Budget Resolutions

Debate between Stephen Kinnock and Nigel Huddleston

Thursday 7th March 2024 Commons Chamber

[Nigel Huddleston]

The hon. Gentleman is making an important point. I said earlier that, unfortunately, we have had taxes at a higher level than we want, but now we are in a position to reduce them. Reducing them and focusing on NICs is impactful for 29 million workers—anybody earning above £12,500. People now need to earn more than £1,000 a month before they pay any tax whatsoever.

As I said, when we came into power unemployment was near 8%, but it is now about 4%. We should not take full employment, or near full employment, for granted. We all know that every Labour Government have increased unemployment—that is not an impressive record but it is a consistent one.

I particularly want to reflect today on how our plan rewards hard-working families. The Government believe that people’s careers should support rather than undermine another important role: parenthood. That is why at last year’s Budget the Chancellor announced the biggest ever expansion of childcare from September 2025, extending the 30-hour free childcare offer to all children of working parents from nine months old. That will result in an extra 60,000 parents entering the workforce in the next four years. But to deliver on that we need to support the private sector to play its part too, so yesterday we confirmed that the Government are guaranteeing the hourly rate paid to childcare providers to deliver the free hours offer.

[Stephen Kinnock]

The Minister has not yet mentioned the Government’s damascene conversion on scrapping the loophole for non-doms, but there is a point here about what they could have generated. If they had listened to Labour and done that two years ago, it would have generated an extra £6 billion of revenue, which could have paid for free breakfast clubs for nearly 4.5 million children. So on the point of childcare, does he think that is relevant?

[Nigel Huddleston]

The hon. Gentleman gave quite a wish list earlier, which, by my calculations, could come out as being quite expensive. I do not know whether he has had conversations with the hon. Member for Leicester West, who is on his Front Bench.

On the hon. Gentleman’s point about non-doms, we will be scrapping the non-dom status, but we will be replacing the system with one that is residency based, including measures that will encourage and incentivise further investment into the UK, because we will be implementing transition measures. I did not hear the Opposition talk about them. Those transition measures are likely to encourage £15 billion of additional investment into the UK. Non-doms at the moment pay about £8.5 billion in taxes. We want to welcome people, but we recognise that those with the broadest shoulders must carry the greatest burden. None the less, we want to be internationally competitive, and the new system that we have proposed will be.

Returning to the childcare measures that I outlined earlier, this commitment would mean over £500 million of additional investment in childcare over the next two years. This will give childcare providers the confidence to invest in expanding at a crucial time, to deliver the free childcare expansion and help bridge the gap between parents’ career demands and their childcare needs.

This approach complements further changes that we are making to the tax system to incentivise parents to increase the hours they work. Yesterday, the Chancellor announced that from 6 April the high-income child benefit charge threshold will be raised to £60,000. In addition, the level at which child benefit is withdrawn completely will increase to £80,000. That was very much welcomed by many Members on the Conservative Benches, including my hon. Friends the Members for Devizes, for The Cotswolds and others. As a result, no one earning under £60,000 will now pay the charge. This will put pounds in parents’ pockets, saving nearly half a million families with children an average of £1,300 a year. According to the OBR, this change will also result in an increase in hours for those already working, which is equivalent to around 10,000 more people entering the workforce full time.