National Insurance Contributions Bill

Sarah Olney Excerpts

Consideration of Lords amendments
Tuesday 1st March 2022 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

I rise to support Lords amendments 2 and 4, but I will deal first with amendment 4.

As I said at earlier stages of this Bill, those who have experience of serving within the armed forces bring tremendous qualities to the workforce through both the skills they have learned while in uniform and their breadth of life experience. Despite our awareness of that and the best efforts of Governments and the third sector, for too many of our ex-servicemen who are leaving the services, the transition to civvy street is far more difficult than it often needs to be.

Having this exemption for national insurance contributions is therefore a very positive step as far as we are concerned, making it even more attractive to employers to hire those ex-service personnel and to bring their skills and experience into the workforce, helping to bring to fruition all the many economic and social benefits that can come from that. In that regard, we are attracted to Lords amendment 4 simply because it gives the Treasury that power to extend the eligibility period attached to the zero rate relief for armed forces personnel and veterans, should that be deemed desirable. That seems to us to be a perfectly reasonable addition to make to the Bill, giving the Treasury a degree of flexibility on how to implement the measure that would otherwise be lacking in the Bill as drafted.

On amendment 2, let me first place on record my satisfaction at the agreement that has eventually been reached by the Scottish Government and the UK Government over freeports, or green ports, of which two will now be established in Scotland, with the bidding process opening in spring this year and the first sites opening, hopefully, in spring 2023. I will go a little bit off piste here to say that that outcome was not always guaranteed, and at times, in at least some of the public discussions, there has been a bit more war-war than jaw-jaw, certainly on the part of individual Conservative politicians rather than between Ministers in Edinburgh and London. For example, the Scottish Business Minister, Ivan McKee, had to write six times to the UK Government to even try to get green port discussions under way in order to get them over the line. He said that the silence was deafening. That is a pretty damning account that rather sits at odds with the impression that we are often given from those on the Treasury Bench as to how they would like to work constructively with the Scottish Government.

The reason for holding out on the variation on the freeports option was quite simple. We felt very strongly that given the scale of the financial support that was on offer, it was vital to ensure that wider policy objectives such as environmental obligations, the commitment to net zero and fair play for those employed within freeport sites, were met. While it is up to the UK Government to decide how those objectives can be met in England, applicants for green port status in Scotland will be required to set out robust plans at the outset on how they plan to contribute to Scotland’s just transition to a net zero economy and how they will benefit the wider supply chain alongside embedding fair working practices such as at least paying the real living wage.

Freeports, it is fair to say, have had a somewhat mixed reception abroad, particularly as regards the relationship that they are perceived to have with criminality and tax evasion. While hardly the “Grand Theft Auto”-style dystopia that they have sometimes been portrayed as, the potential for criminality and non-compliance with taxation, employment rights, health and safety or environmental regulations and obligations is clear, as is the potential for broader economic displacement.

That brings me to the nub of amendment 2. In recent weeks, we have seen significantly increased demand from this House for scrutiny and visibility of financial transactions that take place in this country. We need to have that increased scrutiny over those who spend and invest in the UK, and also over where their money originates. It is very important when setting up freeports that we are able to answer the age-old question, “cui bono?” That is absolutely paramount. A requirement that the freeport deliverance body should be able to make reasonable efforts to verify who the beneficial owners of the business are and to ensure that that information is accessible not just to the relevant enforcement agencies but to the general public is the minimum amount of due diligence that we should expect in exchange for the status and the exemptions on offer.

I listened carefully to the Minister’s arguments about the beneficial register that will be in place and her view that as a third party under the local governance arrangements it would be inappropriate to release that information. Respectfully, I disagree with that. We all know how labyrinthine and byzantine corporate structures can be. Irrespective of any requirement in future legislation that may be coming into force, certainly on freeports, my party firmly believes that we should have transparency and accountability baked into the corporate structure and public reporting at the outset. On that basis, both Lords amendments have our support and we shall be voting accordingly.

[Sarah Olney (Richmond Park) (LD)]

I spoke on Second Reading and at other stages before the Bill went to the Lords, but it is fair to say that I now stand in a very different environment. Since the full-scale invasion of Ukraine last week, so many aspects of our economy, our international relations and our defence strategy have been cast in a new light.

In that spirit, I rise to support Lords amendment 2, which was introduced by my good friend and Richmond Park predecessor, Baroness Kramer. In the past week, we have had cause to look again not just at our defence spending and at the importance of our international relationships, but most importantly at how the UK— London in particular—has become a haven for Russian money, at what it has done to us as a nation and at how it has undermined our efforts to stand with the brave people of Ukraine.

National Insurance Contributions Bill

Sarah Olney Excerpts

3rd reading
Monday 6th September 2021 Commons Chamber

As a final plea, I encourage the Minister, once again, as I have at previous stages, to ensure that the UK Government are working at all stages with the Scottish Government to make sure that we can bring forward a form of freeports in Scotland that meets these objectives.

[Sarah Olney (Richmond Park) (LD)]

I rise to speak to my new clause 4, which would quadruple the employment allowance from £4,000 to £16,000 for two years. I tabled it for several reasons. The Government’s Bill rightly identifies that changes to national insurance contributions for both employees and employers have a role to play in stimulating economic activity. That is why they wish to have special NI provisions for freeports and, elsewhere in the Bill, for veterans, to help them back into work and stimulate economic activity in freeports. Interestingly, the Government are indicating in this Bill that they see a role that national insurance contributions can play in stimulating economic activity. I will not labour the point, because Madam Deputy Speaker has made the rules clear on that, but we expect to see further announcements later in the week on NICs, which I think will contradict what this Bill is seeking to do.

NICs have an important role to play in stimulating economic activity, and I wish to speak particularly about our small and medium-sized enterprises. So many of them have been hit badly by the pandemic, especially those in our retail, hospitality and tourism sectors. One thing that many of us here can agree on is that as we come out of the pandemic we expect to see some big changes to the way business operates. We expect possibly to see more online working and more working from home, and we may well see new businesses come in to replace old businesses that did not survive the pandemic to deliver the new services that will support new ways of working and perhaps new ways of living. People will live further away from town centres. What new opportunities will there be in suburban constituencies such as mine, and even rural constituencies, to deliver services for people who would not previously have spent as much time there? So this is an interesting time, but I believe the Government should, above all, be prioritising economic growth and most particularly employment at this stage.

[Mike Wood (Dudley South) (Con)]

What assessment has the hon. Lady made of the cost to the Exchequer of her new clause?

[Sarah Olney]

I have not made an assessment of the cost, but that is partly because it would be difficult to manage that against the extent to which my proposal could, as I said just a minute ago, stimulate the economy, which is what we should prioritise at this time, particularly for small and medium-sized enterprises. If we can, we should stimulate SME growth, particularly in new sectors that may well benefit from changes in the way we do business in this country. The hon. Member for Gordon (Richard Thomson) commented in particular on businesses that pursue carbon-free ways to deliver goods and services, which are such a priority. These are big areas for growth and we should be pursuing them.

