further two years, until April 2028. This policy will have an impact on many of us, as I said to my hon. Friend the Member for North East Bedfordshire (Richard Fuller), but no one’s current pay packet will reduce as a result. By April 2028, the personal allowance, at £12,570, will still be more than £2,000 higher than if we had uprated it by inflation every financial year since 2010-11.

I reiterate that these are not the kinds of decisions that any Government want to take, but they are decisions that a responsible Government facing these challenges must take. I remind the House that this Government raised the personal allowance by more than 40% in real terms since 2010, and that this year we implemented the largest ever increase to a personal tax starting threshold for national insurance contributions, meaning that they are some of the most generous personal tax allowances in the OECD. Changing the system to reduce the value of personal tax thresholds and allowances supports strong public finances. Even after these changes, as things stand, we will still have the most generous set of core tax-free personal allowances of any G7 country.

Let me now turn to the subject of inheritance tax. As we announced in the autumn statement, the thresholds will continue at current levels in 2026-27 and 2027-28, two more years than previously announced. As a result, the nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. That means that qualifying estates will still be able to pass on up to £500,000 tax-free, and the estates of surviving spouses and civil partners will still be able to pass on up to £1 million tax-free because any unused nil-rate bands are transferable. Current forecasts indicate that only 6% of estates are expected to have a liability in 2022-23, and that is forecast to rise to only 6.6% in 2027-28. In making changes to personal tax thresholds and allowances, the Government recognise that we are asking everyone to contribute more towards sustainable public finances, but—importantly—we are doing this in a fair way.

I am almost there, Madam Deputy Speaker, but I will be assisted by an electric vehicle, because I am now moving on to that method of transport. Earlier this month I attended COP27, where I met international finance Ministry counterparts and reaffirmed the Treasury’s commitment to international action on net zero and climate-resilient development. The Government welcome the fact that the transition to electric vehicles continues apace, with the Office for Budget Responsibility forecasting that half of all new vehicles will be electric by 2025. Therefore, to ensure that all motorists start to make a fairer tax contribution, we have decided that from April 2025, electric cars, vans and motorcycles will no longer be exempt from vehicle excise duty. The motoring tax system will continue to provide generous incentives to support electric vehicle uptake, so the Government will maintain favourable first-year VED rates for electric vehicles, and will legislate for generous company car tax rates for electric vehicles and low-emission vehicles until 2027-28.

These are difficult times, but that does not mean we will shy away from difficult decisions; it means we must confront them head-on. Today the Government are tacking forward specific tax measures in this Bill to help stabilise the public finances and provide certainty for markets. This is an important part of the Government’s broader commitments made in the autumn statement on fiscal sustainability, ensuring that we take a responsible approach to fiscal policy, tackling the scourge of inflation and working hand in hand with the independent Bank of England.

We will do this fairly; we will give a safety net to our most vulnerable, we will invest for future generations, and we will ensure that we grow the economy and improve the lives of people in every part of the United Kingdom. The measures in this autumn Finance Bill are a key part of those plans, and I therefore commend it to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[James Murray]

I thank my hon. Friend for her contribution. She is a great advocate for investment in skills training and making sure that young people have opportunities in the decade ahead, which they have been denied in the last decade under this Conservative Government. The points she makes fit well within a wider plan for growth, which is at the heart of what Labour Members are proposing and pushing the Government to adopt.

That plan is wide ranging. It covers business rates being replaced with a fairer system that makes sure that high street businesses no longer have one hand tied behind their back. It relies on us implementing a modern industrial strategy to support an active partnership of government working hand in hand with businesses to succeed. Labour’s start-up reforms will help to make Britain the best place to start and grow a new business. Small businesses will benefit from our action on late payments and we will give businesses the flexibility they need to upskill their workforce. As I mentioned, we will fix holes in the Brexit deal so our businesses can export more abroad. Crucially, our green prosperity plan will create jobs across the country, from the plumbers and builders needed to insulate homes, to engineers and operators for nuclear and wind. We will invest in the industries of the future and the skills people need to be part of them. That is what a plan for growth should look like. As John Allan, the chair of Tesco, said recently, when it comes to growth, Labour are the

“only…team on the field.”

The truth is that the need for an effective plan for growth has exposed the emptiness and exhaustion of the Conservative party. All we have to show from 12 years of Cameron, May and Johnson is chronic economic stagnation.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. The hon. Gentleman knows that he should not refer to existing colleagues by name.

