Inheritance Tax
Andrew Griffith Excerpts(1 day, 20 hours ago)
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Andrew Griffith (Arundel and South Downs) (Con)
I beg to move,
That this House calls on the Government to cut public spending in order to abolish Inheritance Tax on family homes, farms and businesses.
There is a divide the size of Manchester’s Etihad arena in British politics today: between those who want to tax family farms, and those who do not; between those who want to tax family businesses, and those who do not; and now, between those who want to tax family homes, and those who do not.
Not content with the highest tax burden in peacetime history, in their first Budget the Government chose to impose inheritance tax on farmers and family businesses. The Conservatives would scrap the family farm tax and the family business tax, and we would abolish inheritance tax on the family home. That is because we believe that people who work hard and save hard should keep the rewards, rather than seeing them sold and snaffled up to pay a taxman who refuses to make hard choices and to cut welfare.
We will hear later from the shadow Secretary of State for the Department for Environment, Food and Rural Affairs, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins); she has been a stalwart defender of Britain’s farmers, who this Government have attacked. I will speak briefly to the family businesses that this Government are also attacking. Many of them are small businesses: people who get up every day and take on the responsibility of hiring—often hiring young people—of making payroll and of creating growth in this country.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
I appreciate that my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins) will respond to the point on farms, but before the shadow Chancellor moves on, does he agree that one of the many examples of foolishness in the Government’s approach to a tax on the inheritance of farmland is that there is a challenge with the age of farmers? We need more young people in farming, and if the Government make it more difficult and expensive for those young people most likely to go into farming—namely, the children of farming families—they will exacerbate that primary problem.
Andrew Griffith
My right hon. and learned Friend is exactly right. The original reason for the exemption in death duties that previous Labour Governments respected was that generational aspect—the fact that a business or farm does not necessarily produce the cash flow necessary to hand over an enormous part of that value when, tragically, death takes place. I know that my right hon. Friend the Member for Louth and Horncastle will pick up on that point later.
I will move on to businesses, which, as Members across the House will know, are far more numerous than the farms who we know are impacted. Inheritance tax affects businesses in every one of our constituencies, on every one of our high streets and in every one of our trading estates. Often they are businesses that have been in the same family for multiple generations. This is causing extreme jeopardy, to the point that people are having to take action right now to protect those family interests.
Edmund Burke, a man much beloved on the Opposition Benches, said that society is a partnership
“between those who are living, those who are dead, and those who are yet to be born.”
There could be no better manifestation of that than Britain’s family businesses, which are rooted in their local community and provide jobs down the generations. Yet this Government are hellbent on breaking them up and forcing them to sell the pieces to pay an inheritance tax bill that they should never have to face. We Conservatives are on the side of family businesses.
Wendy Morton (Aldridge-Brownhills) (Con)
A wealth of small businesses across my constituency keeps our local economy growing. Does my hon. Friend agree that at a time when our businesses need support that will enable them to create employment for the next generation, this Government—on whose Benches there is, of course, no business experience—are just squeezing and squeezing our businesses out of business?
Andrew Griffith
My right hon. Friend is quite right. I urge every Member of this House to spend time with family businesses in their constituency; there are excellent organisations such as Family Business UK that would be delighted to make the introduction.
My right hon. Friend is also absolutely right about the relative dearth on the Government Benches of business and private sector experience and of an understanding of how the economy works. However, that is capable of remediation, if only Government Ministers and Members were to seek to educate themselves on the benefits to their constituencies and constituents of family businesses.
We Conservatives will not let a spiteful, prejudiced Labour party destroy those family businesses, which is why we will—
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Will the hon. Gentleman give way?
Andrew Griffith
I would be delighted to give way and for the hon. Member to talk about the family business contribution in his own constituency, and why he will therefore be supporting the Opposition motion this afternoon.
Gareth Snell
There are many wonderful family businesses in Stoke-on-Trent, not least Potclays, which makes clay for the pottery industry. The hon. Gentleman talks about this spiteful tax; he will know that it was introduced in 1986 under Mrs Thatcher. Did he think it was a spiteful tax when she introduced it?
Andrew Griffith
There have been exemptions for family business far beyond that. This goes across multiple generations—the origins date back to the 1960s, and every Labour Government under every Labour Prime Minister have understood the contribution of family businesses, including to those in the hon. Gentleman’s constituency.
We could, of course, talk about many of the other headwinds that business face, but I would then be deviating from the subject of debate, Madam Deputy Speaker. I know that many colleagues want to speak this afternoon, so I will not talk about the higher energy costs, or the costs of hiring, or the red tape that this Government have imposed or the national insurance jobs tax, among many other things. We will not talk about any of those things, Madam Deputy Speaker!
