Finance Bill (Third sitting)

Angus MacDonald Excerpts

Committee stage
Thursday 30th January 2025 Public Bill Committees

[James Murray]

I applaud the hon. Gentleman’s theatre in delivering his response, and welcome his support.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Clause 63

Rates of alcohol duty

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I beg to move amendment 66, in clause 63, page 68, line 10, leave out “£32.79” and insert “£31.64”.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 64 stand part.

New clause 2—Review of sections 63 and 64—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act and every six months thereafter, review the impact of the measures contained in sections 63 and 64 of this Act.

(2) Each review must consider the impact of the measures on—

(a) Scotch whisky distilleries,

(b) small spirit distilleries,

(c) wine producers and wholesalers,

(d) the hospitality industry, and

(e) those operating in the night-time economy.

(3) Each review must also examine the expected effect of the measures on exports and the domestic wine trade.

(4) A report setting out the findings of each review must be published and laid before both Houses of Parliament.”

New clause 4—Statements on increasing alcohol duty—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to alcohol duty introduced by section 63 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) hospitality sector,

(b) pubs, and

(c) UK wine sector.”

This new clause requires the Secretary of State to make a statement about the impact of increasing alcohol duty.

[Mr MacDonald]

The amendment would mean the relevant rate of duty would be unchanged from last year. I am one of the few MPs from Scotland on the Committee, but I am sure I am not alone in understanding the vital importance of the Scotch whisky industry not just to Scotland but to the UK economy. However, it bears repeating just how significant the industry is, and I would like to highlight a few key statistics.

Scotland is home to the production of 70% of UK spirits—whisky, gin and vodka. In 2023, Scotch whisky accounted for 74% of Scotland’s food and drink exports, and the industry employed 41,000 people in Scotland and an additional 25,000 throughout the UK. The Prime Minister himself recognised the importance of the industry. He went to the InchDairnie distillery in November 2023, and afterwards tweeted:

“Labour will put growth at the heart of our government and back Scotch producers to the hilt.”

The hon. Member for West Dunbartonshire (Douglas McAllister) echoed this sentiment when he co-signed a letter to the Chancellor prior to the Budget, urging her to:

“Back one of our great industries, undo the damage of last year’s duty increase, and allow Scotch Whisky to deliver for the economy.”

Despite those commitments, the 2024 autumn Budget fails to deliver the support that the Scotch whisky industry so urgently needs.

A new survey reveals that 43% of 18 to 34-year-olds have given up drinking alcohol entirely. The share prices of the biggest two spirit companies halved over the past year. The Bill proposes 1p off a pint of beer, which I think we can all agree is a bit of a stunt, while increasing the tax on spirits by 32p, with a related VAT increase of 6p. That means that the duty is £9.18 on a standard bottle of vodka, gin or Scotch whisky.

Over the past 16 years, the duty on spirits has doubled. I am concerned, and so are many others, that we are plucking the golden goose one time too many. UK alcohol duty is the highest in the G7. A double measure of spirits is taxed four times more than the average-strength pint of cider in pubs, even when the cider contains more alcohol. Effectively, we are taxing whisky, gin and vodka four times as much.

What is worse, this punitive duty does not even deliver more revenue for the Treasury. This is an important point. Last year, the previous Government increased the duty on spirits by 10.1%, but according to HMRC the revenue from the duty fell by £237 million in the following 17 months. That clearly demonstrates that higher taxes on Scotch and spirits do not lead to higher revenue. The increase was forecast to bring in £800 million. Revenue from the duty has therefore fallen dramatically.

I understand that in recent years alcohol duty has risen in line with inflation under the new system. However, freezing it in this Budget would send a clear message that the Government stand behind one of our greatest industries. The troubled hospitality industry and the Scotch whisky industry do not need hollow words of support: they need meaningful action. I urge the Government to freeze alcohol duty on Scotch whisky and other spirits, and keep their promise. The Prime Minister said that we need to

“back Scotch producers to the hilt.”

Let us give this industry the angels’ share that it deserves.

[The Chair]

Does the shadow Minister wish to speak?

[James Wild (North West Norfolk) (Con)]

I apologise for the confusion on our side, Ms Vaz. The Committee will be pleased to know that I have lots to say on this clause, so we can all settle in for a while.

Clause 63 increases the headline rate of alcohol duty in line with the retail price index, provides a reduction to the rates for draught alcoholic products and cuts to the rates paid by eligible small producers. The Government have also chosen not to extend the temporary easement for certain wine products. I say at the outset that His Majesty’s Opposition is a strong supporter of the broader alcohol sector, and we have some concerns about the impact that some of the provisions will have on important sectors. As well as speaking to clauses 63 and 64, I will speak to new clause 4, which stands in my name and that of my hon. Friend the Member for Grantham and Bourne.

In 2023, the previous Government introduced a progressive strength-based duty system following the alcohol duty review, which was the biggest review of alcohol duties for more than 140 years. The new and simplified alcohol duty rates system was based on the common-sense principle of taxing alcohol by strength, with the aim of modernising the existing duties, supporting businesses and meeting our public health objectives. That was the first time that public health objectives had been inserted into the alcohol duty system. The reforms also introduced two new reliefs: the draught relief to reduce the duty burden on draught products sold at on-trade venues, and small producer relief.

At the autumn statement 2023, the previous Government froze alcohol duty rates until August 2024, and that was extended until February 2025 at the following Budget. According to the OBR, alcohol duty receipts are expected to raise £12.4 billion this year, falling by 0.6% compared with last year as the rates remain frozen, but receipts are then forecast to increase by 5% a year on average, to reach £15.9 billion by the end of the Parliament.

Pubs make a huge contribution to our culture, economy and communities. When the Conservatives were in government, we recognised that and introduced a raft of supportive measures, including draught relief, small producer relief and the Brexit pubs guarantee, which I am sure all hon. Members remember and welcome. I therefore welcome the increased draught relief from February, from 9.2% to 13.9%, and the fact that the relative value of small producer relief will be maintained. Although we welcome the inclusion of both reliefs, the increase to draught relief will mean that beer duty on a 5% pint of beer is reduced from 54p to 53p—a 1p saving. I fear that drinkers will not be toasting the Exchequer Secretary over that.

Turning to whisky—although it is a little early in the day for me—as the hon. Member for Inverness, Skye and West Ross-shire set out, Scotch whisky is one of our most iconic and successful industries. Some 43 bottles of scotch whisky are exported per second and the industry supports more than 66,000 jobs across the UK, many of which are in rural areas. The decision to uprate duty rates by RPI has been met with deep concern by the industry—indeed, the Scotch Whisky Association said that it represents a broken commitment, after the Prime Minister claimed last year that his Government’s trade strategy would

“back Scotch producers to the hilt.”

