Finance Bill

Sarah Olney Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[Dr Ben Spencer]

It is difficult not to take this vindictive policy of taxing education personally. That is not just because, like many parents in Surrey, we as a family have chosen independent education for our children, or because as a Conservative I support all our schools and I want all our children to have the best start in life; it is because lots of different data points show that the Runnymede and Weybridge constituency will be one of the most heavily punished areas as a result of this policy.

It is interesting to hear the Minister talk about the estimated numbers of children who will move out of the independent sector and into the state sector. I speak to the many independent schools in my constituency pretty much all year round. They have met me, and they tell me that they are desperately concerned about this policy. They have estimated that about 5% to 10% of children will need to move out. That is probably 500 to 1,000 children in my constituency, many of whom have already been disrupted by covid. Many of them are studying for their exams, have friendships groups that will be disrupted, and will potentially be moving to schools that will be unable to provide the same courses or exam specifications that they are currently receiving.

I hear from state schools that already face lots of pressure on places. As the Minister will have heard in my earlier intervention about admissions and the empty spaces that we have in years nine to 11, and the intake for the next academic year there is no space—we have lots of pressures. This policy will cause long-lasting damage to many children. I hope it will not, but in reality it will.

It is clear, given the numbers and the full-throated support on the Government Benches, that this policy is going ahead and we will not be able to stop it. But will the Government, at very least, support our new clause 8? If they are so proud of this policy, which they clearly are, and so happy to defend what they see as the limited impact on young people, why are they afraid of a proper analysis? I would ask them please to think again, but I would be at risk of misleading the House, because clearly they never thought in the first place.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats do not support imposing VAT on private school fees. We do not support treating independent schools differently from other independent education providers for VAT purposes, and that is why I wish to speak in favour of new clause 9, tabled by my constituency neighbour and hon. Friend the Member for Twickenham (Munira Wilson). I thank her for tabling the amendment, which would require the Government to produce an impact assessment of the effect of the VAT provisions in the Bill on pupils with special educational needs but who do not have an education, health and care plan. Of the 615,000 children in private schools in this country, almost 100,000 are being educated privately because they have special educational needs but do not have an EHCP.

The Lib Dems are glad that the legislation exempts from VAT on school fees those privately educated pupils who have an EHCP that requires the local authority to fund a private school place. That is a welcome step, but it does not protect those who do not have an EHCP from a steep rise in fees. The parents of many of those children will find that they cannot afford the increase, throwing the future of their children’s education into doubt.

Moreover, there will be an increase in demand for local authorities to issue EHCPs stating that the local authority must fund a private school place. Local authority resources for special educational needs and disabilities are already stretched to breaking point, and additional demand will be impossible to manage.

[Graham Stuart]

The hon. Lady is right. The Government share the analysis that our special educational needs provision in our state schools is under massive pressure already and there is a shortage of capacity, notwithstanding the vast increases in expenditure since 2019. However, the Government’s policy, recognising that, is to tax and therefore deter and reduce expenditure on children with special educational needs out of people’s private pockets. It does not make any sense, does it?

[Sarah Olney]

I trust that that means the Liberal Democrats can look to the right hon. Gentleman to support our new clause today, because the inevitable result of the legislation, if unamended, will be thousands of children with SEND forced into the state sector all at once, which will be enormously disruptive, and not just for them but for pupils already in the state sector. It will be potentially traumatic for those children, as well as being immensely difficult for the state schools to manage. New clause 9 would protect both the children and the schools affected by the impact of these measures—the children who have special educational needs but do not yet have an EHCP, as well as the children of families who have applied for one.

However, it is not just children with SEND who will be affected. The parents of many thousands of other children across the country will find that they can no longer afford to keep them in their current school, and those children will experience enormous disruption to their education as they are forced to change schools. Many will face the upheaval of being separated from their friends and a familiar environment. The Government should reflect carefully on whether the benefits of this policy that they are intent on pursuing are worth the damage caused to these children’s education and wellbeing.

The influx will not be evenly distributed. In my constituency of Richmond Park, more than 45% of children attend a fee-paying private school. In common with other parts of London, demand for state primary places is down, so younger children will be easily accommodated, but secondary schools are experiencing great pressure for places and a rise in requests for in-year admissions will be difficult to meet. There may only be a small proportion of children whose parents are no longer able to meet the fees, but a drop in headcount at private schools could see them closing because they become unviable. That means that the effect of children needing to transfer out of independent schools and into the state sector could be much greater than is currently forecast.

I want to reflect on what the shadow spokesperson, the hon. Member for North West Norfolk (James Wild), and others have said about the music and dance scheme. The Royal Ballet school at White Lodge in the middle of Richmond park in my constituency is a world-leading ballet school, and it has expressed great reservations to me about the effect of this policy, and I would very much like the Government to reflect on that.

If the survey done by The Times of private school parents earlier this year is accurate, and 25% of parents have to withdraw their children from private education due to the Government’s proposals, that could have a huge impact on children in communities such as mine across the country. The Government propose that their new tax treatment should be applied only to the provision of private schooling, but taxing some forms of education and not others will almost inevitably create loopholes.

Creative accountants will find ways of delivering education services that fall outside the VAT legislation while other education providers that the Government did not intend to tax will unwittingly find themselves caught up in it. The risks of these distortions increase if legislation is hastily framed with insufficient time for scrutiny. Between parents who cannot afford to pay their children’s fees and schools that cannot keep their doors open, the state will need to find space and resources for an influx of new students.

The Liberal Democrats are opposed to the Government’s plans to impose VAT on private school fees because we believe it is wrong to tax education. Imposing this increase in fees will have a disproportionate impact on children with SEND, which will create not just hardship for those children and their parents but enormous difficulties for the local authorities and state schools that will be required to provide alternative schooling. That is why I join the calls of my colleagues to urge the Government to back new clause 9.

[The Chairman]

We come to the final Back-Bench contribution, no doubt saving the best till last.