[James Murray]

I apologise, Madam Deputy Speaker. All we have to show from those three former Conservative Prime Ministers in the last 12 years is chronic economic stagnation. This autumn, the Conservatives tried desperately to make their economic strategy work, but their decisions crashed the economy, imposed a Tory mortgage premium, put pensions in peril and trashed our reputation around the world. Now they are trying again. We face tax hikes on working people, the biggest drop in living standards on record and growth still languishing at the bottom of the league. It seems that Conservative MPs are beginning to realise they have come to the end of the road and their time is up. In a timely echo of the popular TV show, hon. Members from Bishop Auckland to South West Devon are declaring: “I’m a Tory, get me out of here.” It seems the Conservative party is finally beginning to realise what the rest of us already know: the Tories are out of time and out of ideas, and Britain would be better off if they were out of office.

Our amendment makes it clear that, although Ministers have been dragged, kicking and screaming, into action on oil and gas giants’ windfall tax, this Finance Bill fundamentally fails the UK economy and comes from a Government holding the British people back. Be in no doubt: the mess we are in is the result of 12 years of Conservative economic failure. With this Bill, they are loading the cost of their failure on to working people. The Government still have no plan to grow the economy and to stop the fall in living standards that is filling people across the country with dread. We need a Government with a plan to get our economy out of this doom loop, to support businesses to grow and to raise living standards again. We simply cannot afford another decade of the Conservatives. Now is time for change, now is the time for them to get out of the way, now is the time to let Britain succeed.

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak so early in the debate. It is also a great pleasure to have a Finance Bill that is so short. I must have spoken on a dozen of them in my time in Parliament and to have one that has only 12 clauses is some sort of miracle. During this week, we have probably about as much time as we normally have for one of several hundred pages, so we can really scrutinise the 11 substantive clauses. Perhaps that is progress, compared with what we normally expect.

I start by comparing this Finance Bill with ones we had at the start of the previous recession a decade and a half ago and ones we had at the start of previous measures to tackle a large budget deficit. If I recall rightly, the single biggest measure we had 14 years ago was a VAT reduction at the start of the recession, which cost something like £15 billion. I am not sure it had the effect we wanted. Interestingly, as we sadly slip into a recession, which we hope is shorter and shallower than that one, what we have not seen in this Finance Bill is any attempt to boost consumer confidence. We can argue that we tried that in September and it did not go so well, and probably the right thing here is to focus on how we reassure the markets that we can keep borrowing under control and therefore not risk a rise in interest rates.

However, if this recession looks like it might be any longer or deeper than the Government’s forecasts, I urge them to think carefully about how we get consumer confidence to turn around. I fear that what we will see in the new year is a big retrenchment in people’s personal spending. We will spend the money for Christmas because we have to, but people will then take a very cautious approach in the early part of next year, knowing that energy bills will go up in April and that tax changes are around the corner. We would not want them to go too far and retrench too fast. So I hope the Government will think about the role that tax can play in turning the economy around if we need that next year.

The other interesting comparison is with the approach George Osborne took in his Budgets in the first half of the last decade to introduce austerity to tackle the big public deficit we had. Let us look at what he prioritised. He had a VAT increase, which we are rightly not doing in this situation, but he increased the personal allowance and reduced corporation tax to try to put more money into people’s pockets from work and to encourage business investment in the UK. Interestingly, the Government are doing the complete opposite now. I am not sure whether we have worked out that that plan did not work, but there is evidence to suggest that the lower corporation tax rates we had for a decade did not achieve the additional investment that we wanted them to and we are probably better off sticking at about 25% than going lower.

I am slightly intrigued. The great claim we made was that we were taking people out of the scope of income tax. We are now at great risk of putting them all back into the scope of it again. I accept the Minister’s point that the personal allowance by the end of this five-year period will still be £2,000 higher than it would have been by inflation, but I think that is not enough of an increase. I hope that the Government regard these personal allowance freezes for another five years to be a kind of last resort and if we get any improvement in the economic outlook they can be reversed. Especially at the lower end of the level, keeping people out of tax, letting them keep more of the income and making sure that work pays are strong arguments. Frankly, I am not absolutely sure why we need to legislate for personal allowances in five years’ time. We will have another five Finance Bills before we get to those and we could have brought those into law at any point. I accept that we want to give the market a clear steer that we are serious about closing the budget deficit. If we need those measures, fine, they are probably less bad than a rate increase, but what is the point of legislating for them in this situation?