That sounds rather like the promise that he gave to farmers, which Labour’s family farm tax has broken. The managing director of Diageo said:

“This betrayal will leave a bitter taste for drinkers and pubs, while jeopardising jobs and investment across Scotland.”

I would be interested to hear the Minister’s response to those comments. Have the Government calculated the risk to jobs in the sector more widely?

A similar picture is painted by the cider industry, which supports more than 11,500 jobs and attracts more than 1 million tourists each year. The National Association of Cider Makers has raised fears that raising the headline rate, alongside the national insurance increases and the family farm tax, could put elements of the UK cider industry at risk. Has the Minister calculated the cumulative impact that these tax rises will have on the sector?

At this point, we should consider the wider context in which we are discussing these increases. Time and again we hear about the Budget placing a range of cost pressures on the hospitality industry, which is a key contributor to the UK economy. According to UKHospitality:

“In the past six years, hospitality has increased its annual economic contribution by £20 billion to £93 billion.”

The tax rises in the Budget, including the £25 billion a year jobs tax, will make it much harder for the industry to succeed. Just look at the impact of recent measures. Colliers, a professional property services company, reported that cutting the hospitality business rate relief from 75% to 40% means that restaurants will face a bill of, on average, over £13,000 a year, up from £5,500.

[Mr MacDonald]

Will the Minister comment on whether, when the Government fix all these additional taxes, they take into account what happens in Scotland, where many in the hospitality industry do not get business rate relief? We are getting it twice on exactly the same issue.

[James Wild]

The hon. Gentleman makes an important point that I am sure the Minister will want to cover when he responds.

The average bill for pubs will go from £4,000 to £9,642 a year. Any hon. Member who talks to hospitality businesses in their constituency will know the real-world challenges they are facing. As it happens, my favourite pub in my constituency closed its doors on Sunday, in part due to the increased costs and taxes the sector is facing. Have the Government considered the impact of the combination of these tax rises on pubs and the wider sector?

Turning to wine, as part of our reforms we introduced a wine easement for 18 months until February 2025. The Minister will be aware of the concerns of some in the sector that because that easement is coming to an end, duty will increase by 98p in just over 18 months. While we support the transition to the new regime and the end of the easement, I would be grateful if the Minister clarified what engagement he has had to understand how prepared the industry is for the new system.

We have many incredible wineries here in the UK. In 2023, sales rose 10% to reach nearly 9 million bottles. Supporting domestic wine producers should be a priority. In my constituency, I am fortunate to have Burn Valley winery, Cobble Hill winery and others. They are producing great products, proving very popular and helping to improve the rural economy and employment. However, growers have higher production and establishment costs, which will be made more challenging by the tax rises in these clauses and the wider Budget.

To support the industry, WineGB has proposed the introduction of a cellar door duty relief scheme modelled on the Australian scheme, to promote wine tourism, which a VisitBritain survey demonstrated could attract 16 million visitors. The Government have an ambitious target to increase annual visits to the UK to 50 million by 2030—up from 38 million last year. In the spirit of trying to help the Government lift their foot off the growth brake lever, perhaps the Minister will have a look at that idea and consider whether introducing it has any merit.

It is because of the challenges facing producers and the hospitality sector that we have tabled new clause 4, which would require the Chancellor, within six months of the Bill being passed, to make a statement to Parliament about the impact on various sectors of the increases in alcohol duties. As we have heard, increases to duty rates place significant additional costs on hospitality, pubs, whisky, spirits, wine, cider and other sectors, and we are concerned that this could inhibit growth and business investment. The previous Government recognised the significant contribution made by those sectors and saw an increase in business investment in the hospitality sector. Given the headwinds facing alcohol producers and hospitality businesses, which support so many jobs, it is only right that the Government report back to Parliament on the impact of their choices.

Clause 64 abolishes the duty stamps scheme for spirit drinks from 1 May 2025, fulfilling a commitment made by the Conservative Government in the spring Budget. We welcome this. The scheme was important when it was introduced, but it became an increasingly diminishing part of HMRC’s compliance response. Unnecessary regulation should of course be removed where possible, and I welcome this Government’s apparent commitment to deregulation, as set out in the Chancellor’s speech, though it would have more credibility if the Government were not also bringing forward the unemployment Bill that will add £4.5 billion to business costs.

As I set out, we support this change to reduce administrative burdens. I look forward to the Minister’s response to the concerns I have raised on behalf of the sector and producers in relation to these clauses.

--- Later in debate ---

[James Murray]

I will attempt to address the points raised by the Opposition parties. Let me make it clear that clause 63 makes changes to the alcohol duty rates from 1 February 2025. Alcohol duty rates for products qualifying for draft relief will be cut by 1.7% to take a penny of duty off an average-strength pint, while rates of all other products will increase by the retail price index.

[Mr MacDonald]

May I intervene?

[The Chair]

You can respond to the debate at the end. Would you still like to make an intervention?

[Mr MacDonald]

In that case, I will not, Ms Vaz.

[James Murray]

As I was saying, the clause also increases the relative value of small producer relief for both draught and non-draught products, and clause 64 ends the alcohol duty stamps scheme. To reassure Members, in consideration of what position to take at the autumn Budget, I had meetings and officials had further meetings with representatives from the wine, beer, spirits and cider industries, as well as with public health people, to understand the full range of opinions and how we could carefully calibrate our policy response.

[James Murray]

The association is included under “spirits”.

As we know, alcohol duty is frozen until 1 February. The OBR’s baseline, reflected in its forecast, is that alcohol duty will be uprated by RPI inflation each year. The Government have decided to maintain the value of alcohol duty for non-draught products by uprating it from 1 February. At the same time we are recognising the social and economic importance of pubs, as well as the fact that they promote more responsible drinking, by cutting duty for draught products, which account for the majority of alcohol sold in pubs.

A progressive strength-based duty system was introduced on 1 August 2023 by the previous Government following the alcohol duty review. The reforms introduced two new reliefs: a draught relief to reduce the duty burden on draught products sold in on-trade venues, and small producer relief that replaced the previous small brewers relief. The clause increases the generosity of both reliefs.