--- Later in debate ---

[James Murray]

I am going to make some progress, because I will come to the right hon. Gentleman’s point in a moment, and I want to mention the points made by other hon. Members in the debate.

We heard from the hon. Members for Twickenham (Munira Wilson) and for Richmond Park (Sarah Olney). Yet again from the Liberal Democrat Front Bench, we see a party that is happy to support our extra investment in education for all children, but that cannot bring itself to support the measures that we put in place to help pay for that investment in education.

[Sarah Olney]

We have heard this point time and again from the Labour Benches. I want to say, one more time, that the Liberal Democrats put forward a fully costed programme in our 2024 general election manifesto, which had a range of tax-raising measures that would have paid for the changes we proposed and did not include VAT on school fees, for all the reasons the Minister has heard today.

[James Murray]

The reason why the Liberal Democrats hear this time and again from the Government Benches is that, time and again, they want all the benefits of investment without having to pay for it. That is a pattern that we see again and again in this Chamber.

Independent Schools: VAT and Business Rates Exemptions

Sarah Olney Excerpts

Tuesday 8th October 2024 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Dame Caroline. I congratulate the hon. Member for Bromsgrove (Bradley Thomas) on securing this important debate and thank all Members who contributed so eloquently.

The Liberal Democrats do not support imposing VAT on private school fees. We do not support treating independent schools differently to other independent education providers for VAT purposes.

VAT is a complicated tax with many quirks and exemptions. Goods and services that are outwardly similar can be given different tax treatments based on the smallest of variations and those different tax treatments can have a large impact on the eventual cost borne by the consumer. Administering VAT and negotiating its various intricacies creates a huge burden for organisations that provide VAT-able goods and services to the public, and that burden is expensive.

All forms of education have always been exempt from VAT for the simple reason that taxing education services would disincentivise people from purchasing them. As with healthcare services—also exempt from VAT—it has never before been considered good public policy to discourage people from purchasing education. Additionally, exempting education providers from VAT frees them from the burden and expense of administering the tax, which means that money that otherwise would be spent on educating children does not have to be spent on tax returns.

The Government propose that their new tax treatment should be applied only to the provision of private schooling, but taxing some forms of education and not others would almost inevitably create loopholes. Creative accountants will find ways of delivering education services that fall outside the VAT legislation, while other education providers—which the Government did not intend to tax—will unwittingly find themselves caught up in it. The risks of those distortions increase if the legislation is hastily framed, with insufficient time for scrutiny.

Of the 615,000 children in private schools in this country, almost 100,000 are being educated privately because they have special educational needs but do not have an EHCP. The Government have announced that they plan to exclude privately educated pupils with an EHCP from VAT on school fees. That is a welcome step, but does not protect those who do not have an EHCP from a steep rise in fees. The parents of many of those children will find that they cannot afford the increase, throwing the future of their children’s education into doubt. Moreover, there will be an increase in demand for local authorities to issue EHCPs stating that the local authority must fund a private school place. Local authority resources for special education needs and disabilities are already stretched to breaking point, and additional demand will be impossible to manage. The inevitable result will be that thousands of children with SEND will be forced into the state sector all at once, which will be enormously disruptive and potentially traumatic for those children, as well as being immensely difficult for state schools to manage.

It is not just children with SEND who will be affected. There will be many thousands of other children across the country whose parents will find that they can no longer afford to keep them in their current school. Those children will experience enormous disruption to their education as they are forced to change schools and, for many, the upheaval of being separated from their friends and a familiar environment. The Government should reflect carefully on whether the benefits of the policy they are intent on pursuing is worth the damage that it will cause to these children’s education and wellbeing.

I have been contacted by many schools in my constituency who say that even a small reduction in their roll as a result of this change will make their situation untenable. Between parents who cannot afford to pay their children’s fees and schools that cannot keep their doors open, the state will need to find space, and resources, for an influx of new students. That influx will not be evenly distributed. In my constituency it is estimated that more than 45% of children attend a fee paying private school. In common with other parts of London, demand for state primary places is down, so younger children will be easily accommodated. However, secondary schools are experiencing great pressure for places, and a rise in requests for in-year admissions will be difficult to meet.

The Liberal Democrats believe that a better alternative to charging VAT on school fees is to encourage private schools to support their local communities, by building links with local state schools and sharing facilities. There are already good examples of these kinds of partnerships happening all over the country and we believe that those can be developed further. Last week, I visited Lowther primary school in Barnes. As I was being shown round the school by Leo, Talia, Elia, Milla, Nick and Abdullah, they were keen to tell me about the swimming lessons they enjoyed at St Paul’s school, a nearby boys’ independent school. The schools link up for a range of activities, and I was very impressed to see the trophy that the children won in the recent Lego competition hosted by St Paul’s. A majority of independent schools have already developed similar partnerships with local schools and the Liberal Democrats want to see that become the norm with every single school.

In conclusion, the Liberal Democrats are opposed to the Government’s plans to impose VAT on private school fees because we believe that it is wrong to tax education, however it is provided. Imposing this increase in fees will cause a precipitate increase in costs for families, resulting in many being forced to undertake a forced, disruptive change in schools. That change will have a disproportionate impact on children with SEND, which will not just create hardship for those children and their parents, but also enormous difficulties for the local authorities and state schools that will be required to provide alternative schooling. There are other routes to equalising outcomes between those educated privately and those educated in the state sector, and the Liberal Democrats believe that communities can be strengthened by encouraging partnerships between different schools, of which there are already many excellent examples.

Winter Fuel Payment

Sarah Olney Excerpts

Tuesday 10th September 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to see you in the Chair, Madam Deputy Speaker.

Liberal Democrats welcome the opportunity for this debate. We will continue to call on the Government to change course on their planned cut to winter fuel payments. We know the Government have inherited a mess, and we know that at the core of that mess is a legacy of reckless economic mismanagement by the previous Conservative Government.