Inheritance tax more generally was once a tax paid by the privileged few—the super-rich, a tiny sliver of a minority of taxpayers and estates. Today, however—these are independent numbers that the Government will understand—inheritance tax is a tax on ordinary middle-class families in every corner of our country. I invite the Minister to challenge these numbers when he eventually responds. By 2030, one in six families will face an inheritance tax bill. At the start of previous decades, that was one family in 20. The scope of this tax has dragged so many more people into its terrible net, and it is only getting worse. One in five homes last year was sold at a price above the threshold where an inheritance tax liability would arise.
Chris Vince (Harlow) (Lab/Co-op)
I wonder whether the shadow Chancellor thinks that inheritance tax has a greater impact than the cost of care on people who are forced to sell their homes. Does he not recognise that the Prime Minister is right to tackle the national care crisis, because that is causing people to need to sell their homes far more than inheritance tax is?
Andrew Griffith
I thank the hon. Gentleman for his point. Very few of us will not be aware of the challenges of the care sector from meeting constituents at our surgeries. It is why I regret the fact that one of the first actions of this Government on coming into office was to reject the consensus around the Dilnot review, which would have moved that conversation forward. We on this side of the House will continue to engage with ideas that the Prime Minister puts forward, but none of that takes away from the iniquity of inheritance tax, which is a double tax, often as a result of earned income, and sometimes even a triple tax as a result of businesses.
As I said, the scope and breadth of inheritance tax is dragging more people into its net all the time. There is a fundamental difference between the Government and Opposition on this issue, and I am very keen to hear what our colleagues in the Liberal Democrat party have to say on the matter.
The Conservatives believe that our homes are special. They are not just another asset to be taxed by a Government who refuse to cut out-of-control welfare. They are where we feel safe with our families, where our young take their first steps, and where we spend religious festivals and precious family moments. That is why so many of the policies we have announced recently focus precisely on those family homes.
We would make it cheaper to buy a first home for young people by removing gold-plated regulation, saving £50,000 from the price of an average new-build home, because we are the party that believes in home ownership. We would make it cheaper to buy by abolishing stamp duty on people’s primary residences and would make homes cheaper to live in by scrapping Labour’s tax on family homes—the so-called mansion tax that, in truth, applies in many parts of the country to flats and ordinary suburban homes. It applies in Birmingham, in Bristol, in Nottingham, in Edinburgh and, yes, in Manchester too. We are the party that prioritises home ownership, and now we are committed to making it free for people to pass on their family home to direct descendants.
The Government should follow our plan: no tax to buy a home, no tax to live in a home, and no tax to pass on a home to family. If the Chancellor is looking for ideas for his Budget in two weeks’ time, he can have that one for free. If the Minister takes that back, maybe he will become the Chancellor. But we all know what Labour will choose: more welfare. Labour is not the party of home ownership. That is a Conservative value, not Labour’s. We are the party of home ownership; they are the party of welfare, and we know how many people are on out-of-work benefits in Britain today.
Even the leader of the Liberal Democrats—this week at least—can see that taxing family homes is wrong. Just two years ago he told the BBC, when they still wanted to hear from him, that
“lots of people’s homes in many areas of the country are quite valuable, and they end up being clobbered by inheritance tax…I think that’s unfair”.
We shall see whether his colleagues—current colleagues—agree with him and which Lobby they end up in today. We will see whether they are useful helpers of the Government or willing to stand up for their constituents who are being over-taxed by this Government. We would take the majority of families out of inheritance tax, abolish the truly awful family farm tax and abolish the anti-growth family business tax—and, when we can afford it within our fiscal rules, we would abolish inheritance tax entirely, because we do believe that it is an immoral tax.
Kit Malthouse (North West Hampshire) (Con)
My hon. Friend is making a powerful argument. He will presumably recognise that the clue is often in the name where our businesses are concerned, as many of those largest businesses that we regard as national champions—Pilkington, John Lewis, Sainsbury’s and banks such as Lloyds—owe their origin to family businesses. The fact that they carry a surname indicates the many generations it took to build them to that power, but by taxing those businesses, we hold the entire economy back from such growth.
Andrew Griffith
My right hon. Friend is right. I do not think that any fair-minded person in the United Kingdom today would say, “The problem is that we have too many successful companies. Too many companies are setting up, being founded and listing on our stock exchanges; our economy is growing somehow too fast; we have not got enough young people to fill the jobs available; and the economy does not have enough debt.” Therefore, were there a measure that would allow productive capital to flow down the generations to allow enterprises across communities in all our countries to help our economy grow, we might think the Government would clutch on to it like a sinking man clings to a life raft. Perhaps we will get that damascene conversion from the Minister today—perhaps we will hear it in two weeks’ time—but I rather fear not.
That is why so many other countries in our situation—those many economies that are growing faster than ours—do not impose multi-generational taxes on businesses. It would be interesting to hear from the Minister why it is that he and his Government single out family businesses—not those owned by private equity, those owned by international domiciled corporations, or even listed companies—for this iniquitous measure. I would love to hear that, as we all would on the Conservative Benches.