The alcohol duty stamps scheme is an anti-fraud measure applied to larger containers of high-strength alcoholic products, typically spirits. It requires the mandatory stamping of certain retail containers with a duty stamp. In 2022, HMRC was commissioned to review the effectiveness of the scheme. It found that it is outdated, susceptible to being undermined and now plays a diminished compliance role, and concluded that the cost and administrative burdens imposed on the spirits industry could no longer be justified. The previous Government announced the end of the scheme at spring Budget 2024. That is a decision that this Government will implement from 1 May 2025. That date was chosen after consultation with businesses, which requested sufficient time to prepare.

Clause 63 makes four changes. First, it increases the rates of alcohol duty for non-draught products to reflect RPI inflation. Secondly, it reduces the rates of alcohol duty on draught products by 1.7%. Thirdly, it amends the tables in schedule 9 to the Finance (No. 2) Act 2023 that are used by small producers to calculate their duty discount under small producer relief. This increases the value of small producer relief for both draught and non-draught products in relation to the main rates for these products.

In cash terms, the current cash discount given to small producers for draught products is maintained, while the discount provided to small producers for non-draught products is increased. Small producer relief provides the same relative discount, irrespective of whether a product also qualifies for draught relief. As a consequence of the RPI increase in non-draught rates, it increases the simplified rates in schedule 2 to the Travellers’ Allowances Order 1994, which is used for calculating duty on alcoholic products brought into Great Britain.

Some hon. Members raised questions about the impact of these measures on pubs and the hospitality industry. To support the hospitality industry, particularly recognising the role that pubs play in local communities, the Government have announced a reduction in the alcohol duty rates paid on draught products. This reduces businesses’ total duty bill by up to £100 million a year and increases the duty differential between draught and non-draught products from 9.2% to 13.9% for qualifying beer and cider.

As we have mentioned a couple of times in this debate, the reduction to draught relief rates will also result in the average alcoholic strength pint at 4.58% ABV paying 1% less in duty. Draught relief provides a reduced rate of duty on draught products below 8.5% ABV packaged in containers of at least 20 litres designed to connect to a qualifying system for dispensing drinks.

Clause 64 ends the alcohol duty stamps scheme from 1 May this year, removing the provisions in the Finance (No. 2) Act 2023 and the secondary legislation in the Duty Stamps Regulations 2006. It also makes consequential changes and removes references to the scheme where they appear elsewhere in legislation.

Amendment 66 would freeze alcohol duty for alcoholic products above 22% ABV. That is contrary to the Chancellor’s decision at the autumn Budget to increase those duty rates to reflect inflation, and would cost the Exchequer £150 million a year.

Specifically in relation to the Scotch whisky industry, I would like to set out that the overall alcohol package balances commercial pressures on the alcohol industry with the need to raise revenue for our vital public services and reduce alcohol-related harms. Consumers and brewers in Scotland will benefit in line with the rest of the UK, with consumption and production patterns roughly equal nationwide. Of course, 90% of Scotch whisky is exported, which means it pays no duty. The Scotch Whisky Association’s own figures show the health of the industry. The Budget offers support to the Scotch whisky industry by removing the alcohol duty stamps scheme, which we have just considered, and through investment in the spirit drinks verification scheme by reducing fees for geographical verification.

New clauses 2 and 4, which were also tabled by Opposition Members, would require the Chancellor to make additional statements about the impact of the alcohol duty measures. The Government do not believe further statements to be necessary. As usual, a tax information and impact note was published at the autumn Budget, outlining the anticipated impacts of the measures on alcohol producers and the hospitality sector. Alcohol duty, like other taxes, will be reviewed in future Budgets.

New clause 2 also requires a review of the impact on trade, but UK alcohol duty is, of course, not charged on exports. Some hon. Members raised the impact of the changes to business rates on the hospitality sector in Scotland, but business rates are, of course, devolved. The Scottish Government are accountable to the Scottish Parliament on devolved areas.

Hon. Members also raised questions around the wine easement and why it had not been extended or made permanent. I remind them that the wine easement was intended as a transitional arrangement to give the wine industry time to adapt to the strength-based duty calculation for wine. The revised alcohol duty system simplified and reduced differences between categories of alcohol. Making the wine easement permanent would introduce a new differential into the system and add to the complexity of that system. It would further lead to a duty regime in which stronger ABV wines pay less in proportion to their alcohol content than lower ABV wines. Making the wine easement permanent would, therefore, undermine the simplification and public health objectives of the revised alcohol duty system.

In conclusion, the changes to the alcohol duty balance public health objectives, fiscal pressures, cost of living pressures and the economic and social importance of pubs, while also supporting small producers by increasing the generosity of small producer relief. Furthermore, the end of the alcohol duty stamps scheme will simplify procedures for approximately 3,500 registered alcohol importers and producers, reducing overall costs on the spirits industry by an estimated £7 million a year. I therefore commend the clause to the Committee, and urge it to reject amendment 66 and new clauses 2 and 4.

[Mr MacDonald]

I do not have a great deal to add. I did miss out, when we declared our interests earlier, the fact that I own a pub, which hon. Members are very welcome to visit when they are next in Fort William—do not all rush at once. It never rains there.

I want to come back, briefly, to the 1p a pint reduction that we were promised. The whole hospitality industry and beer industry have come together to agree that that is a stunt, and that that 1p will not be passed on to the customer. It is just not relative at all, because the reduction in business property relief and the national insurance and minimum wage increases effectively mean that the cost to the hospitality industry is going through the roof. The Minister knows that perfectly well, but he still continues to trot out his line.

On the whisky industry, I am not sure that account has been taken of the potential tariffs. We talk about exports being very strong, but they are not actually very strong at the moment.

Lastly, on tax overall, when I make a submission to Scottish Government Ministers about the tax on hospitality, the whisky industry and so on, they all blame Westminster, but when I speak to Westminster Ministers about it, they all blame Scotland. The net result is that industries such as hospitality in Scotland are suffering from both sides, and that is simply not fair.

[Gregor Poynton (Livingston) (Lab)]

On business rates, they are clearly devolved to the Scottish Government, so it fully sits within their remit to help the hospitality industry. If we are talking about standing behind the whisky industry, one of the first things that the Secretary of State for Business and Trade did was go to Brazil to work out that protected status for the Scotch whisky industry, which will mean millions of pounds extra in exports to Brazil.

We are also discussing clause 64, which deals with the abolition of duty stamps for alcoholic products, and that will also help the whisky industry. The Government are doing a number of things to support the whisky industry and stand behind it, including the provisions on its tax status and the Secretary of State’s efforts to increase exports. The hon. Member should perhaps reflect that in his comments.

[Mr MacDonald]

I have finished my remarks.

[The Chair]

Would you like to press the amendment to a vote?