However, that cannot be allowed to serve as a cover for measures that cause suffering for the most vulnerable in our society. Earlier this afternoon, Liberal Democrats supported the prayer motion to annul the social fund winter fuel payment regulation. Stripping support from many of the poorest pensioners, just when energy bills are set to rise again this winter, is the wrong thing to do, and we have tabled our own early-day motion to reject these plans. It should be noted that the Secondary Legislation Scrutiny Committee in the other place has said that it is

“unconvinced by the reasons given for the urgency attached to laying these Regulations and particularly concerned that this precludes appropriate scrutiny”.

We are supportive of this motion and particularly of the point that there should have been greater scrutiny of the Government’s decision to cut winter fuel payments.

It is well established that there are strong links between living in a cold home and an increase in the risk of serious illness for vulnerable people and those with disabilities.

[Sorcha Eastwood (Lagan Valley) (Alliance)]

I am extremely disappointed by the lack of creativity in this Government. I agree entirely with the hon. Lady that there is a legacy of unfunded promises, but it is not for my constituents in Lagan Valley to bear the burden. Does she agree that they do not have broad shoulders?

[Sarah Olney]

I thank the hon. Member for her intervention and for stating so passionately the case that we on the Liberal Democrat Benches are making in this debate. The Government should have done far more to understand the likely consequences of restricting eligibility for the winter fuel payment, and how that would translate into increased burdens on the national health service.

I and my Liberal Democrat colleagues have listened to our constituents and heard from countless pensioners who are worried about how they will afford their energy bills this winter. Since these cuts have been announced, I have been inundated with local people expressing their disappointment at this decision. That is why the Liberal Democrats have tabled early-day motion 121, calling on the Government to withdraw these plans, and it is why we voted in favour of the prayer motion earlier today. We believe that it is simply wrong to remove winter fuel payments from millions of struggling pensioners.

[Dr Kieran Mullan (Bexhill and Battle) (Con)]

I recognise the comments that the hon. Member has made about the economic inheritance, but does she not agree that, compared with the situation that we managed in coalition with the Liberal Democrats in 2010, the Labour Government are in a better position? They have unemployment lower than we inherited, employment higher than we inherited, the deficit lower than we inherited, and economic growth faster than we inherited. We, in partnership with the Liberal Democrats, managed to keep winter fuel payments in those circumstances. Does she not agree that Labour should do the same?

[Sarah Olney]

I thank the hon. Member for his intervention, but it is important to reflect on the disastrous legacy of the mini-Budget and the circumstances that many people continue to struggle with thanks to higher interest rates on their mortgage payments. Certainly, from the perspective of my constituents, that casts a much longer shadow, which the winter fuel payment cuts will do nothing to ameliorate.

Last week, I asked the Chancellor if she would give her full support to measures to boost the uptake of pension credit. I welcomed her commitment to work with the Secretary of State for Work and Pensions to maximise the take-up of pension credit by bringing forward the administration of housing benefit and pension credit—

[Bobby Dean (Carshalton and Wallington) (LD)]

We have spoken a lot about the take-up of pension credit in this debate already, but it is important to say that 800,000 pensioners—I think that is what the Minister said—are still not taking it up. Those people will, by definition, be harder to reach and the most vulnerable. I do not understand how the Government can, in good conscience, take away this guaranteed benefit at a time where there is no certainty whatsoever about their being able to get the other people signed up to pension credit in time.

[Sarah Olney]

I welcome my hon. Friend’s intervention. He makes an important point, although I would say that I welcomed the Chancellor’s commitment last week to work with older people’s charities and local authorities to raise awareness of pension credit. None the less, he is exactly right that many people will have this benefit taken away without knowing that there is pension credit for which they are eligible and should claim.

As the Lords Secondary Legislation Scrutiny Committee has highlighted, the DWP has assumed that the uptake of pension credit will increase by just five percentage points, and that will still exclude around 700,000 pensioners. Have the Government made a proper assessment of what the impact will be if uptake of pension credits increases by more than that amount? I continue to call for assurance that the Government will ensure that all those eligible for pension credit claim both the benefit itself and the winter fuel payment.

We will be voting against the scrapping of this stream of support for pensioners. Although we recognise that the Government face difficult choices given the appalling mess left by the Conservative party, the Liberal Democrats will continue to advocate for the necessity of winter fuel payments. The mismanagement of our economy by the outgoing Conservative Government has left formidable challenges and we understand that undoing that damage will not be easy.

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

Whatever fiscal pressures are being addressed here today, we have heard about the additional deaths that could possibly result from this measure. Does the hon. Member share my disgust at some Members celebrating the result of the previous vote as if it were a football match?

[Sarah Olney]

I thank the hon. Member for his intervention. I am afraid that I cannot comment because I did not see that, but I thank him for raising it.

It is not right for the consequences of the decisions of the outgoing Conservative Government and this burden to be carried by some of the most vulnerable in our society. Those with the broadest shoulders should carry a heavier burden. Liberal Democrats have set out detailed proposals to tackle fuel poverty and we are calling on the Government to look at them very seriously. That includes steps such as: launching an emergency home energy upgrade programme, with free insulation and heat pumps for low-income households; introducing a social tariff for the most vulnerable to provide targeted energy discounts for vulnerable households; and implementing a proper windfall tax on the super-profits of oil and gas producers and traders, to raise vital revenue. We have also called on the Government to tackle the wider cost of living crisis, including by investing an extra £1 billion a year in our farmers to bring down food prices, increasing the carer’s allowance and expanding it to more carers, and removing the two-child limit and the benefit cap.

More than 2 million pensioners are currently living in poverty. They have had a tremendously difficult time during the cost of living crisis, dealing with record high energy bills and eye-watering food costs. That is why the Liberal Democrats are proud to have introduced the triple lock when we were in government, lifting countless vulnerable pensioners out of poverty, and why we are strongly committed to ensuring it remains in place. Pensioners deserve to have the support and the security of knowing that the triple lock will be there in the long term.