Andrew Griffith
As I have said many times in the House, I think the G7 is the wrong comparator peer group. We are not the fastest growing member of the G7. If the hon. Member took the time to read more than the headlines handed out by the Labour Whips, he would know that yesterday the International Monetary Fund downgraded the growth forecast for our wonderful country and enterprise for 2027. That is what Labour is doing to our economy: it has reduced the rate of growth.
While the G7 largely consists of relatively sclerotic economies that suffer from the same levels of indebtedness and lack of growth as the United Kingdom, in the meantime the G20 is coming up on the outside track. Those are the more prosperous countries, and they are building airports, building infrastructure and forming capital. Their companies are taking on the world and their young people have more job opportunities.
Not that the Labour Government have any interest in calibrating, counting and identifying those who are leaving, but that is why the flow of wealth creators and ambitious young people is not to our wonderful country, with its history and heritage, but from our country to those economies that are successfully growing faster than ours. One of the reasons for that—to conclude—is that those countries are more understanding of family businesses, more understanding of family farms, and more sympathetic and on the side of those who work hard to create wealth and a better life for themselves, for their family and for the next generation.
Gareth Snell
On a point of order, Madam Deputy Speaker. I seek your counsel. The hon. Member for Arundel and South Downs (Andrew Griffith) has just given a rather long speech about the benefits of family-owned businesses, but he failed to declare that one of the biggest beneficiaries of his policy would be JCB, which just happens to have given him £30,000 over the last year. Should that matter have been declared before the speech was made?
Oral Answers to Questions
Andrew Griffith Excerpts(1 month, 1 week ago)
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Andrew Griffith (Arundel and South Downs) (Con)
Thank you, Mr Speaker. First, let me pay tribute to my own predecessor, my right hon. Friend the Member for Central Devon (Sir Mel Stride), and let me welcome the Chancellor to his role. He is already responsible for the highest borrowing costs for 28 years. One in six of our young people are unemployed and yesterday we had the news that one of Britain’s top taxpayers is leaving our country. Every time a billionaire leaves, our country becomes poorer. Chris Rokos is reported to have paid over £300 million in taxes last year. Could the Chancellor tell us how many average taxpayers it will take to replace him?
John Healey
I welcome the new shadow Chancellor to his place and thank him for his words. I welcome him back to the Treasury brief—perhaps Members on the Government Benches will have more to say about that later. I echo his comments about the right hon. Member for Central Devon (Sir Mel Stride), who has played an important role in this House, including his cross-party work during the pandemic as Chair of the Treasury Committee. We thank him for that as he steps down from the Front Bench.
The shadow Chancellor takes reports in the paper and tries to make serious points in this House. We will set out our plans at the Budget to give families and businesses a bit of breathing space, to back good growth in more places throughout this country, and to rebuild confidence in strong British fiscal discipline—something that was lost under the shadow Chancellor’s Government.
Andrew Griffith
The Chancellor does not know the answer. On the Treasury’s own statistics, it would take 38,000 average income tax payers to make up for the loss of Chris Rokos. That is a lot of breathing space paid for. It means higher taxes for everyone else, or lower public spending. We know what Labour will choose. The last Chancellor raised taxes on farmers, family businesses and jobs. Conservatives will reform welfare to cut taxes; Labour always puts them up. Which, if any, of his predecessor’s damaging decisions will the Chancellor reverse?
Family Businesses
Andrew Griffith Excerpts(1 year, 7 months ago)
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Andrew Griffith (Arundel and South Downs) (Con)
When he was seeking the votes of small business owners last summer, the Prime Minister said:
“Small businesses are the lifeblood of our communities.”
He said that business is
“the beating heart of our economy”
and told small business owners in Southampton that Labour would deliver the stability that businesses need to thrive. The Prime Minister, the Chancellor and the Business Secretary all looked businesses in the eye and said that they had their back, but at the very first opportunity, Labour unleashed the biggest attack on business in a generation. It gave its union paymasters a blank cheque to craft an employment Bill that will make it impossible for businesses to grow. It gave us the jobs tax, the family business death tax, and business rate hikes up and down the high street. Business owners across this country are enduring a horror show reminiscent of the darkest days of the 1970s.
It is no wonder how we got here. Not one single person around the Cabinet table has serious experience of business. They do not understand what it means to take the risks that create growth. They do not understand the responsibility that business owners take on when they decide to employ people; what it is like to worry, day and night, about whether they can make payroll at the end of next month. They just do not get it.
Today we have heard some excellent contributions from Conservative Members, my colleagues, who do get it—who understand what it takes. My hon. Friend the Member for Beaconsfield (Joy Morrissey) reminded us that it is businesses that create jobs, not warm words from the Government. My hon. Friend the Member for Bromsgrove (Bradley Thomas) told us that the Government are in denial about the impact of the changes, the choices they have made and the tax increases—we have heard that again and again today.