In particular, we should support employment in new industries. In the past few weeks we have seen a great deal about skills shortages. We really need to improve skills development in existing industries—we have seen massive skills shortages in respect of drivers of heavy goods vehicle and care workers—but there are also lots of opportunities in the new industries and particularly in the green economy. We really need to support employment and encourage people to develop the skills they need to take their place in what I think will be the new, future economy.

[Mike Wood]

rose—

[Sarah Olney]

I would like to make some progress, if that is okay.

We should at this time pursue economic growth and job creation above all other concerns, because we face an uncertain few months in our economy. We could face a wave of closures and redundancies as the various support schemes that the Government introduced to get us through the pandemic come to an end. There could well be lots of redundancies as the furlough scheme closes. Business rates exemptions and deferred VAT payments are coming to an end, so if we can reduce the pressure on businesses by relieving them of some of their national insurance payments, that will help them to ride out the coming period when they will need to repay some of the costs. VAT on hospitality is going back to 12.5% from the end of this month. All such financial pressures are coming at a time when we think prices will rise and the universal credit cut may well hit household incomes and supress demand.

I propose new clause 4 because instead of a selected NICs cut for companies in freeports, I would prefer that we target the cut at SMEs, at this urgent time when we want to stimulate economic growth and support employment.

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

I am grateful for the opportunity to speak on Report on behalf of the Opposition. As we have made clear throughout the passage of this legislation through the House, we will not oppose the Bill. We have, however, used the opportunity of the debates we have had so far to raise important questions with Ministers about some of the approaches they have decided to take.

As we know, clauses 1 to 5 introduce a new zero rate of secondary class 1 national insurance contributions for employers who take on employees in a freeport. The zero rate will apply from April 2022 and allow employers to claim relief on the earnings of eligible employees of up to £25,000 per year for three years. Clauses 6 and 7 also introduce a new zero rate of secondary class 1 national insurance contributions, in this case for employers of armed forces veterans.

National Insurance Contributions Bill

Sarah Olney Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Bill seeks to achieve a range of aims, but like most things that the Government are currently attempting, it misses the opportunity to achieve a great deal more.

The Liberal Democrats welcome the provisions that will enable a 0% rate of national insurance contributions to be paid by employers of former members of the armed forces. Glass Door, a charity in my constituency that provides shelters and outreach for homeless people and rough sleepers, has described to me how past trauma is a key risk factor in becoming homeless and how the two groups most at risk are survivors of childhood sexual abuse and armed forces veterans. Like many Members across the House, I am deeply concerned about how we care for our servicemen and women, and I support all measures to assist them in their post-service life. The Liberal Democrats unequivocally welcome an incentive for businesses to bring them into new employment.

We also welcome the straightening out of any unintended tax consequences that have arisen from covid payments in the past 18 months. The British public have been extraordinary in their response to the crisis and have willingly played their part in staying at home to protect the NHS and save lives. For many individuals, that will have had a direct financial consequence, and it is absolutely right that any payments made to mitigate such financial consequences should be free from tax and national insurance. There is no doubt that people would willingly have gone out and earned national insurance contribution income if the Government had not asked them not to. It is only fitting that their financial sacrifices be properly recognised in our tax and benefits system.

I support the comments made by the hon. Member for Thirsk and Malton (Kevin Hollinrake) about tax avoidance schemes and the extent to which they are being promoted. I support measures to clamp down on such schemes, particularly where vulnerable taxpayers are being targeted and potentially lured, dare I say it, into investing in schemes that would bring them into default in their tax affairs; we have seen that happening in relation to the loan charge, as he mentioned. I would like to see the Government doing more to clamp down on these schemes, and I welcome any measures to do so.

The Bill also makes provision for 0% national insurance contributions for employers in freeports. The Government have made a great deal of their plans for freeports; they appear to have great hopes for their abilities to bring economic revival to our country following Brexit and the pandemic. The extent to which that looks likely to be achieved remains uncertain. The Government have not yet published an assessment of the likely impact of this national insurance reduction, which leads me to believe that that uncertainty is continuing. If the Government are unable to say how much the Treasury will lose from the cut in national insurance, one can conclude only that they do not yet have any confidence in how much they expect freeports to boost employment.

What is certain is that the Government have not yet brought forward any other plans to boost economic growth following Brexit and the pandemic. I regret that they are missing the opportunity to boost growth in other sectors and in regions that are not lucky enough to benefit from a freeport.

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

The hon. Lady says that the Government do not have any additional plans for growth. We launched a plan for growth in the Budget with three pillars—infrastructure, innovation and skills—to tackle net zero post covid and take our opportunities for global Britain on leaving the EU, so she is quite wrong to say that we have not done anything to plan for growth.

[Sarah Olney]

I very much welcome the Exchequer Secretary’s intervention. I am happy to stand corrected, and I very much look forward to seeing the impacts of those plans right across the nation, because as far as I am concerned, the significant weakness of the plan for freeports is that it cherry-picks areas for investment while ignoring the needs of many other communities across the country. That is why I say that the Bill is a missed opportunity: because to target the national insurance cut just at areas that will have a freeport is to ignore the impact that such a cut could have across many sectors that could provide fantastic opportunities for employment as we come out of the pandemic. There is a very real danger that freeports will divert business activity from areas outside freeports, and that this measure will hit the public finances without any subsequent increase in economic activity.

I believe that the Government would make much better use of the national insurance contributions scheme by stimulating economic growth in ways proven to be effective. For example, an increase in the annual employment allowance to £16,000 could benefit every small and medium-sized enterprise. It would allow employers to take on up to five workers each without making contributions, which would be a substantial boost to communities across the country and would do much more to boost employment across the nation than these hand-picked benefits whose impact cannot be measured.

[Madam Deputy Speaker (Dame Rosie Winterton)]

As the next speaker has withdrawn, we will go straight to Jim Shannon.

Finance Bill

Sarah Olney Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), with whom I agree on the importance of the Government ascertaining how measures in this Bill may have a differential impact on different areas of the country, depending on different socioeconomic and health conditions.

I rise to speak to probing amendments 27 and 28, which stand in my name. They would encourage the Government to bring much-needed transparency and strategic thinking to the reliefs proposed by clauses 15 and 19. The amendments reflect Plaid Cymru’s constructive approach to this Bill and our priorities of building Wales’s economy and delivering on our net zero commitments.

Mr Deputy Speaker, you will be pleased to hear that I have no intention of detaining the House for very long this evening and so simply wish to reiterate some of the points I made in Committee. Before doing so, I wish to commend the amendments tabled by the right hon. Member for Haltemprice and Howden (Mr Davis) and the speech by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) on IR35 and umbrella companies. I very much hope that the Government will take them into consideration with some urgency.