We acknowledge the dire economic situation the new Government have inherited, yet we have heard warning calls from sector representatives, including Age UK, Disability Rights UK and many pensioners themselves, regarding the damage that this cut might cause. As the Government try to clear up the Conservative party’s mess, they must ensure that that does not come at the expense of pensioners and families who will struggle to heat their homes this winter.

[Stuart Anderson (South Shropshire) (Con)]

On a point of order, Madam Deputy Speaker, you will know the rules far better than me, but this is a really important debate and I just want to ensure that the House is quorate. Can you tell me how many people have to be on the Government Benches for a debate? There are fewer than 20 Labour MPs who have decided to find this a worthwhile debate to come to, and I want to make sure we have enough people here for this debate, because it is really serious.

Budget Responsibility Bill

Sarah Olney Excerpts

Committee of the whole House
Wednesday 4th September 2024 Commons Chamber

[Ms Creasy]

It will not surprise my hon. Friend that I agree with him not just about his football team but in his analysis. The legislation is about having better fiscal rules and tougher constraints when Governments make decisions. We saw with the Liz Truss Budget how catastrophic those decisions can be.

Many Members will have come across PFI in their constituencies, but it is worth putting on the record just how big it is, because that is relevant to the legislation. We are talking about 700 projects, but each project can be hundreds of individual buildings. One of those 700 projects is made up of 80 schools, for example, which shows the scale that we are talking about. About half of PFIs are held between the Department of Health and Social Care and the Department for Education. That is how we built desperately needed schools and hospitals, but the cost is absolutely critical.

Some NHS trusts are now spending 13% of their total budget on PFI repayments—£2 billion a year for some. In practical terms, that means that some trusts are spending more to repay what is essentially a payday loan for the public sector than they are spending on drugs for their patients. It is a huge drain on our public finances. In 2020, during the pandemic, Norfolk and Norwich University Hospitals NHS Foundation Trust paid £66 million to service its PFI commitments—the same amount that it spent on lab equipment, surgical tools and personal protective equipment. University College London Hospitals NHS Foundation Trust has already paid out £200 million in dividends to the company that owns its PFI, so the money is not just going to repay a debt for building a hospital; it is going out in pure profit to those companies. That is why I draw the parallel with payday lenders and buy now, pay later companies: once you are hooked in, you have to keep paying the debt.

It is not just a problem in the NHS. Hanson academy in Bradford has reached a debt of £4.16 million because of its PFI debt. It is now referred to as the UK’s “orphan” school because nobody wants to run it or take it over, given its financial position. Liverpool city council pays £4 million a year for Parklands high school, which was, again, built under PFI but is no longer needed because of falling school rolls. The council has roughly £42 million left to pay back on that contract for an empty, dead building. The equity solutions company that owns it has posted profits of £340,000 from that project this year alone.

PFI companies have made £111 million in pre-tax profit from education projects alone. That is about £800,000 per project, and the equivalent of 5,5000 new teachers’ salaries. The companies took on the risk of those deals to rebuild our public infrastructure, but the reality is that we do not let schools and hospitals go bust, so they took on the ability to print money. That is what the deals are doing. I will wager that every new and returning MP has had a conversation with someone in local government, a local hospital or a local school who talks about the damage that PFI is doing to their budgets, as if it is non-negotiable.

My amendments are about changing that culture. One challenge is that we have let those companies run rampant. That does not mean that we should not work with the private sector; it means that we should learn lessons, and I think we could learn some very simple ones. For a start, a lot of the companies are incorporated in overseas territories, which raises questions about the amount of tax that they are paying on those deals. Tax was originally part of the Treasury assessment of the deals, which was why working in that way was considered good value for money, and why my hon. Friend the Member for Blackley and Middleton South (Graham Stringer) was told that it was the best way to get a school or hospital.

We could also learn from payday lending by capping what the companies pay. After all, we cap the returns on defence projects. It makes no economic or ethical sense that we cap what can be earned from a military contract, but when someone builds a school or a hospital, they have free rein.

Above all, we need to know how much we owe, because even the Infrastructure and Projects Authority within Government could not get a grip on the total reality of our PFI commitments to date. That is partly because this has been done at a local government level, through devolution and in silos within companies, but it seems a very simple thing: even if those debts are being held overseas, the people paying them are very much here. In Northampton, there are 42 schools costing £30 million per annum, including £4.2 million in pre-tax profits in 2021-22, and Northampton’s budgets as a local authority are in a very difficult position right now. The firm that owns all those schools is based in Guernsey. In Birmingham, 11 schools are part of the Birmingham Schools Partnership, owned by Innisfree. Innisfree owns 260 schools across this country, as well as my local hospital in Whipps Cross. It is based in Jersey and is making millions of pounds in profit from these deals. We have never consolidated those loans to ask ourselves whether we could renegotiate them as a country and therefore claw some money back, because we do not know who we owe what to, or how much it is going to cost.

Amendments 6 and 7 deal with the challenges posed by the threshold of this legislation. It is absolutely right to set a threshold for what is fiscally significant, and individual PFIs would not go anywhere near a threshold of 1% of GDP, which is about £28 billion. However, when we add them up, it is very clear from what we already know about our PFI commitments that they do. As such, these amendments are intended to probe the Government about how we deal with debts and spending that might not meet that threshold individually, but might do so cumulatively, and to look at what we can do in the future to make sure that if we work with the private sector—again, I am not saying that we should never do so; I am saying that we should learn from PFI—we make better decisions. After all, this legislation is about making better-informed, independent decisions.

That is why I also tabled amendment 8, to learn the lessons from trade deals. The hon. Member for Arundel and South Downs is right: the Government’s decision to go for the trade and co-operation agreement—the hardest of Brexits—has cost us an estimated 4% of GDP, so again, that would be a fiscally significant decision. It would be as catastrophic as that Liz Truss Budget—indeed, many of us can see that it has been—but we did not have an independent assessment. Amendment 6 and amendment 7, which is an enabling amendment, would ensure that we have an independent assessment of cumulative spending looking at these issues.