[Mr MacDonald]

Yes.

Question put, That the amendment be made.

Finance Bill (First sitting)

Angus MacDonald Excerpts

Committee stage
Tuesday 28th January 2025 Public Bill Committees

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Did the Minister consider the different legislation in Scotland, where we have short-term letting licences, visitor tax and a whole load of extra legislation coming in, which is making it difficult and reducing the amount of holiday letting available? How relevant is the proposal for Scotland?

[James Murray]

The hon. Gentleman’s question goes slightly beyond the ambit of the tax measures we are discussing. As I understand, he is talking about the wider regulation and the approach to lettings in Scotland. To echo my response to the hon. Member for Gordon and Buchan, the measures really relate to the tax treatment of FHLs in comparison to standard property lettings, making them more equal. It does not make them entirely equal—VAT remains a point of difference—but it is about levelling the playing field between FHL landlords and the landlords of standard lettings in the tax system.

[Mr MacDonald]

My point was really about the cumulative effect of many different taxes and restrictions making it more and more difficult for people in the letting business, which is crucial to the economy of tourist areas.

[James Murray]

We know that in any local area there needs to be a balance between visitor accommodation and long-term accommodation. I am sure that the hon. Member and others recognise the tension inherent in getting that balance right. We need to ensure not only that we are supporting our visitor economy, but that the tax system supports long-term accommodation for people who live in those areas—not least because those who work in the tourism sector need somewhere to live near their place of work. It is about the balance between supporting visitor economies and long-term residential lets. We agree with the previous Government, who introduced the reform, on this point. The tax treatment of FHL landlords is better if brought more in line with standard residential lets.

I will briefly mention the anti-forestalling rule, which is also introduced as part of the Bill. It will prevent the obtaining of a tax advantage through the use of conditional contracts to receive capital gains relief under the current FHL rules. That rule applies from 6 March 2024.

In summary, the changes made by the provisions will make the tax system fairer by eliminating tax advantages for landlords who let out their properties as short-term furnished holiday lets compared with those who let out properties for longer periods. FHL landlords will now be treated the same as other residential landlords for the purposes of income tax, corporation tax and capital gains tax. We are grateful to all the stakeholders who have already fed in following the publication of the draft legislation and supporting documents.

High Streets: Autumn Budget 2024

Angus MacDonald Excerpts

Thursday 23rd January 2025 Commons Chamber

[Victoria Collins]

That is one of the main topics that came up. Businesses shared with me that after facing the impact of Brexit, closures during covid, cuts to local infrastructure following Conservative cuts to local government and the soaring costs from the cost of living crisis, the combination of measures in the autumn Budget, which includes the rise in national insurance contributions, the change in business rates that was just mentioned and the increase in the minimum wage, as well as proposed changes that could impact family businesses, means that they are now reaching crisis point.

Businesses that I speak to are largely supportive of an increase in the minimum wage. I want to highlight that because they want to support their staff. However, it is the combination of all those factors, after such a difficult time, that is devastating. The knock-on impact of that combination has also seen pre-emptive cost rises across supply chains and worries about consumer confidence, as consumers ultimately spend less on our high streets. Although the GfK consumer confidence index in the UK rose by one point last December, confidence levels remain subdued and retail sales in the UK unexpectedly declined 0.3% month-on-month last December, in a moment in the calendar that is often the most critical time for retail and hospitality on our high streets.

Coming back to national insurance contributions for employers, this is a pre-profit cost increase. Not only does that need to be managed, but for businesses that are just about breaking even or making a loss, it will tip them over the edge and drastically cut the cash flow that is often key to investment. The well-loved local Lussmans restaurants in Hertfordshire have been serving local people for 22 years and face around £250,000 off the bottom line, leading to reduced investment in our local area. Temptation Gifts will see similar, if not higher, costs and says that for the first time in 42 years, it will be shortening opening hours as part of its cost-saving measures. It is having to make difficult staffing decisions in a business that the family has built over decades.

My constituent, Charlotte, managing director of the oldest family-run jewellers in the UK, says that the mix of higher national insurance contributions and higher minimum wage costs means that they will not hire any more staff, and that anyone who leaves will not be replaced. Almar in Tring, where Carolyn and her husband already work long days, says that the national insurance contributions will be a big issue in their running costs and that they do not know how they will cope working even longer days.

Chiltern Opticians in Tring highlights the barriers that small businesses face in hiring staff. It says that it is very different for big corporations, which have large human resources teams to handle staffing issues, and that

“we just don’t have the budget for it”.

These are resilient businesses—or they have been—and they want to continue to build those businesses and to employ local people. Indeed, I see their pride in supporting local staff, often calling them “family”. Jordan from G. Grace & Son in Tring says:

“We are more like a community centre at times, providing essential services to the community.”

In that, I hear my mum’s voice who so often did the same. Our pubs, restaurants and cafés in Harpenden and Berkhamsted cover 197 hospitality venues that employ more than 6,000 people and generate nearly £143 million in revenue. These businesses are the backbone of our economy and community.

The Government say that they are protecting small businesses, but these are the small businesses of which they talk. Indeed, the official definition of a small or medium-sized enterprise is a company with fewer than 250 employees. They are growing, local, often family-run businesses that are nowhere close to being the international giants that have started to dominate retail or hospitality. These local businesses are happy to pay their way. Andrei says:

“I have no issue with tax rises, but these are positioned poorly. The vast majority of the high street are SMEs and they will be hit the hardest.”

Sadly, the desperation is clear. These small businesses are worried that the Budget will be the final straw. Participants in my local survey said:

“What is the point of a small business? The high street is dying.”

Therefore, when it comes to national insurance contributions, will the Government consider mitigations to support the local businesses on our high streets? These could include a lower rate of NICs for earnings of between £5,000 and the £9,100 threshold, or a lower rate for lower earning taxpayers who work part time—perhaps fewer than 20 hours per week. As we have heard from many local businesses, this would help get more people working and support our local economy. At the very least, will the Government consider delaying implementation to give businesses time to adjust and consider their own mitigation?

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I wonder whether the Minister will consider what I am about to say. I have been asked to go to the Isle of Skye on Saturday for a crisis meeting. There is a group of hotels, which are family-run businesses, not big multinationals, and they face an awful combination of increases across the board, including heating price increases. Their No. 1 issue is national insurance contributions and minimum wage costs. They think that, on average, their costs will go up by between £40,000 and £70,000. They are in a very poor state indeed. Can the Minister give me any encouragement that I could pass on to them on her behalf?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Mr MacDonald, your intervention was on the Member, so the question goes to her, and she can insist on the Minister responding.