There is another contrast with what we have done on national insurance this year. We chose to—and I accepted the argument that we needed to—increase the headline rate of NI, but the compensation for that, when it became clear that that was a real problem at the start of the economic downturn, was to increase the personal allowance for NI—the starting point at which someone pays that tax. Yet now, rather than increasing the headline rate, we are effectively holding back the starting points of those taxes. So we have a tax on income and a tax on wages where we are taking one approach, and on the other tax we are doing something completely different.

As we go forward from what I accept are emergency measures that we need to use to fill a hole, the Government need to have a clear strategy for what our tax system should look like. They should consider the things we are trying to tax and the things we are trying to incentivise. They should try to give people some long-term stability so that they can plan and understand and we can get the behavioural changes and incentives that we want, rather than having a clear direction one way, and then doing a U-turn and wondering why people do not do the things that we would really like them to do. Now we are through the real firefighting, I hope the Government can produce a strategy and plan for where they think the tax system should go, so that people can understand it and respond accordingly. I think that that is what we had under the Gauke doctrine in 2010. We need to revisit that, now we seem to have changed our mind on so many of those things.

The bleakest bit of news in this Finance Bill was extending the windfall tax to 2028. I was hoping that the energy crisis might be over quite a bit before then and we would not need to have those measures in place. The fact we have done that suggests we are not expecting energy prices to come back down any time soon. Clearly, the windfall tax is the right thing to do. I have always taken the view that this is a level of profit that nobody could ever have thought they could get. These companies are earning it from extracting our natural resources; they are not their natural resources. We have given them permission to extract them, and they have rightly made some profit from doing so. However, we should limit that profit and accept that those are our resources and that we should take the right return from them, rather than the exploiter doing so, so I hugely welcome the introduction of the windfall tax.

I am quite intrigued by the research and development stuff. It is right, even at the most difficult time, to say that we want to make sure that we are incentivising R&D. That is a sensible, long-term measure that shows some long-term planning. I remember being at work as a young accountant when R&D tax credits were introduced—in 2000 for small companies and in 2002 for large companies. The journey they have been on, with rates going up and down and approaches changing—above the line, below the line, cash incentives and all those things—makes me wonder whether, 22 years on, we are really sure that R&D tax credits are delivering the outcome that we want. I suspect that the speeches in the Finance Bill debates in 2000 were that these measures would make us a science superpower in the next generation. I think that we are still giving those speeches, and we have not quite got the superpower bit. I wonder whether the Government should stop at some point and ask whether those are working. I know that there is an ongoing review on combining the reliefs, but are they triggering the right thing?

One piece of data that did worry me was that a disproportionate amount of those are claimed by companies in London and the south-east and they are not spread around the country in the way we would like. Is there a way we can use these tax measures to encourage that kind of investment and those kinds of skilled jobs in the regions of the UK, and not just focus them in the most prosperous parts?

I have expressed the view previously to many Treasury Ministers that, outside the EU, the one thing that we can do is take a regional approach to certain taxation to encourage activity in different parts of the country that we do not need to encourage in London and the south-east. I urge the Treasury to look seriously at whether we could take a regional approach to some taxes so that we can get those differentiating incentives to move wealth outside London and the south-east. That would fit entirely with our levelling-up agenda, but we have not chosen yet to be that creative with our tax system.

Given that we have plenty of time for detailed questions on clauses on Wednesday, I will just say that I accept the need for this Finance Bill. I will support all the measures in it and I will happily vote for it later. I will not be voting for the Opposition amendment, which I suspect will not come as a great shock. I think I support ending non-dom status, but we should have temporary residence relief. If somebody comes here on a secondment or for a short period, we should not try to force them to move all their tax affairs here. We should tax them on the income that they earn here. There would be a big disincentive and it would be out of step with other countries if we did not have a short period where somebody had that different situation to reflect the fact that they are not ordinarily resident here.

The fact is that a person’s non-dom status depends on where their father was born. In theory, they can become a non-dom even if they have lived here all their life and never been resident anywhere else in the world. That shows how ludicrous those rules are. I urge the Government to look at modernising all our residence tests, including that on non-dom status. They are all far too complicated. We could have a far more effective system that works better and would achieve the advantages of attracting investment here. There is a real problem with just scrapping non-dom status; it may drive some people we do want here to leave. On balance, a change is better and we should continue with the direction of travel that we had a decade ago of restricting the time period. I think that we could restrict it with a more modern relief that would achieve what we want without having the big downsides.

With that, I will happily support the Bill and oppose the amendment if there is a Division later.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

Energy (oil and gas) profits levy

Baroness Winterton of Doncaster Excerpts

Tuesday 22nd November 2022 Commons Chamber

(c) (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made for and in connection with extending the period for which the levy has effect until 31 March 2028.