Amendments 27 and 28 would require the Government to analyse the impact of changes to the annual investment allowance and research and development tax credits on the UK economy, their geographical reach and their impact on efforts to mitigate climate change. The amendments reflect a concern not only that existing tax reliefs are being used wastefully, but that we need to better support the levelling-up agenda and the decarbonisation of our economy so that we can achieve our legally binding net zero targets. I say that in the full knowledge that many other hon. Members have made these points far more eloquently than I could this evening. I particularly wish to commend the amendments standing in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas), which would go some way to ensuring that any measures in this Bill would have decarbonisation and our net zero commitments very much at the heart of their endeavours.

More generally, the UK Government have a lacklustre record on the use of reliefs. Both the National Audit Office and the Public Accounts Committee have raised serious concerns in that regard, with the latter concluding that the Government do not fully know their cost and have failed to conduct due diligence to establish value for money, with some 204 reliefs currently uncosted. When we consider that estimates for the 158 reliefs that have been costed suggest that they could cost the taxpayer as much as £159 billion a year, we as parliamentarians are not only justified but duty bound to establish precisely how those reliefs will contribute to levelling up and decarbonisation efforts. I commend the hon. Member for Hackney South and Shoreditch (Meg Hillier) and the work of her Committee, which greatly enhances the quality of our scrutiny in this place.

With those words, I hope that the Government will urgently take on board our amendments, and those tabled by the Members to whom I have referred, to improve the transparency and effectiveness of tax reliefs to furthering what I think are common goals of levelling up and tackling the net zero agenda.

[Sarah Olney (Richmond Park) (LD) [V]]

I wish to speak to new clause 29, which stands in my name. The pandemic has introduced new ways of working right across our economy and we may need some time before we understand the full impact of these changes and the extent to which they represent permanent changes to how we work. Many of us, MPs included, have been fortunate enough to be able to utilise technology to continue our usual work and receive our full salary for it. Estimates put about 25% of the workforce in this category. I am one of many who hope that some of the changes we have been forced to adopt will be embedded in our normal ways of working as we move out of lockdown. On a national basis, it is possible that the use of digital meeting software may reduce the need for travel, both commuting and longer distance. It will also help workplaces become more accessible for those who have experienced obstacles, such as those with disabilities or those with caring responsibilities. But embedding emergency responses into everyday practice represents threats as well as opportunities, especially to workers. This new clause would require the Government to review the effects of this Finance Bill on certain categories of workers and to report to Parliament.

The workers I am particularly concerned about are those employed on precarious contracts, particularly in the distribution sector. One of the impacts of the stay-at-home order has been an enormous increase in online shopping and home delivery, with a corresponding increase in delivery vans on our roads. The impact that that is having on local congestion is a debate for another day, but tonight I want to draw attention to the contracts under which many of the drivers are working.

Better Jobs and a Fair Deal at Work

Sarah Olney Excerpts

Wednesday 12th May 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to speak in this debate on the Queen’s Speech. The Government have had a great deal to say about levelling up, but there was very little in the Queen’s Speech to help our thousands of small businesses all over the country with the real help they need to recover from the pandemic. Our small businesses are the lifeblood of our communities, and the need for strong local communities has been highlighted as never before.

Small businesses and our town centre businesses have already been struggling with high business rates, outdated property leasing arrangements and increasing competition from digital services. Although the Government did a great deal to alleviate some of the problems the pandemic presented, it was unavoidable that many businesses, especially in our retail, hospitality and cultural sectors, should have lost a great deal of income over the past 13 months. Consequently, many small businesses have taken on a great deal of debt. The overall debt burden for businesses in this country is estimated to be more than £100 billion. The Federation of Small Businesses has said that 40% of its members describe that debt as “unmanageable”. I am sure the Prime Minister has a great deal of sympathy for all those struggling with debt repayment, so it is extremely disappointing not to see more action from the Government to support these businesses with the debt burden they are struggling with. Additional support would save many jobs.

I welcome the Government’s announcement yesterday that they plan to continue to open up the economy according to the dates in the road map, and I very much look forward to the next step on Monday. It will deliver a huge boost to businesses up and down the country, and I very much hope we will see a dramatic increase in economic activity in the second half of the year to help struggling sectors recover some of their covid losses.

But beyond the post-covid bounceback, what are the Government’s long-term plans for economic growth? Only sustained growth can help businesses to pay down their debts and deliver secure, skilled, long-term employment. The only thing we have heard about so far is freeports, which are set to be delivered in hand-picked parts of the country and cannot deliver jobs and growth everywhere. They rely on special customs status and are appropriate for only limited forms of economic activity. Evidence shows that their effect is to divert economic activity from elsewhere, rather than generating new activity of their own.

The Government do not appear to have any further ideas. The Liberal Democrats want to see investment in green growth and real action on the fight against climate change, in the form of upgrading our homes, investing in renewable energy infrastructure and reducing carbon emissions from transport. There was nothing in the Queen’s Speech to indicate how the Government plan to progress towards their own goal of net zero by 2050—that is an alarming omission, given how urgent the need for action is. In particular, we need to see the Government’s plans for replacing the green homes grant, to encourage householders to invest in zero-carbon homes, which will encourage the construction sector to invest in the skills, apprenticeships and workforce to deliver this. That work needs to start now.

The most recent figures from the Official for National Statistics show that our trade with the EU has recovered since the low level of exports recorded in January, but exports to the EU in March 2021 were still 20% below the March 2019 levels. The Government need to abandon their flag waving, look seriously at the obstacles that the trade and co-operation agreement presents to trade, and make a start on addressing them if they want this country to recover economically.

Oral Answers to Questions

Sarah Olney Excerpts

Tuesday 27th April 2021 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

There has been no change in the Treasury’s position since I updated the House in January 2019. The relevant records—the data relating to all payments made under the scheme—are retained, and will continue to be so for as long as that is legal. Contrary to the press reports, there are no plans to destroy records. There is a complaints process provided by the scheme, and those who are not satisfied may take their case to the independent review panel which resolved such cases before closure. Further to the oral evidence session to which my hon. Friend referred, the permanent secretary to the Treasury will be writing to the PAC to provide similar reassurance and clarification. Since the scheme has now closed, there will be no further funding on this matter.

[Sarah Olney (Richmond Park) (LD) [V]]

The Association of Accounting Technicians has published its response to the consultation opened by the Treasury on its plans to reduce air passenger duty, in which it argues that a reduction would be wrong, as it “contradicts and greatly weakens government policy on seeking to reach ‘net zero’ by 2050”. Why does the Government’s tax policy not support their net zero goals?

[Kemi Badenoch]

I am not sure exactly what reduction in air passenger duty the hon. Lady is referring to. We are increasing air passenger duty in this year’s Finance Bill.