--- Later in debate ---

[The Economic Secretary to the Treasury (Emma Reynolds)]

I congratulate the hon. Member for Harpenden and Berkhamsted (Victoria Collins) on securing the debate and thank her for sharing her story of working in her mum’s gift shop. It was very moving to hear that she has had direct experience of working in a shop on the high street. I also thank her for her survey of local small businesses on her seven high streets, which is an impressive number. She outlined very well the importance of the businesses there; I think she said that there are 197 retail, hospitality and leisure businesses, employing some 6,000 people. I thank her for sharing those statistics, and the feedback from those businesses.

I share the hon. Member’s passion for the regeneration of our high streets. I think it is a concern for Members across the House. High streets are focal points of economic activity, but most importantly—she said this in her speech—they are often a key part of the unique character of our communities. We know that high street businesses are contending with a range of challenges. She listed some of them, but I will list a couple: changing consumer shopping habits and the rise of online shopping, and a series of economic headwinds, including the pandemic, which we know was particularly difficult for small, independent businesses on the high street.

The Government are committed to reforming Britain’s economy to bring about a decade of national renewal. Creating an environment in which our high streets are able to flourish is critical to that commitment. In her speech, the hon. Member recognised the Government’s dire economic inheritance from the Conservatives, none of whom are in the Chamber. We had some very difficult decisions to make in the Budget, but it was necessary to wipe the slate clean to deliver the economic stability that high street businesses need.

[Mr MacDonald]

Will the Minister say why taxes were put on poor, struggling organisations, such as high-street shops and hotels, rather than the massive online businesses that are emptying our high streets? Why did she not consider imposing a higher rate of corporation tax or income tax, rather than hitting the poorest businesses in our society?

[Emma Reynolds]

The hon. Member pre-empts my next sentence, so I thank him for that. We have committed to reforming business rates, because we need a fairer system, fit for the 21st century. That important part of our reforms and plans will, I hope, benefit the businesses that the hon. Member for Harpenden and Berkhamsted spoke about.

Agricultural and Business Property Relief

Angus MacDonald Excerpts

Tuesday 14th January 2025 Westminster Hall

[Graham Stuart]

I had better make some progress. The hon. Member for Penrith and Solway may have been scolded behind closed doors for doing that, but he will have regained the trust of voters who put their trust in him. As devastating as the proposed changes to APR and BPR could be on our farmers, the impact of the changes on family-owned businesses more widely could be even greater, and perhaps that deserves more attention.

A recent report by Adriana Curca at the CBI laid bare the potential fallout. Far from raising £1.4 billion, as forecast by the Treasury, the Chancellor can expect a £1.2 billion decrease in tax revenue from family-owned businesses. Instead of helping the Government to fulfil their pledge to be pro-business and pro-worker, it could lead to the loss of more than 125,000 jobs over the next four years.

Rachel from accounts obviously never got a new abacus for Christmas. Maple Garage, Beverley Travel, Beverley Camera Centre, Oh My Dog—great place—Flowerstyle, Vivienne Rose Wallpaper and Interiors, the Beverley Card Company, Islay Bloom, the Monkey Tree Café, Trent Galleries, Hull Aero Club—those are all businesses that I have spoken to since the Budget. The overwhelming sentiment was exactly the same, regardless of the type of business: disappointment in a Government who do not understand business. None of the Cabinet has ever run one, and it shows.

When the Prime Minister promised that wealth creation would be his party’s No. 1 priority—do hon. Members remember that?—more than 120 business leaders believed him, from the founder of Wikipedia, Jimmy Wales, to Andrew Higginson, the chair of JD Sports. The Prime Minister convinced them that he had a plan to kick-start our economy. Now, six months into the reality of a Labour Government, they are lacing up their trainers and running for the hills.

It does not have to be that way. Instead of tinkering with who is and who is not eligible for inheritance tax relief, we could consider following Sweden’s example, where, having tried heavy inheritance tax charges—

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Will the hon. Gentleman give way?

[Graham Stuart]

I will have to press on. Sweden ended up with even, I think, the communists voting to abolish it entirely. Since Sweden scrapped inheritance tax in 2004, entrepreneurship has flourished. Some 8,000 wealthy individuals moved their assets back to the country. Its tax revenues increased by £19.5 billion in a decade.

The planned changes to APR and BPR hurt everyone and help no one. Scrapping inheritance tax may not be a silver bullet, but the evidence suggests it is a policy worth examining.

I return to the saying that trust takes forever to repair. The Prime Minister will not take my word for it, but he should listen to his voters, and recent polls show that 66% of voters believe that Labour does not respect rural communities, and 77% do not trust Labour to manage the economy effectively, or remain unconvinced.

Newer MPs may grandstand and say that it will all blow over—although their appetite to do so seems to be diminishing by the day—and that by 2029, it will be a bad memory for farmers and entrepreneurs. Perhaps they could ask some of their colleagues in the Liberal Democrats how that story ends. After all, in 2010, it took them less than six months to break their promise to students not to raise tuition fees, and it still came up in last summer’s TV debates. Farmers and businessmen, like students, have long memories.

I am a firm believer that we reap what we sow. In the past six months, the Government have sown a dangerous thing—seeds of doubt, and an idea that they cannot be trusted. I had better let the Minister have a short period to respond. However, on behalf of colleagues right across this side of the House—and I think, by their absence, quite a number of colleagues on that side of the House—we ask the Minister, who is a thoughtful and decent man, to go back to the Chancellor and the Prime Minister, and persuade them to change course.

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[James Murray]

I am just about to come on to the details of the reforms that we have made to agricultural property relief and business property relief. If the hon. Gentleman waits a moment, he will see some of the reasoning behind the decisions that we took.

The Government recognise the role that the reliefs play, particularly in supporting farms and small businesses, and under our reforms that will continue. The case for reform is underlined by the fact that the full unlimited exemption, which was introduced in 1992, had become unsustainable. Under the current system, the benefit of the 100% relief on business and agricultural assets has become heavily skewed towards the wealthiest estates. According to the latest data from HMRC, 40% of agricultural property relief benefits the top 7% of estates making claims. That is 117 estates claiming £219 million of relief.

It is a similar picture for business property relief. More than 50% of business property relief is claimed by just 4% of estates making claims. That equates to 158 estates claiming £558 million in tax relief.

[Mr Angus MacDonald]

Will the Minister give way?

[James Murray]

I have only a few moments, so I will make progress.