My right hon. Friend the Member for Tatton (Esther McVey) reminded us that family businesses are the breeding grounds of entrepreneurs—how right that is. My hon. Friend the Member for Dumfries and Galloway (John Cooper) reminded us that when it comes to business, Britain’s got talent. Businesses provide so many people, including myself, with their all-important first job, but they are being crushed by what my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) rightly called today’s toxic concoction of changes.
My hon. Friend the Member for Bridgwater (Sir Ashley Fox), as a former and fully qualified solicitor, reminded us of the devastating impact of the employment Bill, which he has studied. My hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) talked about how family businesses are people’s hopes, dreams and ambitions. My hon. Friend the Member for South Northamptonshire (Sarah Bool) reminded us that, right now, businesses are cutting apprenticeships, pubs are closing and high streets are being damaged, and that once again, Labour is not working. My neighbour and hon. Friend the Member for Farnham and Bordon (Gregory Stafford) reminded us that Labour sees business as nothing more than a cash cow to fund its spending sprees, and my hon. Friend the Member for Keighley and Ilkley (Robbie Moore) talked about how growth cannot be magicked out of thin air, however much this Government try.
Family businesses are founded on solid principles and self-reliance. My hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) brought his experience of business to bear on this debate —it is not Government that create, but business owners working hard, day in and day out. My hon. Friend the Member for Bromley and Biggin Hill (Peter Fortune) reminded us that, just seven short months in, the Bank of England is halving growth forecasts, the cost of living is rising and unemployment is going up, all on this Government’s watch.
Finally, my hon. Friend the Member for West Suffolk (Nick Timothy) reminded us why we are really here today. We are here today because Labour broke its election promises. It has increased spending by £76 billion a year—eight times what was in its manifesto—and it is business that is paying the price. Business is not an abstraction; it is our pubs, our cafés, our restaurants and bars, our clothes shops and our newsagents. They are very real, and they are in very real danger. For many of them, the choices the Government have made will be terminal. The British Retail Consortium, the British Chambers of Commerce, UKHospitality, the Federation of Small Businesses and Family Business UK are all ringing the alarm bells, but this Government are not listening, and we have heard that across this House, including from the other parties here today.
The Institute for Fiscal Studies has said that Labour’s job tax will hit the lowest-paid the hardest, as firms are forced to make the toughest of decisions to survive, but for what end? It is to fund pay rises for train drivers, to give away the Chagos islands and to finance Red Ed’s mad windmill obsession.
Andrew Griffith
I will not, as time is limited.
Yesterday, the Conservatives successfully amended the national insurance Bill in the other place to mitigate the worst of Labour’s job tax. In winding up, will the Minister confirm that the Government will respect that amendment to exempt hospices, care providers, GPs, pharmacies, small charities and special educational needs and disabilities providers from the worst ravages of Labour’s job tax?
Let me be entirely clear, for the benefit of every one of our constituents, that these are choices that Labour has made, and they are not choices that will lead to growth. One archetypal small business is the family-owned pub, and we can all think of a family-owned pub that we have come to love. Thousands of them will fall victim to this Government’s anti-business agenda. That is not to mention the Government’s tax on the staff behind the bar, a Bill to ban banter, a threat to end even those cheeky cigarettes outside and even a power for the Business Secretary to shrink the size of the British pint.
The Government are giving themselves unchecked powers that could see the great British pint vanquished as part of their Trojan horse, EU surrender product regulation Bill. The hon. Member for Ealing North (James Murray), who has returned to his place, says that the Government have no plans to ban the pint. If that is the case, will they support our amendment 38 to save the pint?
Daisy Cooper
The shadow Minister was in the Chamber when I spoke earlier. Does he not agree that it is the Weights and Measures Act 1985 that protects our pint and that we should not be scaremongering that our pint is in anyway at risk?
Andrew Griffith
I deeply regret that if the hon. Lady reads the Bill, she will find that it precisely confers those powers on the Secretary of State, but she can join with those on our Benches in the other place by supporting the amendment. The Government can make clear today whether they are scaremongering or whether we should all be deeply concerned. By backing the amendment, they can remove that live risk to the British pint. [Interruption.] They can back the amendment any time they want.
The bravery—I will be kind—of those sat on the Government Benches is impressive. Every single one of them will have to look their constituency business owners in the eye. Every single one will have to face constituents as they lose their livelihoods. The choices that this Government have made will put thousands of employers in the red and some out of business for good. Hundreds of thousands of jobs will be lost. For just one second, I ask Labour Members to put themselves in the position of an employer, telling their long-standing staff that they can no longer afford to keep them on.
Those on the Government Benches do not understand business. Their interests are with their union paymasters, not the workers who will lose their jobs. They are petrified of celebrating success and supporting wealth creators. This is a Government who are taking business for granted. It is devastating our economy, and we will all pay the price.