Finance (No. 2) Bill

Sarah Olney Excerpts

Committee stage & Committee of the Whole House (Day 2)
Tuesday 20th April 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD) [V]]

I wish to speak to clauses 92 to 95 relating to VAT. This last year has been exceptionally tough on our hospitality industries and I welcome all measures to support our valuable tourism and hospitality businesses as they tentatively begin to open up after the pandemic. Like many others, I was delighted to be able to visit pubs, restaurants and cafés in my constituency last week. I had a particularly enjoyable Friday night drink at the Black Horse on Kingston Hill and a fantastic Sunday lunch at the Glasshouse in New Malden. I am very much looking forward to getting round to all the other excellent venues in my constituency over the next few weeks and months.

However, it is important to remember that tourism and hospitality will not recover overnight. While there is undoubtedly a great deal of pent-up demand for eating out and visiting the wonderful sights and attractions of our great nation, it will not be possible for all businesses to open immediately and in full. And we do not know whether the Government’s road map will be able to progress as planned. Despite the wonderful success of the vaccine roll-out, we are still at risk from new variants and there may still be a need in future to restrict people’s ability to socialise indoors. So, although we welcome the cut to the VAT rate on hospitality and tourism sales to 5% until September 2021, the Liberal Democrats argue that the cut should be extended for the whole of the financial year, instead of moving to 12.5% from September to March.

Household incomes also need time to recover, and encouragement to spend on luxuries and leisure such as meals out should be continued for much, much longer. Indeed, the Government could and should have gone a great deal further to support these businesses and to safeguard the jobs that they create. Many businesses are able to partially reopen this month. There are estimates that up to 60% will not be able to reopen because they do not have outside space. But they will all be faced eventually with large VAT bills, deferred over the last 12 months.

A much better way to support businesses would have been to provide relief on the deferred VAT owed. That would have relieved businesses of an immediate cash burden and freed up that cash flow to invest in stock, staff and making their premises covid-safe. Instead, the Government propose to start imposing penalties from June this year on those businesses that have not yet started repaying this VAT. That will fall on businesses that have had extremely limited opportunities to earn any revenue in the last 12 months. The measures to allow businesses to pay this in 11 instalments is welcome, but will not help those businesses that cannot yet reopen and will not have any cash coming in to pay any of those instalments.

Businesses will also be carrying a great deal of debt and it is very disappointing to see a lack of measures in the Budget to address that. In particular, many businesses will be indebted to their landlords and it is disappointing that the Government have done nothing at all to help businesses with those costs. The Liberal Democrats would have introduced a revenue compensation scheme to help businesses with fixed costs such as rent. The burden of repaying those will fall very heavily on businesses that cannot yet reopen fully.

I am probably unique in the House in having direct experience of implementing Making Tax Digital for VAT reporting in my former role as an accountant for a large organisation. While the overall objectives of the programme are sound, I can tell the Minister from personal experience that they are not always straightforward to implement. I am puzzled as to why the Government think it should be a priority for struggling small businesses to deal with the additional administrative burden of implementing Making Tax Digital, at a time when they are having to deal with the huge burden of reopening in a highly uncertain time, and at the risk of further fines if they do not comply. Surely this could have waited another 12 months. The imperative to close the tax gap surely pales into insignificance when compared with the imperative to support precarious businesses at this time. How can additional red tape and administrative burden be the right response to the current crisis?

In short, this is not a Government who understand the needs or priorities of small businesses; it is a Government who choose to impose punitive costs and paperwork rather than provide effective support.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Dame Rosie, my humblest apologies for being late in attending the Chamber. I was badly caught out by the fact that this debate is way ahead of where I thought it would be. [Hon. Members: “Hear, hear.”] There is a silver lining to every cloud.

My good friend and colleague, my hon. Friend the Member for Richmond Park (Sarah Olney), has said it all, but I would like to touch on the issue of the hospitality sector. I am sure the Minister is tired of hearing this again and again, but business in my part of the world is very fragile. The hospitality sector depends on making as much money as it can during the short tourist season because the weather can be so inclement—it is like living on the fat you can make in the good times to get through the winter.

I give credit to the Government for the help that has been given, but I am very concerned that some tourism businesses may still yet shut down permanently. I do not know how many times I have said this in the Chamber, but the fact is that, if we lose one business, two businesses or three businesses, we are impoverishing the tourism product that we can offer in a remote part of the British Isles and, if we do that, there is less for tourists to come, see and do, or to eat and drink, and then we do not get as many tourists coming, and it becomes a downward, vicious circle. The VAT reduction we have had so far is welcome, but could we look at extending it a little further, perhaps for as long as my hon. Friend the Member for Richmond Park said? That would be very welcome. I have said several times in this place that it would be helpful if the Scottish Government and the UK Government could look at an overall, longer-term strategy to try to get businesses back on their feet, seeing them through the difficult times and nursing them so that we get to—to quote Churchill—the “sunlit uplands” that surely will come our way.

There is one other issue: we need some form of training element in that package. I was talking to Murray Lamont, who owns and runs Mackays Hotel in Wick, and he said: “Talk about training, Jamie, because we need to keep improving the product and making it still better because the competition is out there.” My hon. Friend the Member for Richmond Park touched on the revenue compensation scheme, and I would be extremely grateful if that could be looked at.

I am tempted to chance my arm and talk about banks, given the name of this section of the debate. Members will have heard me say many times that we have one branch of the Bank of Scotland in the huge county of Sutherland. That is a massive problem, but rather than incur the yawns of those on the Treasury Bench—

Finance (No. 2) Bill

Sarah Olney Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

With the greatest respect for the previous speaker, I think there is a view across the House and in all parties that we need to manage the economy effectively in the interests of everybody. That means addressing the debt to GDP ratio—of course it does—but the question always arises, “Who bears the burden? Who carries the heaviest burden?” I believe that the Bill shifts too much of the burden on to those who are the least able to bear it. That is where we disagree, and it is an honest disagreement.

I will speak to oppose clause 5 standing part and to support amendment 2, and consequential amendments 3 and 4, which stand in my name and those of a number of my colleagues. Some of this is about confidence in politics, which at the moment is receiving a bit of a drubbing.

In the last general election, the Conservative manifesto pledged:

“We promise not to raise the rates of income tax…This is a tax guarantee that will protect the incomes of hard-working families across the next Parliament.”

Clause 5 breaches that pledge; incomes are not protected. More of people’s incomes will be hit by income tax. It is especially harsh on the millions of public sector workers who have faced from this Government: first, a pay freeze; a 5% rise in council tax; and now a stealth rise in their income tax. These people are low earners who struggle to make ends meet as it is. Low earners are heavily indebted. Some have been furloughed, losing 20% of their income for a year. Now they are being hit by a stealth rise in income tax that was not pledged at the last election and that any fair reading of the Conservative manifesto would have thought was completely ruled out.