I know that the Minister is as interested as I am in what we can do to tackle the drain that PFI represents and work better with the private sector. I hope that this legislation and the concept of putting PFI on the books is the start of a conversation about better public spending, and I hope that Toad of Toad Hall will recognise that maybe this time it is good that they are in the passenger seat.

[Sarah Olney (Richmond Park) (LD)]

I will speak in favour of amendments 1 to 4, which were tabled in my name. Once again, I welcome this Bill and this Government’s intent to rebuild trust with the financial markets and across our economy as a whole. The Liberal Democrats are optimistic about the new Government’s stated commitment to building a strong platform for economic growth, particularly after years of Conservative turmoil. I remain hopeful that this Bill can support fiscal responsibility and transparency and help prevent a repeat of the Conservatives’ disastrous mini-Budget. The amendments tabled in my name would strengthen the legislation so that that aim can be achieved.

I welcome the concern that the hon. Member for Arundel and South Downs (Andrew Griffith) has shown for my constituents in Richmond Park and their thoughts about this legislation, but I wonder where his concern for my constituents was when the Government of which he was a part cheered on, championed and voted for that disastrous mini-Budget that so undermined our stable economy, to the detriment of the wellbeing of individuals, communities and businesses.

Liberal Democrats understand how much our constituents have suffered from the increase in mortgage payments, higher fuel bills and escalating food prices. We understand the disastrous effects of the chaos and uncertainty wrought by the previous Conservative Government in their horrendous mismanagement of the economy, and we know that future prosperity can only be built upon a firm foundation. We know the heavy burden that our constituents continue to feel in their pockets and their personal finances, and we know that they deserve better.

As I have previously acknowledged, the broad positive response that this Bill has evoked across the business and finance sector is indicative of the desire for stability, and we welcome the engagement from economists—such as the new hon. Member for Loughborough (Dr Sandher), who I wish well in the beard of the year contest—and industry experts who advise of the beneficial impact this Bill will have on confidence in the public finances. We have carefully scrutinised the details of the Bill to make sure it will achieve its intended aims.

In particular, we have looked closely at the threshold for fiscally significant measures, which will be set at 1% of GDP or approximately £30 billion, and whether the proposed fiscal lock could be circumvented by Governments announcing major changes that fall just below that threshold. Although we understand that the bar has been set relatively high to prevent a large-scale irresponsible fiscal event such as the disastrous mini-Budget, we are aware of the limitations this places on the Bill, especially when it comes to measures that might have relatively small up-front costs to the Government but significant indirect fiscal or economic effects. I therefore ask Treasury Ministers whether a GDP measure alone can adequately capture the impact on the economy of a spending or taxation measure, and whether the Government should examine the possibility of using additional criteria when setting the threshold.

Oral Answers to Questions

Sarah Olney Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Mr Speaker]

I call the Lib Dem spokesperson.

[Sarah Olney (Richmond Park) (LD)]

We know that the Government have inherited a mess, and that at the centre of that mess is a £22 billion hole left in the public finances by the previous Government, but that cannot be allowed as cover for measures that cause suffering for the most vulnerable in society. The Chancellor will have heard Lib Dem colleagues talk about the hardship that the scrapping of the winter fuel allowance will mean for their constituents, so can she assure us that she will give her full support to measures to boost the uptake of pension credit? Most crucially, will she give the House the opportunity to have a proper debate and a vote on this cut, which will have such an impact on so many?

[James Murray]

I thank the Liberal Democrat spokesperson for her comments and for recognising the state of the finances that we inherited—the £22 billion in-year black hole that we need urgently to address to put our finances on a firm footing. It is essential to boost the uptake of pension credit, as the Chancellor set out. Some 800,000 pensioners who are eligible for pension credit are not taking it up. We saw a lack of action under the previous Government to drive up that uptake, and we are overseeing a campaign across Government to increase the number of pensioners who access pension credit and thereby the winter fuel payment.

[Sarah Olney]

I welcome that response, but if the Government are asking us all to make difficult sacrifices, people need to know that the Government are making the vital investments that will protect the vulnerable and help to deliver economic growth. Does the Chancellor agree that now is the time to work across Government to launch an emergency home energy upgrade programme to provide free insulation and heat pumps for low-income households?

[James Murray]

A crucial part of the manifesto commitments that we brought into Government is to increase the insulation of up to 5 million homes across the country. We will set out further details of our plans for insulation in due course, but we know that that is the kind of investment that brings down energy bills for good.

Budget Responsibility Bill

Sarah Olney Excerpts

2nd reading
Tuesday 30th July 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to see you in the Chair, Madam Deputy Speaker; congratulations on your election.

The Liberal Democrats understand the importance of a stable economy to the wellbeing of our nation, and we will support the Bill as it makes its way through Parliament. We have seen the effects of the chaos and uncertainty wrought by the previous Conservative Government in their horrendous mismanagement of the economy, and we know that future prosperity can be built only on a firm foundation.

The former Member for South West Norfolk may have intervened to prevent officials from using the phrase “disastrous” mini-Budget in the King’s Speech document, but this was a disaster for which many millions across the country continue to pay the price. Liberal Democrat MPs have been returned to this House in greater numbers than ever before, because we understand how much our constituents have suffered from the increase in mortgage payments, higher fuel bills and escalating food prices that resulted from the disastrous mini-Budget. We will do all we can to tackle the cost of living crisis being felt by so many, and we welcome the new Government’s commitment to building a strong platform for economic growth. We welcome the Bill as a symbol of strengthened fiscal responsibility and transparency, which we hope will prevent a repeat of the Conservatives’ disastrous mini-Budget under Liz Truss from ever happening again. After the turmoil of the outgoing Conservative Government, we welcome the seriousness of intent from this Government as they rebuild trust with the financial markets and the business and financial sector as a whole.