Budget Responsibility Bill
Andrew Griffith ExcerptsWednesday 4th September 2024
(2 years, 1 month ago)
Commons ChamberRead Full debate Budget Responsibility Act 2024 View all Budget Responsibility Act 2024 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 4 September 2024 - (4 Sep 2024)
Nigel Huddleston
Thank you very much, Madam Chair. May I first take the opportunity to congratulate you on your election? I promise to try not to try your patience over the coming weeks, years and so on, but we will see how things go.
I wish primarily to speak today to amendment 9 and, of course, consequential amendment 10, which effectively seek to ensure that the fiscal lock proposed in the Bill should also include any changes to the fiscal rules and would require the Office for Budget Responsibility to produce a report on their effect on public finances. The Office for Budget Responsibility was of course constructed by a Conservative Chancellor following the poor forecasting record of the previous Labour Government. Between 2000 and 2010, the then Labour Government’s forecasts for economic growth were out by an average of £13 billion, and their forecasts for the budget deficit three years ahead were out by an average of £40 billion. Their forecasts therefore lacked credibility, and to re-establish confidence and credibility the OBR was created by the Conservative Government.
Labour lacked economic credibility in the past, and I am afraid it still lacks it now. The facts simply do not stand up the false claim that the Government have inherited the worst economic circumstances since the second world war; they transparently have not. Contrary to the rewriting of history that the current Labour Government are attempting, when we took over from Labour back in 2010, inflation was 3.4%. When they took over from us, it was 2.2%. The annual deficit is half what we inherited in 2010, unemployment is about half what it was in 2010, and we handed Labour the fastest economic growth in the G7. The dominant political and economic narrative since the second world war is in fact, as has been widely commented on, that every single Labour Government end up with unemployment higher at the end of their time in power than when they took over from the Conservatives preceding them.
The British public should not be taken for fools. Just because Labour keeps claiming something, that does not mean that it suddenly becomes true, which is why clarity over plans and rules is so important. The fiscal rules are of course restrictions on fiscal policy set by the Government to constrain their own decisions on spending and taxes. The fiscal rules set by the previous Government said that the debt to GDP ratio should be falling within a five-year horizon, and that the ratio of the annual budget deficit to GDP should be below 3% by the end of the same period. Labour’s manifesto for the election proposed the following fiscal rules: balancing the current budget, so that day-to-day costs are met by revenues, and that debt must be falling as a share of the economy by the fifth year of the forecast. On the surface, therefore, the debt rules appear to be broadly the same under the new Government. The Government have even said that they have an “ironclad” commitment to reduce Government debt. It is therefore critical what definition of debt is used for the fiscal rules. Clearly, any changes to the fiscal rules are financially significant decisions because they affect how much the Government can borrow and spend.
On Second Reading, the Exchequer Secretary to the Treasury said:
“Our fiscal rules are non-negotiable.”—[Official Report, 30 July 2024; Vol. 752, c. 1263.]
Great, but why then has the Chancellor repeatedly failed to rule out that she will change the definition of debt in her fiscal rules to allow, presumably, for massive borrowing? The Government cannot run from the scrutiny that they should be subjected to if they are considering making such a change. We believe that our amendment requiring an OBR report on changes to the fiscal rules is entirely consistent with the Government’s stated policy intent, and should therefore be fairly uncontentious. After all, on Second Reading, the Chief Secretary to the Treasury said that
“the announcement of a fiscally significant measure should always be accompanied by an independent assessment of its economic and fiscal implications, in order to support transparency and accountability.”—[Official Report, 30 July 2024; Vol. 752, c. 1211.]
We agree, and not accepting our amendment would be contrary to those goals, because clearly changing the fiscal rules would be a fiscally significant measure in anybody’s book. Furthermore, the Chief Secretary said that
“fiscal discipline and sound money is the bedrock of our plans.”—[Official Report, 30 July 2024; Vol. 752, c. 1213.]
Well, changing the fiscal rules would be changing the foundations and that bedrock.
Transparency and clarity are important in relation to the public finances, because Ministers should never forget that it is not their money that they are spending; it is the public’s money. The public have a right to know how their money is being spent, and government is about making difficult choices with limited resources. With Government spending being above £1.2 trillion per year, the British public recognise that the Government clearly have choices. It is not an endless supply of money, but it is a very, very large amount. In the last few weeks, the new Labour Government chose to spend the public’s money on pay settlements for their union friends rather than on supporting pensioners. Those settlements are estimated to cost about £10 billion. They also chose to spend £8.3 billion on a public energy company and £7.3 billion on a national wealth fund, so far from inheriting a £22-billion black hole, they have actually just spent £25 billion creating one within their first few weeks of coming to power.
Andrew Griffith (Arundel and South Downs) (Con)
My hon. Friend is making a fantastic speech on the importance of being responsible with our public finances. Much of the Bill is concerned with responsibility and transparency. Does he know whether the Government published an impact assessment when they took away the winter fuel allowance?