The Labour party also stood on a manifesto that said there would be no rise in income tax for 90% of earners, and has recently said that now is not the time for tax rises. I hope that Members across the whole House will stand by their commitments at the last general election and oppose clause 5. This would allow the threshold to rise with inflation, as legislated for way back under the last Labour Government in the Income Tax Act 2007.

Low pay is endemic in our society. In 2015, the then Chancellor, George Osborne, promised a £9 minimum wage by 2020. It is 2021 and the minimum wage is still below that level. Let us look at an example. We know that half of all care workers earn less than the real living wage and the majority of children are living in working households. What does that say about low wages? The last thing any Government should be doing is raising taxes on low-paid workers, especially when that Government have broken their promises on raising wages and have failed to reach the target they set for the minimum wage.

Some Members may recall the Rooker-Wise amendment; it was a long time ago—44 years ago. That amendment overturned a similar proposal from the Callaghan Government. With many low-paid workers not getting a pay rise and facing mounting household debts, we should not be taking more of their income in tax. With high street retail needing an urgent stimulus, there cannot be a worse policy than removing demand from the economy at this time. That demand is really created by the people—these are the people who will spend, not hoard.

If the House is not minded to leave out clause 5, perhaps the Government can compromise and accept amendments 2, 3 and 4 in my name and those of other hon. and right hon. Members. These amendments would ensure that the stealth tax on working people was delayed until 2023-24—the same year that the corporation tax rise kicks in. Low-paid workers should not be hit with an extra year of tax that the corporations are not hit with.

Another point that I hope the Government will consider incorporating into the Bill before Report stage is the case for equalising capital gains tax rates with income tax rates. Ahead of the Budget, I was heavily briefed that this was being considered by the Chancellor. It is manifestly unfair that income derived from wealth is taxed at a lower level than income derived from work. I hope that the Government will look at this issue ahead of Report stage. I urge the Government to consider accepting amendments 2, 3 and 4 at a bare minimum—better still, leave out clause 5 altogether. Do not force the lowest paid in our economy to shoulder what could be the heaviest burden.

[Sarah Olney (Richmond Park) (LD) [V]]

I wish to speak to clause 5 relating to the changes in personal income tax allowances and to clause 28 relating to the freezing of the lifetime allowance on pension pots.

There is no doubt that the last year has made unprecedented demands on the public purse, and it is right that the Government should be prepared to take difficult decisions on taxation as we move forward, as we all very much hope, out of the pandemic and into the changed world beyond. However, the Government made clear commitments in their 2019 manifesto that they would not raise income tax on working families and they have broken that commitment in this Bill. The freezing of the personal allowance and the higher tax bands means that more working people will pay tax and at higher rates than they would otherwise have expected.

Clearly the Government are banking on a consumer-led recovery and this tax burden on working families will reduce the amount of discretionary spend available to households, limiting their ability to spend on consumer goods. As housing costs increase to their highest ever levels, household budgets will continue to be squeezed, and piling additional tax charges on top will create an enormous burden for those who are already struggling to make ends meet. It is a particular insult to those in our NHS, who have sacrificed so much to keep us all safe this year and have been told to expect only a 1% pay increase for their trouble. Our nurses will have to give back more of that 1% in tax than previously despite all that they have already given. This is particularly galling when compared with the Government’s decision to delay a corporation tax increase. The Government have chosen to tax hard-pressed frontline workers first and large, profitable corporations later. Only those companies that have remained profitable throughout the pandemic would be paying corporation tax next year, which is why an immediate increase in corporation tax could have captured the windfalls or excess profits of those who found their revenues increased as a result of the unusual trading conditions of the last year. This would have been a far more equitable route to raising income than putting the burden on hard-working families.

On clause 28, I urge the Chancellor to carefully consider the impact on NHS pensions of freezing the lifetime pension allowance. I have heard a few stories from constituents about how this measure interacts with their final salary scheme. While a figure of a little over £1 million would rightly strike most as more than sufficient as a tax-free pension pot, senior doctors in the NHS are finding it extremely difficult to assess whether or not their overtime will result in their yearly calculation of their lifetime allowance being tipped over the threshold and result in a current tax bill. The British Medical Association estimates that the number of GPs taking early retirement has tripled over the past decade and puts this down partly to the uncertainty about their tax bills.

It is worth noting that when the lifetime allowance was first introduced in 2006, it was set at £1.5 million, rising to £1.8 million in the financial year 2010-11. Since the Conservatives came to power, it has reduced every year to the current level of only just above £1 million. Like the freezing of the personal allowance, this has the impact of catching more ordinary people in the taxation net, and again we see that the Chancellor wants to raise money off the back of hard-working NHS frontline workers while protecting profitable corporations.

This issue has been a problem for doctors for the last few years, so the Government have no excuse for not knowing that the freezing of the pension lifetime allowance would make the situation worse. Have the Government carried out an impact assessment of the measure on NHS retention of senior staff? I am extremely concerned, at this time when our senior NHS staff are exhausted and facing a huge backlog of elective surgery, that skilled staff should not feel compelled to take early retirement because of an unintended and avoidable tax consequence.

The Finance Bill seeks to tax hard-working families and penalise those who have been working so hard to keep us all safe this year, and the Liberal Democrats cannot support these measures.

[Matt Rodda (Reading East) (Lab)]

I want to offer my support to the shadow Minister, my hon. Friend the Member for Ealing North (James Murray), who put his case very fairly. I want to illustrate what that means in my constituency of Reading East and perhaps develop some of the points he made.

I particularly want to raise the growth in the use of food banks, which has been very significant across the country, and our area is typical in so many ways, as indeed it is in many instances. The growth in the use of food banks illustrates why the Budget was such a complete failure, because the Government failed to offer real help to many families. In particular they offered very little to those in the greatest need, as we heard from the shadow Minister, and very little to those who are self-employed and have recently set up a small business. Indeed, the3million campaign group rightly pointed out that, although a small number will benefit from some measures offering further support for recently set-up small businesses, most will not, and that has been widely recognised in my constituency.

Before going into the detail of local food banks, I want to thank all the volunteers at our local council in Reading and many others, both businesses and individuals, who have helped support food banks by generously giving their time and putting the community and others first at what is a very difficult time for so many people. I have tried to keep in touch with the pressures by going to help myself and to receive regular briefings from food banks and other charities, and I want to describe to colleagues what this is like.

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[Sarah Olney [V]]

I wish to speak to clauses 6 and 7 relating to the rates of corporation tax and also to the super deduction.

Businesses everywhere, of all sizes and in many different sectors, have had an extremely challenging year. As we hopefully move into a time when business as usual can return, I know that Members in all parts of this House are united in wanting to support businesses to flourish once more. But this has also been a year of unprecedented demand on the public finances. Much of that money has been directed towards households in the shape of our furlough and SEISS schemes to ensure that incomes can be sustained and, in turn, to maintain revenue for those businesses providing essential services. Many businesses have seen increases in revenue this year as indirect competitors have been forced to close or prevented from making their goods and services available. Any business that provided a digital or delivery service found an unexpected increase in demand compared with those that provided an in-person service.