The financial irresponsibility and unfunded tax cuts in the mini-Budget sent mortgage rates soaring and continued a pattern of low growth, falling living standards and business uncertainty under the Conservatives. Millions of people across the country continue to see the devastating impact of their disastrous governance in their food and energy bills and to feel its heavy burden in their personal finances.

A recent report from the Institute for Fiscal Studies shows that 320,000 people have been pushed into poverty because of mortgage interest rate rises caused by the incompetence of the previous Conservative Government. It has been devastating to hear the stories of so many households dragged into poverty, and to know that so many families are struggling under the worst cost of living crisis in a generation. It is painful to reflect on the thousands of people who were hoping to make progress in their life and improve the circumstances of their family, but find themselves pulled backwards by the weight of the costs now piled upon them. The IFS report tells us that the number of adults unable to keep their home warm enough increased from 1.8 million in 2020 to 4.6 million in 2023. The IFS attributes that increase to the rise in mortgage interest rates during that period. The statistic lays bare in shaming detail the enormous and ongoing impact that the Conservatives’ disastrous mini-Budget had on all our lives.

The positive responses that this Bill has evoked from the broader business and finance sector are indicative of the desire for industry stability. We welcome the engagement from economists and industry experts, who advise of the Bill’s beneficial impact on confidence in public finances. Even the former Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), has acknowledged that he is minded to support the Bill. We will carefully scrutinise its details to ensure that it will achieve its intended aims. In particular, we will look closely at the threshold for fiscally significant measures, set out in the legislation as measures worth at least 1% of GDP or approximately £30 billion, and will consider whether that provision could be circumvented by Government announcing major changes just below that threshold.

The proposed terms set a substantial threshold that would have to be reached before the OBR could insist on intervening. That raises questions about how easy it would be for a Government to skirt the rules and avoid scrutiny from the watchdog. We understand that the bar has been set relatively high to prevent a large-scale irresponsible fiscal event, such as the disastrous mini-Budget, but we are aware of the limitations that places on the Bill. In particular, an announcement could have a largely indirect fiscal effect—it could have an impact on the economy, but come at a small up-front cost to the Government—and therefore not trigger the fiscal lock. We therefore ask the Chancellor: can a GDP measure alone adequately capture the impact of a spending or taxation measure on the economy? Should the Government examine the possibility of using additional criteria in establishing the threshold?

We must consider the wider context in which the Conservatives’ damaging mini-Budget came about to determine whether the measure that we are debating would be sufficient to prevent such a disaster ever happening again. The Conservatives’ period in government, and the last two Parliaments in particular, were characterised by a distaste for the institutions that provide checks and balances on power, and efforts to actively undermine them. Throughout the past few years, we have seen attacks on the judiciary, the civil service, the BBC, the Bank of England, the EU and any British citizen who dared express the view that the Government’s botched Brexit deal was doing enormous damage to our economy. We have seen the provisions of international treaties airily discarded. Conservative Ministers even illegally prorogued Parliament. Even now, in the Conservative party leadership contest, it seems that the one thing all candidates agree on is a promise that the UK will leave the European Court of Human Rights.

The disastrous mini-Budget emerged from the philosophy that the power of central Government, exercised by successive Conservative Prime Ministers, can trump that of other vital independent institutions, and it is precisely that philosophy that we must never again see from Government. The ongoing failure of the former Member of Parliament for South West Norfolk to apologise for the disastrous mini-Budget underlines the fact that she thinks she was both entitled and correct to unleash it on an unsuspecting country that voted for neither it nor her.

Truly addressing the causes of the systemic failure that led to the disastrous mini-Budget will take a great deal more than this Bill. It requires the Government to work alongside institutions that exist to support and challenge their decision making. It requires the Government to submit their proposed measures to parliamentary scrutiny. The Liberal Democrats think that reforms devolving power to local bodies to decentralise decision making would also strengthen our ability to take long-term decisions in the national interest. This Bill and other measures are encouraging signs of this new Government’s intention to ensure that those in power act with more integrity and transparency, but ultimately, unless all Governments are committed to upholding the principles of fiscal responsibility, transparency and sound governance, the risk of future disasters such as the mini-Budget will remain.

In our general election manifesto, we set out the need for every fiscal event to be accompanied by an independent forecast from the OBR. More broadly, we wish to see the Government foster stability, certainty and confidence by managing the public finances responsibly, getting national debt falling as a share of the economy and ensuring that day-to-day spending does not exceed the amount raised in taxes. We must make the tax system fairer by asking some of the wealthiest companies in the world to pay their fair share—the big banks, the oil and gas producers and the tech giants—instead of adding even more to the burden on hard-working families. To improve stability and growth, we need to fix our broken trading relationship with Europe and set up an industrial strategy, helping to make Britain one of the most attractive places in the world for businesses to invest. We must work in partnership with responsible, sustainable businesses to tackle the climate emergency, and spur the growth that is needed for investment in health, social care, education and other essential public services.

Responsibly managed public finances are essential if we are to have the stability, certainty and confidence that drive economic growth, and they are vital in getting mortgage rates under control, too. Under the outgoing Conservative Government, we found out just how much pain and damage can come from fiscal irresponsibility. The Liberal Democrats want a thriving British economy that provides jobs and opportunities and is attractive to businesses and investors. We welcome this Bill as a useful step in that direction that will help to improve long-term stability and responsible economic management.

[Richard Tice (Boston and Skegness) (Reform)]

On a point of order, Madam Deputy Speaker.

Public Spending: Inheritance

Sarah Olney Excerpts

Monday 29th July 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

I thank the Chancellor for advance sight of her statement. Let me associate myself with the expressions of gratitude to our emergency services; the thoughts of all Liberal Democrats are with those affected by the incident in Southport.