Nigel Huddleston
I thank my hon. Friend for that point. My understanding is that the Government have not published an impact assessment, as would normally be the case for something with such a significant impact. I think that speaks to the whole narrative that we are hearing from the Government: claiming one thing when the facts speak differently. As I said, far from inheriting a £22 billion black hole, they have actually spent, or committed to spending, an additional £25 billion. That is a choice that they made, so the claim that the Labour Government are having to take the winter fuel allowance away from millions of pensioners as a response to unexpected financial constraints simply does not stack up against the facts, or indeed the words of the Chancellor herself, who on 25 March 2014—yes, a decade ago—said:
“We are the party who have said that we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money”.—[Official Report, 25 March 2014; Vol. 578, c. 174.]
That is a direct quote in Hansard from the current Chancellor, so no, the Government’s restriction of winter fuel payments is not a response to financial circumstance; it is a long-established, clearly stated Labour policy intent—a deliberate policy choice, but a policy that they conveniently forgot to tell the public about in the run-up to the last election.
I hope, however, that the Government can be straight with the public on this point about the fiscal rules, accept the amendment that we are proposing, and provide assurance to all Members and the outside world that there is no sleight of hand here. We want the Bill to work as they say it is intended to, and to include financially significant decisions, such as on the levels of Government borrowing and the fiscal rules. I would therefore appreciate it if the Chief Secretary to the Treasury confirmed in his wind-up that the Government do not intend to change the definition of debt in their fiscal rules or practise some accounting trick to hide the level of Government borrowing, and that they do indeed wish to be clear and transparent about the public finances. If Labour Members vote against our amendment, it will merely prove that they are planning to change their fiscal rules in the Budget to borrow more money, increase debt, and run away from independent OBR scrutiny—the very opposite of the stated intent of the Bill.
The Chairman of Ways and Means (Ms Ghani)
A very strong maiden speech, without a script in hand—your parents will be proud.
Andrew Griffith
It is a delight as ever to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for Loughborough (Dr Sandher) on his maiden speech and his kind comments about his predecessor Jane Hunt, a great colleague of this House. It was one of my great pleasures in my previous role as Minister for science and research to visit the fine university he now represents; I wish him and them well, and I wish him all the best of luck with those on his Front Bench in procuring the financial support he seeks.
This is a disreputable Bill, if we are brutally honest. It is a piece of political theatre, which all of us on both sides of this House should think very strongly about giving our support to. This history of this place is of legislation made in haste, which this House subsequently repents at leisure. I say this in all seriousness and in the spirit of this place: at a time when there is low trust in politics, did our constituents—did the hon. Gentleman’s constituents, when they trooped to the ballot box and returned him to this place only weeks ago—seriously expect that our role would be to give away even more of our responsibilities? Can any of us, hand on heart, say that our constituents know what and who the OBR is? Did the electors of Bristol North West, Hampstead and Highgate, Richmond Park or, indeed, Arundel and South Downs send us to this place only to give away our duties and responsibility to the unnamed, unknown and unelected officials—well-meaning, no doubt—of the Office for Budget Responsibility? Hands on the face of a stopped clock are sometimes more accurate than the OBR forecasts, as they are at least correct twice a day for sure.
In truth, this legislation, put together at breakneck speed, has more holes than a Swiss cheese. If we look at clause 1(3), who decides the “costing”? Proposed new section 4A exempts any measure that is intended, at the time of its introduction, to be temporary. Members of this House will be familiar with the fact that income tax itself, one of the largest ever fiscal measures, was intended to be temporary; perhaps the Minister will address that fact when he winds up. Income tax was introduced by Pitt the Younger in 1799 as a temporary measure. Well, here we are, 225 years later, and that temporary measure is still going extremely strong.
Who defines what is and is not a fiscal measure—a measure with a potential impact on the GDP of this country? Many things decided in this House will have a direct or indirect impact on the GDP of this country; the decision by Tony Blair to take us to war without a vote in this House undoubtedly had an impact on our GDP. Decisions to introduce a four-day working week—if this House so chooses to make them, as is its right—would have a material impact on the GDP of this country. The Centre for Business and Economic Research estimates that every bank holiday costs this country a sum approaching £3.6 billion. Three, four, five or six bank holidays add up to a 1% impact on GDP, which I speculate may be the threshold for the OBR to intervene.
On trade deals, if those on the Government Benches fulfilled their ambition to realign with Europe—to federate and once again abrogate our trade to Europe—that would potentially have a material fiscal impact on GDP. There are very few domains of this House—very few of the decisions that our constituents have sent us here to legislate and decide on their behalf—that would not potentially fall foul of this rule.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I will delight the hon. Gentleman, because, as I am sure he saw on the amendment paper, I have tabled an amendment that would look at trade deals. One of the reasons why I felt compelled to do that, and explore this question that he raises about the economic impact, is that while he was in government and, indeed, a Treasury Minister, the Government did not publish any information for the very trade deals he is talking about. I will always welcome a sinner who repenteth but, for the avoidance of doubt, is he saying that he now believes there should be independent scrutiny of things such as the trade and co-operation agreement?