Why should the businesses that have profited from the pandemic not pay their share in restoring the public finances that have been expended on supporting us all through this difficult time? The Liberal Democrats have called for an excess profits, or windfall tax so that those businesses that have done well can contribute their share to the recovery. This could most easily be done by an immediate increase in corporation tax whereby only those companies that have remained profitable would pay it. Instead, the Government propose a sharp rise in corporation tax in 2023. This delayed increase will give larger companies time to rearrange their affairs, potentially limiting the amount of revenue that can be captured by the planned rise. It will create an artificial boost to the economy in the short term as profits are brought forward, to be reported against the lower tax rates of the next couple of years.

The Government’s changes to corporation tax rates come when the global nature of trade presents a major challenge to national autonomy on tax rates. The Liberal Democrats are in favour of higher corporation tax rates to ensure that businesses are paying their fair share. The challenge to implementing this has always been that we are in competition with other countries attracting investment by setting lower tax rates. I am interested to hear how the Government plan to react to the plans by the new Biden Administration in the United States to set a global floor for corporation tax rates. This is a fantastic opportunity to introduce a fairer and more progressive tax regime in all nations and reduce the options for corporations to reduce tax. I very much hope that the Government will sign up to the Biden plan and set an example to the rest of the world.

The Chancellor’s most eye-catching announcement in the Budget was the super deduction available to businesses over the next two years to get back 130% of the cost of new plant and machinery. I know that this will benefit many businesses, but I fear that the impact will be more limited than at first appears. First, it creates a cliff edge in investment, especially when coupled with the tax increase in the third year. Secondly, many manufacturing businesses invest for the long term and plan their capital expenditure in 10-year cycles, so a two-year incentive will not make a big change to investment plans. Thirdly, a great deal of equipment is leased rather than bought outright, so investment incentives like these will make no difference.

It would have been a better policy if the expenditure recovered could have included measures to get our economy to achieve net zero carbon emissions or have included expenditure on training and development to help us to build the high-skill economy that we need. These expenses could then have been claimed by a far wider number of businesses in many different sectors and made a genuine contribution to future prosperity and green growth.

The Government need to be clear about their business tax policy so that businesses have time to plan and an understanding of how tax policy interacts with an overall strategy to support enterprise and productivity. Many of our business owners feel a real loyalty to their communities and will maintain those connections regardless of the tax rates, but they need to know that this continues to be a country that welcomes entrepreneurs and supports small businesses. Much more can be done in our tax system to support small and medium-sized enterprises, and I regret that the Government have not taken the opportunity to do this. The Liberal Democrats would introduce a tax cut for SMEs and quadruple the annual employment allowance to allow small businesses to employ up to five people without paying any national insurance contributions. The Government have shown a lack of commitment to small and growing businesses in this Bill and no strategy for private sector growth.

The Liberal Democrats oppose the corporation tax clauses in the Bill because they mean that profitable corporations are not paying their fair share as we recover from this pandemic and the overall provisions do not provide the support we need for small businesses.

[Bell Ribeiro-Addy [V]]

I shall speak in favour of new clause 9 in my name, and the amendments and new clauses in the names of my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and the Labour Front Bench.

The thread that weaves through these amendments and new clauses is utter outrage at plans for big corporations, including big firms that do not support trade union rights, that pay below the living wage or that avoid tax, to benefit from the Chancellor’s astonishing super deduction tax break giveaway. In particular, new clause 9 would require a meaningful equality impact assessment of capital allowance super deductions that must cover the impact of those provisions on households at different levels of income; people with protected characteristics; the Treasury’s compliance with the public sector equality duty; and equality in different parts of the UK and different regions of England.

For most of us, one of the key consequences of the pandemic has been to illuminate far-reaching health and socioeconomic inequalities in many countries. However much this Government try to conjure otherwise, it is just a statistical and factual truth that, as a result of years of cruel Conservative austerity followed by the callous Conservatives’ handling of the covid crisis, the pandemic’s impact has fallen disproportionately on the most vulnerable individuals and along gendered, ethnic, occupational and socioeconomic lines.

Inequalities in people’s protection from and ability to cope with this pandemic and its tremendous societal costs have stressed the importance and urgency of the societal changes needed to protect population health and wellbeing. According to the statement issued by independent experts of the special procedures of the United Nations Human Rights Council, condemning the Commission on Race and Ethnic Disparities’ report:

“The reality is that People of African descent continue to experience poor economic, social, and health outcomes at vastly disproportionate rates in the UK.”

Women—particularly the poorest women, black, Asian and minority ethnic women, disabled women, lone parents and young women—not only have been badly hit by the pandemic, but have suffered for years under this Government’s brutal austerity onslaught. Yet, coming in at an enormous £12 billion for 2021-22, the Chancellor’s announcement of a super deduction on purchases of capital goods by businesses was one of the largest spending items in the spring Budget. In fact, some argue that it is one of the largest single-year tax giveaways ever enacted by a Government. And who will it benefit? Although the Chancellor claimed in his speech that the Government’s response to covid had been “fair”, women, those on low incomes and those from BAME backgrounds stand to benefit the least from the untargeted tax breaks for large companies through the super deduction. We know that more businesses—and larger ones—are owned by men than by women. As such, it is important to recognise there are many potential equalities impacts to business taxation.

Incentives such as the super deduction are biggest for large firms and the Financial Secretary to the Treasury has admitted that only 1% of firms will benefit this year, as the rest are within the annual investment allowance. How can the Government justify the fact that under this Bill the rich and big business will be treated to mouth-watering tax giveaways and reliefs, despite unclear evidence about whether that will actually create the investment needed?

The Women’s Budget Group argues that this provision is likely to have “substantial deadweight costs”, bringing forward investment rather than generating new investment. The group also raised the point that it is unnecessarily limited to investment in “plant and machinery”, thereby excluding training and other human capital investments, and missing opportunities regarding the transition to a lower-carbon economy that recognises the economic benefits of spending on the social infrastructure that our public services provide. This goes to the crux of the problems with this Finance Bill, and with the Government’s lack of vision for a green recovery based on intersectional socialist economics and progressive taxation.

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[Sarah Olney [V]]

I wish to speak to clauses 109 to 111 relating to the powers to designate sites as freeports and associated provisions.

This has been a turbulent year for the UK economy, with the expected disruption of Brexit and the unexpected and unprecedented impact of the coronavirus pandemic. Now that we can, hopefully, look forward to the end of the pandemic and its associated lockdowns, it is time for the Government to put forward their bold and radical plans for kickstarting the UK economy to enable growth and skilled employment in all corners of the country.