The Leader of the Opposition has made it clear that she would prioritise that tax break within the public finances, but we do not believe it is fair or sustainable to maintain such a large tax break for such a small number of the wealthiest claimants, given the wider pressures on the public finances. It is for those reasons that the Government are changing how we target agricultural property relief and business property relief from April 2026. We are doing so in a way that maintains a significant tax relief for estates, including for small farms and businesses, while repairing the public finances fairly.

Let me be clear that individuals will still benefit from 100% relief for the first £1 million of combined business and agricultural assets. On top of that, as we know, there will be a 50% relief, which means that inheritance tax will be paid at a reduced effective rate of up to 20%, rather than the standard 40%. Importantly, those reliefs sit on top of the existing spousal exemptions and nil-rate bands. Depending on individual circumstances, a couple can pass on up to £3 million to their children or grandchildren free of inheritance tax.

Crown Estate Bill [Lords]

Angus MacDonald Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I will speak about the Crown Estate’s borrowing powers and the broadening of its investment scope. These changes are intended to enhance the Crown Estate’s capacity to support our ambitious goals for renewable energy, nature recovery and economic growth. The Bill is undoubtedly a significant step forward in enabling the Crown Estate to play a greater role in the transition towards net zero. I fully support its efforts and ambitions.

The partnership between the Crown Estate and Great British Energy to develop offshore wind projects is exciting. Many of us have been trying to get Great British Energy to include community benefits and community ownership within its reach, but we have failed to do so. [Interruption.] It does? Okay—we have tried hard. A measure is to be considered in the other House on 13 January to try to get it to do that, so perhaps Labour Members know something that I do not. Anyway, that is good news.

I want to focus on a critical element that is close to my heart, and perhaps even more familiar to my colleagues, as I bang on about it. That subject is, of course, community benefits. Those of us in remote and rural Britain pay far more for energy than those who can access mains gas, and we also have a much higher level of poverty; especially fuel poverty. Communities hosting renewable energy projects, and particularly those overlooking offshore wind farms, deserve to see tangible benefits from those developments. The Bill presents an opportunity to ensure that offshore wind farm projects—indeed, all renewable energy projects—not only meet our national and global ambitions but provide meaningful real-world advantages to the people most impacted by them.

There are numerous examples from overseas of where community benefits have become significant. One such example is from Germany, where in the North sea archipelago of Heligoland three offshore wind farms generated €22 million in 2016. These are massive amounts of money. While the Bill’s focus is on increasing borrowing powers and investment flexibility, there is no mention of how communities will benefit from these developments, although perhaps Labour Members know something that I do not.

[Melanie Onn]

Is the hon. Member aware of the example of Ørsted, which has just given £1 million to the Horizon Youth Zone to support all young people across the Great Grimsby and Cleethorpes constituency and further afield with new activities and free mentoring and support outside school hours? Not only that; it sponsors local fun runs. RWE, another company operating in my constituency, is supporting education activities. Both those companies are not only employing masses of people but engaging with schools to support young people to have the skills and talents to come and work for them. That is the reality of community benefit.

[Mr MacDonald]

Funnily enough, as a Highland councillor, it is a subject that I have spent many years working on. Highland council—I know this does not relate to the Crown Estate in England and Wales—had £9.1 million of community benefits and Scotland as a whole had £23 million. This is an industry worth hundreds of billions of pounds across the whole of Britain, so we should have, say, 5% of that as community benefits, which would be transformational for Cornwall, Devon, Pembrokeshire and indeed Scotland. I encourage the House to consider how the Bill could establish a robust framework for community benefits that could serve as a model for renewable energy projects across the whole of the UK, working closely with the Scottish Crown Estate.

The Bill represents a vital step forward in enabling the UK to meet its net zero targets and enhance energy security. However, it is equally vital that we legislate to include statutory powers for the Crown Estate in England and Wales, and indeed in Scotland, to ensure that these transformative projects see their fair share of community benefits for communities.

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[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

I welcome the Government’s proposed powers to enable the Crown Estate to drive greater investment in the country’s future to boost energy security, nature recovery and economic growth. It should be allowed to access private sector funding to expand and get the greatest benefit possible from its access to financing, and not retreat to markets having to survive on their own and not delivering, or recourse to the public sector for critical funding to grow industries.

I want to focus on clause 3, which deals with sustainable development, and to pick up some of the comments that were made in Committee in the House of Lords. My constituency is at the forefront of the delivery of practical skills in the day-to-day operations and continued maintenance of the offshore wind sector, and my constituents benefit from apprenticeships, introductory training, continuous professional development and, critically, long-term, well-paid employment in the sector. The Bill has the potential to open up possibilities for broader community engagement through the promotion of various educational opportunities in numerous workstreams.

Having worked with the Crown Estate in a previous role before returning to this place, I must say that I have had a slightly different experience from my hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell). I know that in recent years the Crown Estate has sought to expand the areas of work in which it actively engages, and has provided immense support for the renewables sector. We should bear in mind that there has been a collective understanding—not just within our Government—that for energy security purposes we must, as a minimum, look at renewable energy sources to supplement our other energy sources as we progress, and as we view the global economics and the changing impact of the energy industry and the way in which others are maximising this change to encourage wealth into their countries.

We know that not just the present Government but Governments around the world, and previous Governments in this place, have recognised that we should accept and embrace this move, seeing it not as something divisive or prohibitive to other sectors but as something that will be the mainstay of this country. Simply objecting to it and saying no will not help to move things forward. We should be working together, as I think the renewables sector has been endeavouring to do and has been enabled to do in a much stronger way through the partnership that the Crown Estate has facilitated, to unite the many different relevant parties in seeking appropriate solutions to some of the most testing and challenging issues that the industry faces, including people and skills, environmental impacts and derogations, the unlocking of the UK supply chain, spatial squeeze, offshore asset security—which has not been discussed today—and aviation impact, which has not been referred to either. The Crown Estate has played a critical role in ensuring that the voices are heard in each of the areas where this new industry is having an impact—and it is having an impact, as I think the industry itself recognises—in the knowledge that this must be done in collaboration and co-operation with the other existing organisations, industries and operators in those sectors.

Through the evidence and change programmes, it became clear to everyone involved, including those who might have been less than happy that a new industry was making things different and challenging in certain circumstances, that the earlier these issues were considered as part of the Crown Estate’s planning and scoping, the easier it was to fulfil the existing and basic expectations of both the Crown Estate and the renewables sector from a Government perspective. Earlier consultation and partnership working on common difficulties and challenges meant that agreeable solutions were found earlier, and it was then possible to build acceptable frameworks for future use. Some of that is in evidence now, in the context of the Celtic sea developments and the fishing communities in those areas.