[Madam Deputy Speaker (Dame Rosie Winterton)]

The Question is the first Ways and Means motion on the Order Paper. At the conclusion of the debate, the Question on that first motion will be put to the House. I will then put forthwith the Questions on the remaining Ways and Means motions and the money resolution. I remind the House that the scope of the debate is the content of the autumn statement, as well as the motions on the Order Paper.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the shadow Minister, I notify colleagues that I do not want to put a time limit on, but my guidance is that, if everybody speaks for eight minutes, we should be able to fit everybody in comfortably. That was the guidance yesterday, so it has been equal on both days. I call Tulip Siddiq.

--- Later in debate ---

[Jonathan Gullis]

More!

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call Wendy Chamberlain.

--- Later in debate ---

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I have been here.

[Anna Firth]

I apologise, Madam Deputy Speaker.

I remind Opposition Members that this budget is bringing in the largest ever increase to the national living wage—as we have heard, £1,600 on average for millions and millions of workers. These are not people at the top of the tree.

Autumn Statement Resolutions

Baroness Winterton of Doncaster Excerpts

Monday 21st November 2022 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

I would like to start on a note of agreement—because I probably will not end up on one. The supply shocks after the covid pandemic, followed by the war in Ukraine and Putin’s weaponising of the gas supply to Europe, are the primary reasons for inflation and the cost of living crisis. But they are not the whole story. Analysis of data from company accounts and the Office for National Statistics suggests that there is an additional level of profiteering that the Government have failed to address.

Let me substantiate that claim. If companies were simply passing on increased supply chain costs, we would expect company profits to be broadly static, or even slightly reduced, given that low wages have been unable to keep pace and therefore would have reduced demand. In fact, profit margins for the UK’s biggest listed companies on the FTSE 350 were 73% higher than pre-pandemic levels.

When companies raise their prices to cover their increased costs, that is justifiable; when they increase their prices by more than their increased costs, that is gouging and it gives them a boost in profit. The trouble is that this can then create a second, third and fourth wave of inflation as companies along the supply chain all follow suit. This is the real inflationary spiral. Workers’ wage demands are not driving it; they are following it and responding to it in desperation, as workers see their living standards eroded first by genuine inflationary pressures and then by profiteering.

Many companies respond badly to the accusation that they are price gouging. In April, Sainsbury’s reported a record profit of £730 million. The supermarket insisted that it was not price gouging, but it was not above accusing its competitors, which were making even higher profits, of doing precisely that. Sainsbury’s chief executive Simon Roberts said:

“We are inflating behind the market, our direct competitors are inflating ahead of the market.”

I take that to mean: “We are only profiteering because we don’t want our share price to decline against our competitors who started profiteering first.” As protestations of innocence go, that one does not really go far.

When so many companies are making record profits at a time of soaring inflation, the logical expectation is that they should be able to pay their workers at least enough to maintain their standard of living, yet employers and the Government insist on wage restraint, by which they mean workers accepting wage settlements that are a cut in real terms. They think that is the key to managing inflation. I say again that wage demands have not and are not driving inflation.

Food prices are causing real misery in the UK. Food price inflation is running at over 16%, yet Tesco, Sainsbury’s and Asda increased their combined profits, compared with pre-covid levels, by a staggering 97%. Many of their customers—even their own workers—earn so little that they are on universal credit. This Government are presiding over a system that is happy to see companies grind down workers’ wages to funnel more and more public money through universal credit into shareholders’ dividends. It is obscene.

What about the food manufacturers? They made a profit of £22.9 billion after the pandemic. Nestlé alone showed a profit of £13.7 billion, more than £4 billion more than its pre-pandemic level. Yet in July, after a two-month strike at its east London factory, Nestlé agreed to settle with its workers for a miserly 4%. The workers had asked for 7.5%, which, as we now see, would still have meant a real-terms cut in their living standards. It is not workers who are being unreasonable.

Remember that in the UK we have approximately 2.5 million children who have been using food banks, and then ask why the four giant agribusinesses managed to increase their profits by 255% compared with pre-covid levels. Probably the most blatant example of profiteering and gouging, though, comes from the container shipping industry. The sector is dominated by three alliances of major multinational giants and, together, they control 85% of the world’s container trade. Some might call that a cartel. Only eight of the top 10 container companies have yet reported their latest profits. They are not up by 200%. They are not up by 2,000%. Their combined profits are up by 20,650%, compared with pre-pandemic levels. No wonder they managed to pay out £4.7 billion to their shareholders last year. No wonder P&O, under DP World, is now back in the container business. That brand is so well-known in Parliament for the disgusting treatment of its own workers, and its directors’ total disregard for the law.