The Government have had plenty of time to think about how they plan to deliver the benefits of Brexit that we have all been promised. I expected the Chancellor to jump at the chance to realise those benefits through the Budget and this Bill—and he has delivered freeports. This is it: the big idea, the bold move, the economic leap forward that our freedom from EU shackles has finally granted us. Except, of course, we have always had the freedom to initiate freeports in this country. We last had them in 2012. The reason we have not had them since is that their economic impact has previously proved to be negligible.

Research into freeports in other countries has shown that they do little to boost exports as opposed to imports, and there is very little evidence that they create new economic activity as opposed to redirecting existing economic activity from elsewhere. This risks trappings thousands of workers in insecure work with reduced rights, in areas with reducing opportunities for alternative employment. Any increased economic performance arising from freeports is therefore unlikely to trickle down to higher living standards in local households and communities.

What is the plan for economic growth in areas of the UK that are not lucky enough to have been awarded a freeport? The Budget and this Bill are silent on that matter. Elsewhere, the Government have scrapped their industrial strategy, replacing it with a glossy brochure full of photographs but very little content. More seriously, there has been no real attempt to quantify the impact of leaving the EU on UK business and trade, and what that might mean for our economy as a whole.

We have already seen a big short-term impact on the level of trade across the channel. It will take a while for the full picture to emerge, clouded as it is at the moment by the pandemic and the unwinding of pre-Brexit stockpiles, but there is no doubt that the increased paperwork is an expensive burden on our small businesses—and that is before import controls are introduced and the impact of the scrapping of mutual recognition of professional qualifications has been fully realised.

The UK economy has a difficult road ahead, and nothing in the Budget or this Bill demonstrates that the Government have a plan to lead us to new sources of productivity or prosperity. The Liberal Democrats are not opposed in principle to freeports, but they are not a sufficient solution to the current challenges of our economy. They fall a long way short of what is required to compensate for our leaving the EU and to restart our economy in the wake of the pandemic. Thank you, Madam Chair.

[Sir Bernard Jenkin]

I am very pleased, Dame Eleanor—if I may address you correctly—to make common cause with the hon. Member for Richmond Park (Sarah Olney) at the outset. We can agree that freeports are necessary but not sufficient to deal with regional disparities and levelling up.

I am none the wiser from the contribution by the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) whether the Labour party is in favour of freeports or against them. I would just point out to her that I spent a certain amount of my period in opposition, which was a miserable 13 years, as shadow Secretary of State for the regions, and though the Labour party was elected in 1997 with a very sincere determination to reduce economic disparities between London and the other regions of England and the other parts of the United Kingdom, it failed, and those disparities got wider.

This is a very difficult thing to address, and the answer is that we should use every tool in the box. We should use every tool we possibly can. It is also perfectly clear that all the tools are not available if a country stays in the European Union. Some of the tools were taken away from the Republic of Ireland at its Shannon freeport when it joined the European Economic Community, and it got worse; the notion that tax advantages or tax incentives were artificial tax subsidies was extended.

Of course, we want to see other tax advantages extended to other parts of the United Kingdom, such as differential rates of corporation tax, which we have extended to Northern Ireland, but only with the permission of the European Union to treat Ireland as a separate entity—which has a double edge to it that we perhaps do not want to pursue. We should be able to do that on a sovereign basis and to bring Ireland into the sovereignty of the rest of the United Kingdom in the longer term.

I wish to emphasise that the freeport east was very much driven by the need for levelling up. I see my hon. Friend the Member for Thurrock (Jackie Doyle-Price) nodding in sympathy, because she shares this problem. The perception is, “Oh, you’re in the rich south-east. You don’t need any help. It all needs to be directed to other parts of the United Kingdom.” Well, I can tell the House that I have red wall voters in my own constituency. Places like Clacton, Jaywick and Harwich are hard bitten by economic decline. Average weekly earnings in Tendring district, which is Clacton and Harwich, are £556, compared with a GB average of £587, and incidentally below the rate in Liverpool, which is historically regarded as deprived. We have a project that could generate, we hope, 13,500 jobs. The hon. Member for Richmond Park and others are right: we have to make sure that the minimum is substitution and the maximum is additionality. That is the challenge of making sure this works.

I will concentrate on what is in the Bill. I very much welcome the tax provisions in clauses 109 to 111, but there are bits missing from the Government’s additional proposals. Not mentioned in the Bill are the enhanced structures and buildings allowances, or the lower national insurance contributions, or the business rate reliefs proposed in freeport sites, or the local retention of business rates, so I remain concerned that we are offering only what is allowed under EU state aid rules. I will be grateful if the Minister, when he replies to the debate, addresses those points and says how those other tax reliefs will be provided.

It is worth mentioning that the Shannon freeport zone was regarded as such a success that it was imitated and adopted by China, which now has a freeport zone programme that it regards as an important enhancement of its economic competitiveness. I ask those who are cynical about freeports to open their minds, to look at the successful freeports and free trade zones around the world, and to learn from them, as well as listening to what one might call the “economic statics”—the people who think everything is about substitution and nothing is about releasing additional creativity.

I take seriously the points raised by the hon. Member for Erith and Thamesmead about compliance with the necessary conventions, such as authorised economic operator certification, World Free Zones Organisation safe zones rules and the OECD code of conduct for clean free trade zones. Those are all important, but let us recognise that, unless we avail ourselves of all the freedoms available to freeports, they will not deliver the benefits we want. I am reminded that when he was a Back-Bench Member of Parliament, the current Chancellor produced a very interesting report, “The Free Ports Opportunity”, which was published by the Centre for Policy Studies, price £10, which was rather more radical than the Treasury’s current offering. Some of us are a little worried that we will not see that enthusiasm and radicalism. Let us go step by step, let us work incrementally —that is not a criticism, but this is something to build on for the future.

Let us also recognise that the real benefit of freeports is not the tax incentives, but the customs facilitation. We must have really modern electronic customs systems to make the customs advantages of being in what is called a customs inversion zone real. Otherwise, it becomes a bureaucratic nightmare and we will not get the advantages we should get from it. Also, if it is a bureaucratic nightmare, it is the less savoury elements who benefit, not the legitimate businesses.

That is the challenge. We have a great opportunity, for which I really thank the Government in respect of my constituency and others. Incidentally, I think the freeports around the United Kingdom—this is a United Kingdom policy—should be working together. I wonder whether the MPs who represent the freeports that have been designated should get together, stop this mutual suspicion—which is understandable, as we have been competing for designation—and start working together to press the Government for the positive changes that will benefit all our freeports in the future.

Finance (No. 2) Bill

Sarah Olney Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

This Bill is a catalogue of hard choices unconfronted, challenges ducked and emergency measures to deal with the pandemic used as a fig leaf for the failure to face up to long-term challenges.

We have heard a great deal in recent months about the Government’s approach to public procurement—how personal friends of Ministers get to jump the queue when contracts are being handed out. We have heard a great deal in the past few days about how friends of the former Prime Minister get preferential access to Treasury officials to make the case for financial support.

