Finance Bill

Baroness Lawlor Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 19th March 2025 Lords Chamber

[Baroness Lawlor (Con)]

My Lords, I welcome the noble Baroness, Lady Caine of Kentish Town, to the Benches and look forward to her many contributions in this House. I am grateful to the Minister for setting out the Government’s aims in the Bill and would like to comment on the overall direction of travel, which we see before us, in terms of the Government’s aim of achieving economic growth.

This aim of growth is indeed laudable but the measures anticipated in this Finance Bill, along with measures proposed elsewhere, are not the way to promote it. Rather, the evidence is that raising tax, higher borrowing and increased public spending as a proportion of GDP hinder rather than help growth. Here, we have all three. Higher tax of almost £40 billion each year in this Parliament will take money out of the productive entrepreneurial economy. The increase in capital gains tax, both its higher and lower rates, in the energy profits levy for oil and gas firms—up to 38%—in stamp duty on second homes, and in changes to non-doms come on top of the payroll taxes in the employers’ NICs Bill: £25 billion per annum is levied on businesses by lowering the threshold at which employers start paying NICs and increasing the level to 15%.

The consequences have already been felt. Unemployment went up in the last quarter of 2024 by 213,000 people to reach 4.4%, up from 3.9% the previous year. Entrepreneurs and businesspeople are fleeing the UK with their assets; my noble friends Lady Neville-Rolfe and Lord Leigh of Hurley have both referred to this. I echo his question about the taxes forgone and the costs. Have any revisions been made to what this is supposed to yield?

The impact of higher tax on business and individuals has its mirror in the charitable and educational sector, to which noble Lords on this side of the House have already referred. Under the Bill, VAT will be levied on independent schools, including those which educate children with special needs. Early reports have confirmed that they are cutting staff numbers. They are also reducing the number of bursaries and the range of subjects taught. Pay and pensions are being cut, as well as jobs, and I am afraid that school closures have already been announced—we have had nine announced so far this year.

Overall economic growth is now down on expectations. For 2025, we are looking at 0.9% and next year at 1.4%, instead of the rather dismal 1.5%. The state and the public sector are growing, in terms of cost and numbers. The increase in the size of the state has to be paid for by taxing the productive and innovative private sector, and higher borrowing is costing £32 billion a year. At the time of the Budget, the public sector had increased by 28,000 people between July and October. This is the only growth we see from the measures being taken by the Government.

There is another, more sinister side to what this Bill and its policies imply: that the Government have declared war on the private sector; that they want to impose penalties on those who succeed, while referring euphemistically to broad shoulders. The truth is that by penalising the private sector in this way, the Government are penalising the whole economy. Despite its apparent move to the right—I welcome the cuts to quangos such as NHS England—Labour still appears to see the world in terms of class division: employers versus employees and haves versus have-nots, but this is myopic.

The victims of this Bill are the whole of society: the jobless with no job on offer and none in the offing, the employee with pay frozen and the child whose school closes. To judge by this Bill, we are looking at a revolutionary Government. They threaten to devour not just Britain’s wealth but the freedoms of its people and the settled ways in which they have ordered their society, the fruit of their efforts over centuries, paid for by their work, shaped under the laws they have ordained, and for which people from all political sides have come together to enable a state which knew its place.