When Members speak of the cost of living crisis, attribute it all to Putin and covid, and attempt to blame ordinary working people for fuelling inflation, they should understand that it is a perfectly reasonable request for ordinary people to say that after 12 years of declining real wages, they should not lose out yet again when inflation is at a 40-year high.

Our Government, and more especially those on my party’s own Front Bench, need to be making the case that workers are not causing this inflation spiral. They need to listen to what some of the companies themselves are saying. In a survey of retailers earlier this year, 56% of companies said that inflation had allowed them to raise prices beyond what was required to offset increased costs. Some 63% of larger companies reported that they were using inflation to “boost profits”. BP’s chief executive has referred to his business as a “cash machine”, and BMW’s chief financial officer has said that the company has

“a significant improvement in pricing power”.

When companies themselves tell us that they are ripping us off, it is time for politicians to listen and to act. Ordinary families should not have to pay the price.

[Madam Deputy Speaker (Dame Rosie Winterton)]

A perfect eight minutes.

--- Later in debate ---

[Anthony Browne]

I agree with the point made. As I said, there was a temporary period of a few weeks when there was a rise in interest rates. Some people renewed mortgages in that time and some people lost mortgages. That is terrible for those people, but there are no ongoing, long-term consequences because virtually none of the mini-Budget was implemented.

Many Opposition Members have referred to the Tories’ economic record since 2010. The fact is, we have had a series of extraordinary economic hurricanes. In 2010, we inherited an economy in recession—by Labour’s own admission, we had run out of money—and the 2008 economic crisis was so profound and deep that it led to the longest, deepest recession since the second world war. It took about a decade for the structural changes to the economy to play through, and gradually we returned to growth. Since then, as many have mentioned, we have had the once-in-100-years pandemic followed back to back by the once-in-50-years energy price shock.

During the pandemic, we spent £400 billion supporting households and businesses. I do not think Labour has complained about that too much, but that has led to higher national debt. The pandemic also led to problems with global supply chains that hit countries across the world. On the energy price shock, we are an energy importer, so inevitably we are poorer as a country and inflation has shot up. The question is this: if you are in a plane in a hurricane, or repeated hurricanes, and the plane gets struck by lightning and the engine catches fire and explodes, do you attack the pilot and ditch them because they happened to be in the pilot’s seat when all that happened or do you judge them on their performance and how they managed to get through those crises?

There are two things. First, this is not a UK crisis at the moment. Inflation has shot up around the world and is at roughly the same level in America and Germany as it is here. The IMF has said that one third of the global economy is going into recession this year. The downturn in Germany is faster than it is here. In America, they are putting up taxes by $800 billion to pay for it all. This is a worldwide phenomenon.

Secondly, as many Opposition Members keep going back to 2010, I have been checking my data—I like data. Between 2010 and 2019—the latest international figures I could find while sitting in the Chamber—the UK’s GDP growth per capita was lower than that of the US and Germany, but higher than that of every other G7 country. It was higher than that of Japan, Canada, France, Italy, and every other major European economy, including Spain. Our economic track record between 2010 and 2019 was better than all those countries, so the Conservative Government have a lot of which to be proud.

I want to make a couple—I see you waving your hand at me, Madam Deputy Speaker—of substantive points. The autumn statement does increase taxes; no Conservative Government like increasing taxes, but it is far better to iron out tax distortions before, or indeed while, raising them. The capital gains tax system, for example, has many distortions and is not indexed with inflation, which it should be. It works in a very perverse way. Inheritance tax, which has effectively been increased because the threshold has been frozen, is riddled with issues. There is a potentially exempt transfer scheme where many people do not pay any inheritance tax at all. We need to get rid of all these exemptions, smooth things out and fix inheritance tax before raising it. I also urge the Government to look at marginal rates of taxation that are more than 50%. Increasing numbers of people are falling into that bracket because of the freezing of the thresholds.

Finally—thank you for your patience, Madam Deputy Speaker—I welcome the protection of capital budgets. In particular, I urge the Government to protect the funding for Cambridge Children’s Hospital.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I was not so much waving my hands at the hon. Gentleman, as indicating that he might remember that we had talked about an eight-minute speaking limit. That was simply my intention, and I realised that he immediately remembered that stricture.

Stamp Duty Land Tax (Reduction)

Baroness Winterton of Doncaster Excerpts

Monday 24th October 2022 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I inform the House that I have selected amendment (a) in the name of Tim Farron.