In keeping with that theme, the Chancellor presented a Budget for selected beneficiaries. Carefully handpicked groups are going to do well, but it was clearly not a Budget for the nation as a whole. We could have had, for example, a bold move on business rates. Real reform in this area to level the playing field between high street and digital retail has been long overdue. I was delighted to see retail and hospitality reopen across my constituency yesterday and I hope that predictions of a retail boom, funded by savings built up during the pandemic, will materialise to the benefit of our small businesses, but consumer behaviour is changing and that change has been accelerated by the pandemic. What is the long-term future for our town centres? How will our communities thrive without the retail businesses that traditionally provide the heart of our towns?

We need to lower the barriers to entry to retail and other town centre businesses, and invite new entrepreneurs to try new ideas. However, instead of business rates reform or devolution of power to local authorities, which could have allowed for real change across the whole country, a select few high streets, mostly in Tory-supporting constituencies, get a cash bung. What is the long-term plan for the retail sector and for small businesses in our high streets? These businesses support our communities, providing flexible and well-paid jobs. They support entrepreneurship at all levels and in particular provide opportunities for women.

Small businesses of all kinds will have breathed a sigh of relief at the Government’s announcement that they plan to continue furlough and business rates holidays until the end of September, but what will happen then? I worry that there will be a huge spike in unemployment when furlough ends and I see nothing in the Budget that will address that. The Liberal Democrats are calling for the Government to cut national insurance contributions for small businesses in order to boost employment in this sector.

We have also seen very little action for those groups that have been excluded from financial support during the pandemic. What frustrates me is that so many of the sectors that have been hardest hit are the very same that we should be investing in as key strategic industries that can provide future growth for the economy as we move out of the pandemic. In particular, the cultural sector, the travel sector and the live events and exhibitions sector have been left scrabbling for support, with many of their contractors and freelancers excluded from help. The continuing failure of the Government to help those individuals is completely baffling. When the cultural sector is reopened, it will struggle to find skilled staff as so many will have been forced out of the sector by financial necessity and will find it extremely difficult to come back.

I would like to take this opportunity to mention again that many people who were excluded from help were contractors moving between pay-as-you-earn contracts, which they were forced to take on because of the IR35 regulations that the Government are still insisting on introducing. Had they been able to continue as self-employed, they might have qualified for help.

The biggest opportunity missed, however, is the fight against climate change. We have heard many warm words on global warming from this Government. They appear to have grasped the magnitude and immediacy of the crisis we face, yet they have no plans for action. The 10-point plan for a green industrial revolution, released before Christmas, announced a wide range of aspirations, but no concrete policies or spending commitments. The Budget continues that trend. Liberal Democrats welcome the new direction to the Bank of England to take account of climate change, but that is a small drop in an ever-deepening ocean of what needs to happen if we are to take the necessary action.

The Government have shown with this Budget and Finance Bill that they are not serious about achieving net zero and creating a green recovery. They have gone as far as scrapping the industrial strategy, leaving businesses in the dark about how the UK will tackle climate change and achieve green growth in the years to come. The Budget promised to re-establish a new infrastructure bank, which merely replaces the green investment bank established by the Liberal Democrats in 2010 and sold off by the Tories in 2016. There was nothing on extending the green homes grant scheme, which could have tackled fuel poverty and cut energy bills for millions of homeowners while cutting emissions—and since then the Government have scrapped the scheme altogether. The Government even failed to cut VAT on home insulation products to encourage people to invest in their home themselves. There was nothing on increasing incentives on electric vehicles, including VAT cuts or new grants. There was nothing on investing in more public transport or new walking and cycling infrastructure. Liberal Democrats wanted a Budget to kickstart the green recovery, but the Conservatives have failed to deliver. We must see a bold green recovery plan that will invest £150 billion in the next three years to tackle climate change, create new green jobs and help us to grow our way out of this crisis.

What is the Chancellor’s plan for investing in sectors that will create jobs? It is freeports in selected sites, yet there is little evidence that they increase economic activity rather than displace it. Again, we see the benefits concentrated in preferred areas of the country, rather than a strategy for the country as a whole. The one advantage of freeports, of course, is that they can avoid the customs duties and paperwork currently creating such a barrier to trading, thanks to the Government’s terrible deal with the EU. I find it extraordinary that the Chancellor has made no mention of how he plans to offset the OBR’s projected 4% hit to the UK’s GDP as a result of leaving the EU. He is bringing forward planned economic activity or concentrating it in specific areas of the country, rather than investing in new sources of wealth and future jobs. This Budget ignores the real needs of our economy, both for the immediate challenges of the pandemic and for its long-term future.

Coronavirus Job Retention Scheme

Sarah Olney Excerpts

Thursday 17th September 2020 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

Like many Members on both sides of the House who have spoken, I come to praise the furlough scheme and to beg the Government not to bury it. There is no doubt that it has saved many families from poverty over the past six months. A recent estimate shows that something like 9.6 million people have been on the furlough scheme, and there are probably 6 million still on it. The point made by many people here today is: why stop it now? That is a position that I absolutely support.

We are facing a really uncertain future, and this country will depend upon an effective test, trace and isolate process being in place if we are to live with this virus in the medium term. That, more than anything else, is what is needed to keep our economy up and running. Much has been said in the Chamber over the past week about testing and tracing, but I also want to highlight the point about isolating. If we want people to isolate effectively to keep infection rates down, we must provide them with the financial support to do so.

This is about more than the furlough scheme; it is also about the Government’s approach to the whole economy and how they will ride the economic dislocation that we will all face in the months to come. We are calling on the Government not just to extend the furlough scheme until next year but to make it available to anyone who needs it, because the weakness of targeting certain sectors is that people will be left out. As the hon. Member for Sheffield, Hallam (Olivia Blake) mentioned, over the past six months that has affected about 3 million people who earn their income in many different ways.

A lot of support seems to be targeted at people who pay mortgages and earn salaries, but we all know that there are many more ways to earn a living and that many people have been missed out. We need a strategy for the whole economy to help us with the approaching economic dislocation. We need investment in green jobs. We need those people who are going to lose their jobs in the near future to retrain urgently to work on retrofitting houses with better heating, on renewable power and on electric vehicle infrastructure. I echo what the hon. Member for Sevenoaks (Laura Trott) said about ensuring that the needs of women and minority groups are considered as we think about this just transition to a greener future.

I want to highlight the Public Accounts Committee’s findings on the furlough scheme in its inquiry last week. It found that between 5% and 10% of the scheme had been lost to fraud, so I urge the Government to look at that and to ensure that we have financial sustainability for the scheme for as long as it is needed. We need better controls to ensure that the money is being spent where it is needed. Echoing what my hon. Friend the Member for Edinburgh West (Christine Jardine) said in the earlier debate, I also urge the Government to cancel the job retention bonus scheme. Those businesses that have already got people back into work do not need the extra money. That money needs to go to those who are still facing an uncertain future.