Years of Conservative chaos and mismanagement have left our economy on life support and in desperate need of emergency care. Things cannot go on like this any longer. We must now revive growth by getting people off NHS waiting lists and back into work, so we urge the Government to invest wisely in GPs, dentists and hospitals, not only to support patients but to improve efficiency in the NHS and deliver the growth that is so desperately needed after years of Conservative failure.

The outgoing Conservative Government will go down in the history books as one of the most damaging Administrations that our country has seen, and today’s statement has thrown that picture into even starker relief. It was not just their catastrophic mini-Budget; we saw a vicious cycle of stagnation and recession, driven by years of chaos and uncertainty. For the first time, living standards declined over the course of a Parliament as people experienced the harshest cost of living crisis in generations. Our public services were abandoned: waiting lists soared, schools crumbled, and our social care was in crisis. The dire state in which the Conservatives left our public finances is indicative of their irresponsibility.

People are painfully aware that Conservative chaos has real-life consequences. Interest rates were sent soaring, and millions of people saw their mortgage payments increase by hundreds of pounds a month. That is why, more than ever, we need to foster economic stability to draw a line under the uncertainty of the last few years. An important step in rebuilding confidence in our economy is the setting up of a long-term industrial strategy. That will help to unlock vital investment, create good jobs, and help us to tackle the climate emergency. Will the Chancellor reassure the House that the Government will start work on such a strategy as soon as practically possible?

We cannot talk about rebuilding our economy without talking about the crisis in health and social care. Millions have long-term health conditions that make them too ill to work, and millions more are stuck on NHS waiting lists. Many others cannot leave hospital because there is no care provision. The Liberal Democrats have always understood that we cannot have a thriving economy and strong public finances until we fix the crisis in health and social care, which is why we put forward detailed proposals to deliver more GPs, invest in dental services, and cut ambulance waiting times. Equally, we must give people the good-quality care that they deserve, so we urge the Government to work across party lines to implement a system of free personal care and give our unpaid carers the proper support that they need. The last Conservative Administration left people with crippling care costs. That is why it is urgent for us to have cross-party talks on social care, and I urge the Government to begin those as soon as they possibly can.

Investing in health and care is not just about giving people the fair deal that they deserve; it is also about sound management of our public finances. Will the Chancellor guarantee that the NHS and social care will be at the heart of her plans to address the Conservative party’s legacy of mismanagement? Part of that legacy is the previous Government’s promise to deliver 40 new hospitals, which was postponed, redefined and never properly funded. It turned out to be yet another empty Conservative promise, but having listened to many colleagues on these Benches over the last few years, some hospitals are clearly in dire need of investment, with crumbling roofs and buckets to catch the leaks. Will the Chancellor meet Members whose constituents will be affected by today’s announcement, to hear directly about the situation in their hospitals?

Lastly, let me turn to the other side of the equation: securing the funding that our public services so desperately need. Over the last Parliament, we saw the Conservative party raise taxes on hard-working households again and again, just to pay for its own mistakes. Does the Chancellor agree that it would be unfair to ask working people to pick up the tab a second time, after they have already suffered through years of painful tax rises? My party has set out detailed proposals to raise funding for our public services in a fair way—for example, by reversing the Conservatives’ tax cuts for big banks, putting in place a proper windfall tax on oil and gas producers, and raising the digital services tax on social media giants. I urge the Chancellor to draw from these ideas, which could raise billions of pounds by asking some of the largest companies in the world to pay their fair share.

There is no doubt that our economy, our public services and our public finances have been left in a precarious position. Now the hard work must be done to repair the damage and return stability, growth and prosperity to our country. That is what the Liberal Democrats will always champion, and we sincerely hope that the Government will look closely at our proposals to end the crisis in health and social care, grow our economy and give people a fair deal.

[Rachel Reeves]

I thank the hon. Lady for her contribution, particularly the theme about helping people into work and fixing our national health service. I totally agree with her about the immense damage that the Tory mini-Budget did, particularly in pushing up mortgage costs for so many of our constituents.

The hon. Lady asks about industrial strategy. My right hon. Friend the Business and Trade Secretary will be setting out more details of the modern industrial strategy, which will enable us to work in partnership with business to exploit the big opportunities that the country and the economy have for growth and prosperity in all parts of the UK.

The hon. Lady asks about health and social care. She is absolutely right to highlight the huge challenge of the waiting list—it was at 7.6 million when the Conservatives left office. I welcome the deal to get junior doctors back to work, and I am sure the whole country will, because it will mean that people can get operations and treatment when they need. After last year’s industrial action cost our economy £1.7 billion and caused 1.4 million appointments to be missed, the deal will be welcomed by people on NHS waiting lists. Of course, this Government have made a commitment to provide 40,000 additional appointments every single week. That is why we will crack down on tax avoidance and ensure that, finally, non-doms who make their home in Britain pay their fair share of tax here.

My right hon. Friend the Health Secretary will meet constituents who are affected by the previous Government’s betrayal on building 40 new hospitals, because we recognise, as the hon. Lady says, the importance of ensuring that all our constituents have the health services they deserve. I could not agree more with her that it should not be working people who pick up the tab for the Conservative party’s failure. That is why I have restated our commitment not to increase taxes on working people—there will be no increases in income tax, national insurance or VAT. That is the commitment on which we campaigned in this election, and I stand by that commitment.

Economy, Welfare and Public Services

Sarah Olney Excerpts

Monday 22nd July 2024 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

Thank you, Madam Deputy Speaker. It is a pleasure to see you in the Chair.

It is a real pleasure to contribute to the debate on behalf of the Liberal Democrats, not just because I am speaking on behalf of so many more of them than I used to, but because it gives me an opportunity to welcome the Chancellor of the Exchequer to her place and express my personal congratulations on becoming the first woman in the UK’s history to hold the position. I am personally delighted. I spent many years working in banking and finance, and I know how male-dominated those industries still are. I wish her well in her new role and look forward to working with her over the coming Parliament. The Liberal Democrats will be vigorous in scrutinising her plans, but we will always work in the national interest, and I can assure her of the support of the Liberal Democrats on all those matters on which we can agree.