Andrew Griffith
It is good to have a proper debate. I certainly think that if we want and seek good government—which, like the human condition, is not a perfect state, but a state that we should seek constantly to perfect—the highest levels of transparency and the very important exercise in Government publishing of impact assessments when they make material decisions, as required by Cabinet Office guidance, are things that the whole House should join hands and agree on. It is one of the reasons why I asked my colleague, my hon. Friend the Member for Droitwich and Evesham (Nigel Huddleston), whether the Government had published an impact assessment on their callous decision to withdraw the winter fuel allowance from so many pensioners. The hon. Member for Walthamstow (Ms Creasy) will well know that the process of trade deals undergoes extensive scrutiny in this House, and I took one of those trade deals through that process of scrutiny in a former life.
I will conclude, because I simply want to alert hon. Members to what they are potentially doing as they seek to support this Bill. It is not for partisan or political advantage, but about the important role of Parliament, which has been litigated many times in this Chamber and in debate.
Graham Stringer (Blackley and Middleton South) (Lab)
Unsurprisingly, I have listened to the hon. Gentleman’s speeches on a number of occasions, and I agree with quite a lot of what he is saying about transparency. Does he agree that the burden of his argument is that we cannot make a Government behave better or govern more effectively by quango? This quango was set up by George Osborne to trap an incoming Labour Government and restrict and slow them down, and it is an odd thing that we see this quango being gilded.
Andrew Griffith
As ever, the hon. Member makes an important and weighty contribution. He is exactly right about the direction of travel. On both sides of the House, we will all find our own particular point on the envelope when it comes to the balance around organisations that can hold us to account and, in particular, hold a mirror to Government and ensure that this House acts with the best, most accurate and well-meaning data.
My core point is that we are sent here by our constituents. I again congratulate the hon. Member for Loughborough, who has been sent here on behalf of his constituents and has given a fine speech today, but I do not believe—he may intervene and correct me—that the citizens of Loughborough, whether they voted for Jane Hunt or for him, intended that one of the very first actions he and we would take as legislators would be to award more of our powers and place more fetters on ourselves. This is the right Chamber for accountability. We should hold ourselves to account; we have a number of ways in which to do that to ourselves. The hon. Member for Blackley and Middleton South (Graham Stringer) makes a very real point about quangos, arm’s length bodies and how we hold ourselves to account.
That is my point. I understand that many colleagues wish to get in. I support the amendment put forward by my hon. Friend the Member for Droitwich and Evesham, because it is quite right that we have rules. I was an accountant by training, and the first thing we learn—whether someone is an accountant or in performance sport—is that we play by the rules as they are; we do not seek to rig the rules in our favour.
Ms Creasy
It is a pleasure to speak in the same debate as the maiden speech given by my hon. Friend the Member for Loughborough (Dr Sandher). I am sure other speeches are coming that will show just how impressive the new generation of MPs is across the House.
It is also a joy to follow the hon. Member for Arundel and South Downs (Andrew Griffith), because I have always enjoyed the experience of listening to him. When he was a Treasury Minister in the previous Government, I watched him, debated with him and tried to encourage him to take on the buy now, pay later lenders—that is related to what I will say about legal loan sharking. But I have to be honest: being lectured by former Conservative Ministers about fiscal probity is a bit like being lectured by Toad of Toad Hall about safe driving, given the experiences of many of our constituents, which have led to the need for this legislation.
I put on record my support for this legislation, because frankly anybody who has had to renegotiate a mortgage since the Liz Truss Budget knows exactly why it is needed and why we must protect the British public from the consequences of bad decision making at a national level. As we saw in many examples under the previous Administration, the public have paid the price for that and will continue to do so.
Andrew Griffith
Of course, the legislation does not fetter previous Governments, but it would fetter the discretion of the hon. Lady’s own Front Benchers. In that context, does she not have the same confidence in her Front Bench that many others seem to enjoy?
Ms Creasy
I am a bit disappointed that the hon. Member did not seek to call me Ratty. I am also quite struck by the fact that he, a former Conservative Treasury Minister, rises not to hold himself accountable for the consequences of decisions made by the previous Government, or indeed to defend them, but simply to say, “You will be held to a higher fiscal standard.” We on the Labour Benches welcome a higher fiscal standard; that is the purpose of the legislation. Political decisions will still be made, but we will make them with the benefit of independent information. He will know that there were many debates in the previous Parliament, and indeed in those before it, in which independent information about and verification of the economic impact of policies mattered but were missing. Indeed, he mentions trade deals, which are an example of where we did not have independent information. I will comment on that only briefly, because my amendment has not been selected—he will be as disappointed as I am about that.