The right hon. Member for Orkney and Shetland (Mr Carmichael), who is my co-chair on the all-party parliamentary group on fisheries, rightly raised the issues and concerns that the fishing communities will have. However, in Committee in the Lords, there was a conversation about the regional wealth funds that the Bill will create. It seems to me that there is a prize opportunity for support and training for the fishing industry, to make it work alongside the renewables sector and to look at the opportunities that will come from the decarbonisation happening in that sector when it comes to offshore vessels and flexibility of service, so that a fishing vessel is not just a fishing vessel. Can it be used for multiple purposes? Can it be used for surveys? It can, because fishing vessels are already being used for surveys. There is an opportunity for the Bill to support those other industries, and we should not lose sight of that.

With these new ways of working, there is a great opportunity to expand the level of knowledge and understanding of the sector, to be able to teach the next generation of young people about how things really work in practice. To date, that has been a bit more experimental, I think it is fair to say, but because the sector is maturing and all the organisations involved have become more experienced, there is much more collective learning, and there are clearer lines of guidance that the Crown Estate has a definitive interest in ensuring a wide and common understanding.

I would like to focus on the people and skills area of work, which the Crown Estate has had some engagement in. There is an acceptance that the workforce will grow and needs to grow substantially. For areas such as mine and other coastal communities, ensuring that we have a skilled workforce ready to go is imperative. It is much more effective to ensure that people have the skills to get the jobs to earn their own way and have some pride in their life, working in an industry they are proud to be working in, than to simply rely on other community benefits that may well be short-lived and do not have the long-term impact that growing a brand-new industry around the country delivers. We know that the workforce will need more than three times its current numbers—I had written in my speech “over the next decade”, but I do not think that is true; actually, it is over the next half a decade, which is hardly anything at all—to meet the needs of the industry, and that is across all the different areas I mentioned such as environmental impact and aviation.

[Mr Angus MacDonald]

May I come back to the community benefits, which the hon. Member brought up in her intervention on me? The community benefits will be hundreds of millions for 25 years or the life of the project. It will be absolutely transformational to the most rural parts of Britain; it is not just something that will come and go.

[Melanie Onn]

I thank the hon. Member for that comment. It is about how we view community benefits and how embedded in communities they are. The hon. Member for South Cambridgeshire (Pippa Heylings) talked about things being done with communities, not to them. This is about what will best benefit a community and having that discussion at an early stage, which is what I have been advocating.

The traditional understanding of community benefit is payment for a local football team’s shirts or things like that, but that is not what I see this industry or this Bill unlocking. It needs to be about transforming local communities, which, critically, comes through skills, through the supply chain and through delivering industrial benefits that local people have access to. That is the thrust of what I am trying to say—clearly I have not been successful, if the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) did not see that, but I will persevere, which I am sure he will be delighted to know.

Interestingly, the Crown Estate has recently supported a community project in my constituency called Projekt Renewables—it has a “k”, giving it a slightly Nordic slant on things. It is a box park construction next to the Grimsby Fishing Heritage Centre, bringing together the old and the new, and the past, present and future. It provides community education, and it is a space to bring together schools, businesses and visitors to learn about the renewables sector in Grimsby, including its history, its importance and the possibilities for the future. The community education piece is incredibly important, and we do not talk about it enough.

The Crown Estate recognised that there is a need for wider understanding of activities, some of which are significant or significantly disruptive in local areas, so that residents can better understand what is happening in their place. I keep talking about opportunity, because some Members have not seen this Bill as an opportunity for expansion, investment, growth and long-term change. The Bill actually unlocks quite a lot of that. There is an opportunity not only for greater expansion of public information and education, but to have a single standard of available materials and off-the-shelf information to support local areas. That would help provide a general understanding that would stop individual companies producing their own bespoke education programmes. We should have something that is uniform and that provides the facts, and then companies can build on that if they want. It would be a much stronger offer, and more beneficial to collective understanding because of the uniformity.

However, there are further steps that the Crown Estate could take to provide local people with skills, to guarantee sustainable development. In my area, the freeport is already undertaking some work on skills. Under the new devolution plans, there is provision for skills to be a key strand of mayoral responsibility, but how can the Crown Estate fit into that model? I believe that it really must do so to maximise the benefit of all the organisations, and to have a common theme and common objectives. Arguably, the Crown Estate has a lot more to lose if the skills are not there for offshore deployment and long-term maintenance support.

New projects such as the Able quay, which is just outside my constituency, will make offshore wind ambitions deliverable. It will open up the supply chain investment opportunities that we have been waiting for—frankly, for far too long—and enable the Crown Estate to generate significant revenue and value for the UK. The Crown Estate could do so currently but, under the new proposals in the Bill, has an even greater opportunity to invest in infrastructure such as the Able quay. Port facilities are holding back the sector and the core skills that are currently in shortage in the industry, as well as those that we know will become a critical blockage in the future once the newly consented projects get under way.

If we really want to maximise the value of projects and see the UK get the biggest bang for its buck, it is essential to use every arm of every organisation to actively support them in overcoming the challenges. I know that the Crown Estate is willing—and I have seen it in action, so I know that it is also able—but I wonder whether this Bill needs to say explicitly that it has a duty to focus on infrastructure and skills, which are so critical. Not having those prerequisites in place could make projects undeliverable, and no developer or supply chain company can oversupply or invest ahead of decisions, because the Crown Estate makes so many of the final decisions, alongside the Government. No one can invest until those decisions are made.

Devolution and the creation of GB Energy—two great leaps in structural change in this country—give a great opportunity for new public institutions to be created in order to intervene in skills. In the Humber region, I would like to see an arrangement or organisation that brings together the Crown Estate, the new devolved authorities, the freeport and the Humber Energy Board. With support from the likes of GB Energy and central Government, it could back a coherent approach to supporting skills and avoiding their becoming a barrier to project delivery, as well as reduce costs by supplying enough talent for the whole sector, rather than each project chasing the same small pool of people.

We should use the Bill to catalyse substantial and lasting change, providing employment opportunities for generations to come. I understand that Crown Estate Scotland is already carrying out similar efforts, actively promoting skills and job opportunities through initiatives such as community capacity grants, which support social enterprise projects and training courses, and land-based skills education, so I do not think that is beyond the scope of the Bill.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Angus MacDonald Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[James Murray]

I will make some progress, and take more interventions shortly. For me, keeping the promises on income tax, employee national insurance and VAT is crucial, but making those decisions and needing to get our country back on track has meant that other tough decisions in the tax system have been necessary. That is why, at the Budget, we took the decision to increase national insurance contributions from employers, while, as I mentioned to my hon. Friend the Member for Bradford East (Imran Hussain), increasing protections for small businesses and charities. It is those measures that the Bill seeks to introduce.