Out-of-Turn Supplementary Estimates 2022-23

Baroness Winterton of Doncaster Excerpts

Monday 24th October 2022 Commons Chamber

[Andrew Griffith]

I defer to my right hon. Friend on all matters economic, but he is absolutely right that the Government had to act and come forward with an estimate, and that global gas and energy prices are volatile. We are proceeding on the basis of a particular set of assumptions, but if those things change, of course we will return to the House with an update.

The second departmental request relates to capital funding for the Bank of England. Since 2009, the asset purchase facility, a subsidiary entity of the Bank of England, has been a policy tool of the independent Monetary Policy Committee. The APF supported the MPC’s objective of stimulating the economy to try to keep inflation at its 2% target. By far the largest element of the APF was so-called quantitative easing, under which the Bank of England has purchased to date a total of £856 billion-worth of gilts and corporate bonds. The Treasury rightly indemnifies the APF and the Bank against any losses from those authorised operations.

In 2012, the Bank and the Treasury agreed that it would be prudent for cash management purposes that any excess cash in the APF would be transferred to HMT at the end of each quarter and that if there were a deficit, the cash would be transferred in the other direction. To date, the APF has regularly transferred cash to the Treasury. In February, however, the MPC announced that it would start unwinding QE, initially by not reinvesting redemption proceeds. Further, on 21 September, the MPC announced its decision to unwind £80 billion of its stock of gilts acquired under QE over a 12-month period, including through a programme of active gilts sales that are due to start soon.

Accompanied by the recent rise in the Bank rate, that means that the overall net position has altered from one of receiving cash over the past 10 years to having to pay out under the indemnity. The outflows requested today are therefore the counterpart of previous receipts in the life cycle of the scheme. The eventual size of the net payments to or from His Majesty’s Treasury should not be used as a measure of the success of asset purchases or of the impact of the schemes on the public purse as a whole. The schemes should instead be judged by the degree to which they meet their objectives for monetary policy and financial stability. I should point out to the House that the value of these payments is difficult to predict. Future market prices and the Bank rate will impact on the amounts required, and the Bank of England MPC decision on sales may itself change over time. Any adjustment in the payments, either up or down, will be reflected in the Treasury’s usual requests in future main or supplementary estimates in the normal way.

Given all that, this is an important motion for the continuation of Government business, and I commend it to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I am glad the Minister agreed that the £60 billion for the energy scheme will of course adjust according to market prices, and let us hope that the current downward trend in some of the gas prices is continued. We need a mild winter and other bits of good fortune, otherwise we could be back facing even bigger bills. I am sure we are all appreciative of the fact that the new Chancellor wishes to review the scheme after March, because this is a very expensive scheme and there may be better ways of doing it to contain the expenditure.

I hope, for example, that consideration will be given, where price controls are still being offered to consumers, to limiting the amount of subsidised fuel any household can buy to a reasonable amount for a normal household, so that those who are in richer households and making much bigger demands on the fuel system would pay for the additional fuel they need—if they are lucky enough to have a heated swimming pool, or whatever it is—and would pay the full price on the extra fuel that such luxuries require. That is offered as a hopeful idea of how one can start to grapple with the very high costs of this scheme without in any way undermining the crucial guarantee to all those who are struggling with their bills already and want this kind of security.

I also have some concerns about the Bank of England estimate. It is quite true that, from Chancellor Darling onwards, quantitative easing decisions have always been jointly taken by Chancellors of the Exchequer and Governors of the Bank of England. One of the main reasons why they have always been joint decisions is that the Bank of England always understandably insisted on a complete capital guarantee against losses on the bonds, because it was envisaging buying so many bonds that they became very big for the Bank of England balance sheet, and it wanted to be reassured that the Treasury and taxpayers stood behind the system in case of losses.

To the extent that this supplementary estimate is to make good losses on bonds that the Bank of England is selling, I have these questions. First, why does the Bank of England think it must sell bonds at this juncture, when the United Kingdom bond market, the American bond market and lots of other bond markets around the world are particularly depressed by the need for a counter-inflation strategy based on high interest rates? We are crystalising a loss that, as I understand it, the Treasury then has to pay for, whereas if we have an unrealised loss, no payments are of course needed until eventual redemption, and very often the redemption value of the bond is considerably higher than today’s price in the market. I cannot quite understand why the Bank needs to sell these bonds now, and as this has always been a joint policy in which Chancellors have been very heavily involved and have heard Bank of England advice—Chancellors had to sign it off because the taxpayer is at risk, not the Bank of England itself—I hope this will be carefully re-examined.