Andrew Griffith
The Minister can answer this briefly as well. Could he confirm that he has no plans to change the fiscal rules?
Darren Jones
The hon. Gentleman is enjoying himself, but he knows the answer: wait for the Budget.
The amendments from the official Opposition are therefore not necessary. To answer the question from the shadow Financial Secretary, the hon. Member for Droitwich and Evesham (Nigel Huddleston), as I have been invited to do so, the Chancellor has already confirmed that the Government will set out the precise details of our fiscal rules at the Budget on 30 October, alongside an updated OBR forecast.
amendments 6 and 7, tabled by my hon. Friend the Member for Walthamstow (Ms Creasy), focus on the definition of “fiscally significant” measures to which the fiscal lock will apply. They would extend the definition to include measures that have a cumulative effect on public sector net debt or contingent liabilities. I welcome my hon. Friend highlighting this issue, on which I know she has worked for many years. The draft charter text states that measures will trigger the lock when the combined costing is at least 1% of GDP in any year, and specifically:
“The costing of a measure is the direct impact of a policy decision on the public finances”.
It is difficult to set and interpret a threshold consistently for contingent liabilities as they can often be large in maximum exposure, but low in expected or reasonable worst-case losses. Effective management of contingent liabilities is important, and transparency is key to good fiscal management. The Government plan to announce new significant contingent liabilities at fiscal events to make sure there is transparency with Parliament. We will of course continue to notify Parliament of new contingent liabilities, as set out in “Managing Public Money”.
The amendments would also place a condition on policies with a cumulative impact on public sector net debt, and my hon. Friend noted public-private partnerships as an example. She was referring to PFI and PF2 models, which the previous Government had no longer proceeded with, and there has been no change to this policy. As the Chancellor said in her Mais lecture earlier this year, we will also report on wider measures of public sector assets and liabilities at fiscal events to ensure transparency across the whole balance sheet, which includes non-debt liabilities. Reporting transparently on the Government’s stock of contingent liabilities is key to ensuring we do not take excessive risk. I can therefore confirm today that the Government will publish a report on our contingent liabilities. I expect the contingent liability central capability to do this in early 2025. Having said all that, I recognise the issues my hon. Friend raises, and I will arrange to meet her to discuss them further.
Moving on to the Liberal Democrat amendments, amendment 2 was tabled by the hon. Member for Richmond Park (Sarah Olney). As she said, it would enable the OBR to notify the independent adviser on Ministers’ interests if the fiscal lock was triggered. I remind hon. Members that the purpose of this Bill is to ensure that never again do we find ourselves in a situation, like at the 2022 Liz Truss mini-Budget, in which fiscally significant measures are announced without accompanying OBR analysis. If a future Government were to act in this way, the Bill provides a clear remedy. The OBR is empowered to independently notify the Treasury Committee and to produce its own report. This would be available for full scrutiny by stakeholders and Parliament, which would be able to hold Ministers to account in the normal way. We therefore do not consider the amendment necessary.
Amendment 1, also tabled by the Liberal Democrats, would broaden the definition of fiscally significant measures to cover anything that is likely to have an impact on the cost of Government borrowing, interest rates or economic growth. The Bill is focused on preventing irresponsible large-scale fiscal announcements that could undermine macroeconomic stability, such as at the mini-Budget. To support that, we need clear and robust legal frameworks that ensure the provisions are triggered only when appropriate. This requires precise definitions that everyone, including the OBR in particular, can understand clearly and work with practically. It would therefore not be helpful, in the Government’s view, to have a broader, vaguer definition that might repeatedly trigger the fiscal lock under many different circumstances.
Amendments 3 and 4 would require the Treasury to consult the OBR and the Treasury Committee before the charter can be updated for the purposes of the fiscal lock, and to publish a report on the outcome of any such consultations. It is of course important that the views of the OBR and of Parliament are taken into account when making changes to the charter. However, I hope the hon. Member will accept that it will not be necessary to set out this specific process in primary legislation, because the Bill already includes an important safeguard on the fiscal lock, which is the requirement that any changes to the charter for budget responsibility are published in draft at least 28 days before they are laid in the Commons. That will ensure that the OBR, the Treasury Committee, this Parliament and all stakeholders will have a clear opportunity to make representations to the Treasury and to publish their views, as they see fit.
Amendment 5, tabled by the hon. Member for North Herefordshire (Ellie Chowns), would require the OBR to take net zero targets into account when preparing a report on fiscally significant announcements. Strong legal frameworks are already in place in the Climate Change Act 2008 to support the transition to net zero in 2050. The Act legislates for interim five-year carbon budgets, and requires the Government to report on those periodically. Parliament and its Select Committees already scrutinise that in great detail. The Green Book, the Treasury’s guidance on how to appraise policies, projects and programmes, requires Departments to assess the climate and environmental impacts of policy proposals, with major bids and proposals at fiscal events being assessed accordingly in that way. We therefore do not consider the amendment to be necessary.