I am sure that one of the things on which we can certainly agree is that the right hon. Lady and her colleagues have received a dismal inheritance from the departing Conservative Administration. The numbers reveal a dispiriting picture of low growth, high interest rates and a record fall in living standards delivered by an out-of-touch and incompetent Conservative party that took people for granted for years. Our constituents see this situation reflected in the increases in their mortgage payments, the hike in their energy bills and the prices they pay at the tills for their weekly shop. They see it in public services that are in a state of crisis and an NHS that is failing to deliver the care they need. The Liberal Democrats welcome the seriousness with which this King’s Speech focuses on stability, reinvesting in our crippled public services and growing the economy.

We welcome measures such as the introduction of an industrial strategy council to co-ordinate policy on economic growth, but the immediate and pressing problems that our constituents are facing in their everyday lives cannot just be addressed by centralised, top-down institutions run from Whitehall. Our economy needs to grow from the bottom up, bringing prosperity to every community, taking away the barriers to entry for small businesses and enabling individuals across the country to make the most of their skills and talents. The Liberal Democrats want urgent measures introduced to give immediate support to families and small businesses.

While out on the doorsteps during the general election campaign, I and my 71 colleagues heard a clear message from our constituents that their biggest priority was fixing the NHS. We are here because we promised to fight hard for a better NHS for our constituents and for communities across the country. That is why we are calling for the Chancellor to immediately draw up a Budget for health and social care. We cannot deliver economic growth without fixing the crisis in our NHS and in social care. NHS waiting lists are at an all-time high; it can take weeks to see a GP and it is now almost impossible to see an NHS dentist. Everyone deserves access to the care they need when they need it and where they need it. A successful health and social care system is fundamental to a fair society and our country’s prosperity.

The failures of the Conservative Administration led to a dramatic increase in the number of people experiencing long-term sickness conditions and the Liberal Democrats will continue to push for public service investment to help reduce NHS waiting lists to get people back to work.

[Ben Maguire (North Cornwall) (LD)]

Does my hon. Friend agree that reforming social care should be one of the most urgent priorities of this Government? The Royal Cornwall hospitals NHS trust recently announced that £26 million a year is spent on patients who are medically well but unable to be discharged due to a lack of social care packages.

[Sarah Olney]

My hon. Friend is right, and it is wonderful to see him in his place; the people of North Cornwall will be well served by his championing of social care, which was front and centre of the Liberal Democrats manifesto in the general election.

The most direct way to alleviate poverty is to increase the money paid to the poorest households. We know that our fellow citizens who are living in the severest poverty are likely to be families with small children. Growing up in poverty affects children’s educational chances and is likely to impact their physical and mental health, holding them back from achieving their true potential. Taking immediate steps to tackle child poverty should therefore be a priority. We believe that removing the two-child cap is the most cost-effective way of immediately lifting 500,000 children out of poverty, while helping to make costs more manageable for parents. That would have a direct benefit to families struggling with the cost of living crisis. Not only do we have a moral obligation to change this unnecessary policy but it is the most cost-effective way of alleviating poverty with a broad range of economic advantages, including supporting more parents back into the workforce. So I urge the Chancellor of the Exchequer to remove the two-child limit on social security payments in her Budget to ensure that all families who need it receive immediate reassurance and support.

But families of all sizes are suffering under the cost of living crisis and desperately need help. Our schools are increasingly having to battle the effects of poverty to ensure children are able to attend school and have the best chance of reaching their potential, and too many children are distracted from their lessons because they have not had enough to eat. The Liberal Democrats set out plans in our manifesto for free school meals for all children living in poverty, with an ambition to extend them to all children once public finances allow. The Liberal Democrats are calling on the Government to consider funding free school meals as a priority to alleviate the pressure on the finances of the families who are struggling the most. This will also contribute to positive educational outcomes that will benefit us all in the future.

The Liberal Democrats welcome many of the measures in the King’s Speech that aim to boost economic growth, and we support the Government’s objective to make that a priority. We welcome moves to boost stability and provide strategic leadership via an industrial strategy council and to increase investment through pension reform. However, our small businesses and local high streets need immediate support, and the Government need to do more to ensure economic growth can reach every part of the United Kingdom and that small businesses and entrepreneurs can quickly rediscover the confidence that they need to invest after years of Conservative chaos and mismanagement. Liberal Democrats want to see more direct support which will impact local community businesses. We believe we need swift action specifically to tackle high energy costs and we continue to call for business rate reform.

A new Parliament presents a real opportunity to begin to properly rebuild our trading relationships with Europe. From speaking with many small business owners I understand the pressures and limitations that current trade deals with Europe pose to businesses. We must tackle the arduous legislation around importing and exporting goods, which significantly limits the opportunities for small businesses to grow. The Liberal Democrats have a comprehensive plan to rebuild trust and co-operation with Europe, and we understand that to be a crucial aspect of the support that businesses urgently need. We welcome the Government’s acknowledgment of the need to reform the apprenticeship levy. However, we would like to see them go further and replace the current scheme with a broader and more flexible skills and training levy. We hope that the Government will join us in encouraging the take-up of apprenticeships, particularly for young people, and support our calls to guarantee that they are paid at least the national minimum wage by scrapping the lower apprentice rate. We understand the broad economic benefits of supporting the development of skilled workers and are optimistic about the advantages that can bring to business.

The recent years of chaos and irresponsible Conservative administration have left a substantial challenge for the new Government to tackle. We do not underestimate the work lying ahead to get the economy back up and running, to nurture an environment that will allow businesses to thrive and to restore the public services that provide care for people when they need it. My Liberal Democrat colleagues and I will hold the new Government to account to ensure that they deliver on the promises outlined by His Majesty on Wednesday as we work to rectify the damage done by the Conservatives: rebuilding our economy, supporting individual communities and small businesses, and urgently investing in health and social care.

[Several hon. Members rose—]