To those who say that we do need to be selling bonds as well as putting up interest rates to curb inflation, I would say they should be careful not to overdo it. If the Bank really does feel it has to tighten even more, it can do so by a further rise in interest rates; it does not have to do so by selling bonds. Very directly, as we see tonight, the sale of these bonds can realise a loss and then can trigger a cash requirement on taxpayers and the Treasury at an extremely bad time for such a cash requirement. I think all of us have much better priorities than paying for bonds that are underwater, when we see the current state of the economy and the need to route more money to individuals and companies in the right ways, to see off a longer and deeper downturn and provide some balance in the public accounts. I ask the Minister and Chancellor to think again, and to talk again to the Governor of the Bank of England about their joint responsibility. They must ask whether this is really the right time to be crystalising losses, resulting in unspecified amounts of money that will have to be paid.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson, Alison Thewliss.

Economic Responsibility and a Plan for Growth

Baroness Winterton of Doncaster Excerpts

Wednesday 19th October 2022 Commons Chamber

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Colleagues will be aware that there is a great deal of interest in this debate, so I warn the next speakers that, after the SNP spokesperson, I will introduce a six-minute time limit. I call the SNP spokesperson, Drew Hendry.

--- Later in debate ---

[Geraint Davies]

On a point of order, Madam Deputy Speaker. Is it in order for a Member to say that he is against fracking but will vote in the opposite direction?

[Madam Deputy Speaker (Dame Rosie Winterton)]

That is not a point of order. Each Member is accountable for their own decisions on voting, and I am sure the hon. Gentleman would not want me to interfere with that.

Health and Social Care Levy (Repeal) Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[James Cartlidge]

The new Prime Minister would rightly say that our manifesto said we would not increase national insurance, so she can draw on the mandate of the general election. We also seem to have vapourised our memory of the pandemic, but I would argue that it changed everything. The enormous borrowing accrued to this Government during the pandemic, which everyone supported—everyone wanted even more spending and even more support for businesses and individuals, as I remember because I was the then Chancellor’s PPS—made it exceptional, and we had to balance the books. I make it clear that this was not my preference, as I would not have wanted a levy to fund the NHS and social care. Given the politics of the time, it was the best way forward.

This is my personal view about how we should move forward. The key point is that the NHS is free at the point of delivery, which means we pay with time. When something is free, people wait and there are massive queues. Of course, those queues have been massively exacerbated by the pandemic, which is why the backlogs are so big, but it is blindingly obvious that the pressure on the NHS is overwhelming. There is almost infinite demand on finite capacity.

Labour Members will say in any election campaign, as we will. “We will do everything possible to increase capacity.” The Deputy Prime Minister and Health Secretary will, of course, do everything possible through her ABCD—ambulances, backlogs, care, doctors and dentists —strategy to improve outcomes in the NHS, but when we talk about funding the NHS, when we talk about the obligation to our grandchildren and the next generation, we have to be more radical, frankly.

In my view, we need a core NHS that is free at the point of delivery, but as a country we need to drive up the use of the independent sector and of private healthcare from all those brilliant companies that are seeing take-up shoot through the roof because of the backlogs. I know some of this territory is difficult to talk about, but I will give three key reasons why we should go down this route. First, every single person who pays to go private is freeing up space on the backlog. They are also boosting NHS capacity.

Secondly, this is standard in comparable countries. The Republic of Ireland, Australia and Germany have tax incentives for people to pay for their healthcare. There is an understanding that people who go to that trouble should have some kind of rebate, because they are doing everyone else a favour.

Thirdly, this is already happening. The post-Beveridge revolution is happening, and it is happening silently. There has been a massive surge in the number of people paying privately for healthcare. The Guardian recently published figures estimating that one in 10 adults in the UK has paid for private healthcare in the past 12 months, primarily because of the backlogs. Use has surged, according to the Independent Healthcare Providers Network. The number of people paying for hip replacements was up 193% in January to March 2022 compared with January to March 2019, and the number of people paying for knee replacements was up 173%. This is a huge surge in the number of people paying privately. It is true that many of them will not have wanted to do so, and I am not suggesting that they will have been delighted. Of course, we all want everyone to be able to use the NHS without long waits—that is clearly the ideal scenario—but it is not deliverable any more, not least with the demographic pressures we face.