I will set out the detail of how the Bill seeks to achieve that. First, it increases the main rate of employer secondary class 1 national insurance contributions from 13.8% to 15%. It decreases the secondary threshold for employers—the threshold above which employers begin to pay employer national insurance contributions on their employees’ salary—from £9,100 to £5,000. At the same time, as I have mentioned to hon. Members, the Bill increases the protection for small businesses by more than doubling the employment allowance from £5,000 to £10,500. That increase in the employment allowance, alongside the removal of the £100,000 eligibility threshold, means that all eligible businesses will be able to employ four full-time workers on the national living wage without paying any national insurance contributions.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Is the Minister aware of the complete disaster this will cause for Scottish hospitality businesses? We do not have business rates relief, as businesses do in England Wales. We have a very large number of young people in the hospitality sector. For example, for someone working part-time for 25 hours a week on the minimum wage, their salary is £15,912, and the national insurance has just gone up by 74%. This is wiping out the hospitality industry in Scotland.

[James Murray]

I recognise that the decision we are taking will have impacts, and in some cases it will mean that employers have to take difficult decisions. We are, however, reforming business rates to help retail, hospitality and leisure on the high street, so I would suggest that the hon. Member speaks to the Scottish Government about their doing something to support businesses in the same way; I cannot speak on their behalf.

Taken together, the measures, should the Bill pass, will mean that 865,000 employers pay no national insurance at all next year, with over 1 million—more than a half of all employers—paying the same or less than they did previously. I have been clear, however, that I recognise that there will be impacts on some employers as a result of the changes. While many small businesses and charities will be protected through the employment allowance increase, others will have to contribute more.

--- Later in debate ---

[Luke Murphy (Basingstoke) (Lab)]

For too long, this country has suffered from irresponsible and short-sighted fiscal management from Conservatives, saddling working people with the bill for their broken promises, incompetence and chaotic approach to governing. They hiked taxes for working people to record rates and left behind a £22 billion black hole in the public finances. Then, to add insult to injury, the Conservatives spend their first few months in opposition washing their hands of 14 years of failure in power. That changed on 30 October when my right hon. Friend the Chancellor of the Exchequer gave a historic Budget, which led to this Bill. The Budget delivers the swift action needed to repair the immediate fiscal crisis and a long-term plan to repair our public finances, while also laying the foundations for a decade of national renewal.

We heard a lot from the shadow Minister, the hon. Member for North Bedfordshire (Richard Fuller), and no doubt we will hear much from Opposition Members, about the Bill. But really, the gist of their argument is that they want all the benefits of the Budget, but have no idea how to pay for it. Boris Johnson may no longer be the leader of the Conservative party, but his belief in cakeism lives on. On cake, they are pro having it and pro eating it.

The right hon. Member for Richmond and Northallerton (Rishi Sunak) attempted at first to wean the party off its cakeism addiction. Running in the first leadership context, he told his party not to believe in

“comforting fairytales that might make us feel better in the moment, but will leave our children worse off tomorrow”.

But under his leadership, the Conservatives once again succumbed to the fairytale of cakeism. That is why they lost the general election. The hon. Member for North Bedfordshire spoke of polls, but he will remember that they lost an election just a few months ago because they could no longer handle the challenges of the world as it is. They ducked the hard choices and, in opposition, they continue to duck them and to drift away from reality.

Back in the real world, let me remind the House what this Government are delivering, funded in large part by the Bill. They are delivering £25.6 billion in increased NHS funding, ensuring that our health service can meet rising demand and creating 40,000 more elective appointments every week. They are delivering more teachers, and investing £1 billion in special educational needs provision. They are investing billions in surgical hubs and diagnostic scanners. There is a further £1.5 billion to rebuild crumbling schools and ensure that every child learns in a safe environment. Those are investments that Conservative Members must surely support.

[Mr Angus MacDonald]

Does the hon. Gentleman not agree that the impact of this measure is hitting the most vulnerable businesses and the most vulnerable charities throughout the United Kingdom? Surely a much better way of raising the money—which I can understand is needed—would be to raise corporation tax, or to increase taxes on, for instance, social media or the very largest companies.

[Luke Murphy]

The Bill, and the Budget, protect the smallest businesses, as the Minister has already explained. It is disappointing to hear the hon. Member sharing the Conservative party’s cakeism. Opposition Members must surely support the investments that the Bill will deliver, but if they oppose the Bill, how do they propose to fund them? Turning up at the supermarket with a long shopping list but no means to pay does not work in real life, and it does not work in government either.

The Conservatives have clearly learnt nothing from their kamikaze mini-Budget of 2022. Perhaps they believe that cakeism has just not been tried properly. This Government, by contrast, have taken the tough but fair decisions to protect working people, invest in our NHS and rebuild our public services. For too long the burden of tax has fallen on working people, but under this Government, larger businesses and the richest will pay a little more in tax to help fund the NHS and other public services on which working people rely. Where the Conservatives would either cut public services or pick the pockets of working people, this Government are asking those with the broadest shoulders to pay a bit more to help repair our broken public services—broken over the last 14 years. This Bill will help to deliver on the priorities of my constituents in Basingstoke, who will be able to see a doctor when they need one, and schools will be able to deliver the best—

--- Later in debate ---

[Dr Sandher]

I politely suggest that the right hon. Gentleman should not set up a polling company, as that is not an effective sampling strategy. Deary me. Where do I start?

Anyway, we are insulating our homes and hiring more nurses and teachers—and yes, we will pay those nurses and teachers enough money to keep them, because that is what responsible Governments do. All that investment needs to be paid for. That is why we are raising national insurance contributions for the largest employers, with £3 out of every £4 raised coming from the largest 2% of businesses. That will raise some £23 billion of investment that every family and business will benefit from. Crucially, we are raising that money while protecting the smallest businesses.

[Mr Angus MacDonald]

The hon. Gentleman keeps talking about the largest businesses, but the Government are completely wiping out small and medium-sized businesses across the whole hospitality and retail sector. This is a catastrophic piece of legislation. He talks about a kamikaze Budget; we are considering a kamikaze Budget right here, today.

[Dr Sandher]

Not only are we protecting the smallest businesses by raising the employment allowance, but there will be business rates relief for the hospitality businesses to which the hon. Gentleman refers.