We should look at the surging use of the independent sector and embrace it as a policy opportunity. Research from the Independent Healthcare Providers Network shows that 48% of people in this country will consider going private in the next 12 months because they know about the waits. This is about choice, and the most important thing is to have greater tax incentives for people to use the independent sector, so that people think about making a realistic choice. We should not settle for long waits for care any more. This is standard practice in comparable European and Australasian countries.

To be very specific, going back to the OBR document I mentioned, as a country we face a huge liability for health and social care. We should target increasing the percentage of our healthcare spend that goes to the independent sector so that we have a better balance, more like the balance in comparable European countries. If we did that, we would get much better outcomes, we would have more choice and we would finally have a 21st-century healthcare system with diversity of provision, which is the best way forward.

We should recognise that the revolution is happening, and it needs to happen with the Government’s backing and support.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson, Richard Thomson.

Financial Services and Markets Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

Second Reading

[Madam Deputy Speaker (Dame Rosie Winterton)]

I inform the House that neither of the reasoned amendments has been selected.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Before I call the shadow Minister, I want to point out what is probably obvious, which is that this debate is very well subscribed. I hope that, in considering their speeches, right hon. and hon. Members will bear that in mind.

Independent Brewers: Small Brewers Relief

Baroness Winterton of Doncaster Excerpts

Tuesday 6th September 2022 Commons Chamber

[Owen Thompson (Midlothian) (SNP)]

It is good to see such an amazing turnout for tonight’s Adjournment debate and such an interest in small brewers relief!

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Will right hon. and hon. Members please leave quietly, because if they do not, we will not be able to hear the Adjournment debate?

[Owen Thompson]

Thank you, Madam Deputy Speaker. Take two. Politicians like to talk about how everything, in one way or another, is political. We would say that, wouldn’t we? But I think it is genuinely true; decisions taken in places such as this set the scene for our broader social and cultural lives. How we answer questions such as what gets support, what is left to the whims of the free market and how much is something taxed can have a direct impact on how people live, what products they use, what they eat and what they drink. That is certainly the case when it comes to beer.

When we look at Scotland and the UK’s independent brewing scene today, we see diversity and growth, but this is not how it has always been. Only 20 years ago, there were only about 400 brewers in the UK, whereas today the number stands at about 1,900, which is five times as many, with nearly one in every parliamentary constituency. Midlothian, my constituency, punches well above its weight when it comes to brewing, as it does in many other regards; to name just a few local companies, we have Stewart Brewing, Cross Borders, Top Out, Otherworld and Black Metal. The overall picture in recent years has been a booming sector coming out of nowhere and making a huge economic impact.

According to the Society of Independent Brewers, which is represented here tonight with Barry Watts, Keith Bott, Eddie Gadd, Roy Allkin and Greg Hobbs in the Gallery—I am delighted to see them here and I thank them for their support in campaigning on this issue—small independent breweries contribute about £270 million to GDP each year and employ about 6,000 full-time staff. That is an average of 4.1 employees per brewery. A great deal of that success is precisely because in 2002 the Government of the day recognised that existing policy—beer duty—was artificially holding back a sector. In addressing that, politics has enabled craft beer to flourish, to the point where it is now embedded in our culture. Much of this is thanks to small brewers relief, which celebrates its 20th birthday this year. Conveniently, today of all days, the Five Points brewery in Hackney hosted a 20th anniversary celebration to mark the good that SBR has done. Sadly, parliamentary business meant that I could not make it along, but I am told that it was a roaring success, and I hope the Minister will join me in congratulating the organisers.

SBR was introduced to help smaller craft brewers compete in a marketplace dominated by large and global brewers. It allows smaller breweries who make less beer to pay a more proportionate amount of tax, as with income tax. For those who produce up to 5,000 hectolitres a year, which, for clarity, is about 900,000 pints and enough to supply around 15 pubs—or one Downing Street Christmas party, perhaps—SBR means a 50% reduction in the beer duty they pay. Above 5,000 hectolitres, brewers pay duty on a sliding scale, up to the same 100% rate that the global producers pay. This enables brewers to invest in their businesses, create jobs and compete with the global companies.

However, SBR has always had a major glitch. Once a brewer makes more than 5,000 hectolitres, the rate at which duty relief is withdrawn acts as a cliff edge. As a result, instead of empowering small brewers to grow, SBR puts up a barrier, and all because of a wee technicality. It is not the sort of thing that should take years and years to address, but sadly that is exactly what has happened.

As far back as 2018 the Treasury announced a review of SBR to address the cliff edge. Since then, brewers have been barraged with a review in 2019, a technical consultation in 2021, a call for evidence on the alcohol duty system, and a consultation on yet another new system this year.