Finance Bill

Ben Lake Excerpts

Report stage
Monday 3rd March 2025 Commons Chamber

[Jim Shannon]

The hon. Lady makes her point succinctly. I hope that the Minister has heard her comments about the impact. Her concerns are certainly my concerns—indeed, the concerns of all Members on the Opposition Benches. She referred to the review of the impact on small and medium-sized enterprises. I understand that new clause 4 will not be pressed to a vote, but if it were, it is another that my party would support.

[Ben Lake (Ceredigion Preseli) (PC)]

Does the hon. Gentleman share my concern that there seems to be a disconnect between some of the statements made by the Government about the impact, or lack of impact, of the measures on small and medium-sized enterprises, and the fact that, week after week, small businesses and family businesses tell us, as constituency MPs, that they will have to reconsider much of their investment and recruitment plans for the coming year as a result of the measures in the Bill?

[Jim Shannon]

The hon. Gentleman is absolutely right. That is what my small and medium-sized enterprises tell me—and, I believe, everyone else on the Opposition Benches—about that.

Ultimately, whenever the national insurance contributions are passed on to businesses, they will pass it on again to the customers—the wee man and the wee woman. They are the people that the Labour party—the party of conscience—says that it represents, but it will penalise them.

Crown Estate Bill [Lords]

Ben Lake Excerpts

Report stage
Monday 24th February 2025 Commons Chamber

[Henry Tufnell]

I thank the right hon. Lady for her intervention. I sometimes feel, though, that the ideas of her party are slightly for the birds. The idea of devolution—where is their plan? There is no plan. What are the practicalities?

[Ben Lake (Ceredigion Preseli) (PC)]

I thank my friend and constituency neighbour for giving way. The plan is quite simple: we could look at what is happening at this very moment in Scotland.

[Henry Tufnell]

The issue, though, is the practicalities. Is the hon. Gentleman going to draw an artificial line in the Celtic sea? What about the issue of consenting? What would that do for the leasing rounds, when certainty of investment for the private sector is so critical at this stage?

Furthermore, other Government agencies and Departments have to take account of this economic vision. In its latest contract for difference round, the Department for Energy Security and Net Zero set a criterion of achieving shorter supply chains, in order to ensure that manufacturing facilities, installation firms and ports are located in areas of deprivation. It also adheres to science-based targets, which are goals that businesses set to reduce their greenhouse gas emissions in line with obligations under international treaties, so that we can reach net zero by 2050.

The national wealth fund has an overall goal of increasing investment in resilient and sustainable infrastructure to support the UK’s net zero transition, and to contribute to improved local economic opportunity and productivity. In partnering with the private sector and local government, the national wealth fund has two clear strategic objectives: to tackle climate change and to support regional and local economic growth.

Great British Energy facilitates, encourages and participates in the production, distribution, storage and supply of clean energy, the reduction of greenhouse gas emissions, improvements in energy efficiency and measures for ensuring the security of energy supply.

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

It is a pleasure to speak on Report, Madam Deputy Speaker. I will focus on amendment 4 and new clauses 5 and 6, which I tabled.

The Bill was developed under the previous Conservative Government to increase the Crown Estate’s ability to compete by providing a broader power to borrow, in order to maintain and enhance the value of the estate and the income derived from it. The assets managed by the Crown Estate, which total £15.5 billion, are not the property of the Government, nor are they part of the sovereign’s private estate; they are held in right of the Crown. Appropriate scrutiny of the Crown Estate is therefore essential, which is what the amendment and new clauses I have tabled seek to ensure. Over the past decade, the Crown Estate generated £4.1 billion for the nation’s finances, and it believes that the measures in the Bill will enable it to generate an additional £100 million in revenues to the Treasury by 2030, which is a prize worth seeking.

Before speaking to the measures in my name, I turn briefly to new clause 1, which proposes devolution of the Welsh functions of the Crown Estate to the Welsh Government. I wonder whether the hon. Member for Ynys Môn (Llinos Medi) has support from businesses for this change, as splitting the Crown Estate at this time would introduce risk for assets and revenue streams. In Committee, we heard about the potential problems and complexity of licensing of the Celtic sea, to which the hon. Member for Mid and South Pembrokeshire (Henry Tufnell) just referred.

[Ben Lake]

I am very interested to hear the hon. Gentleman’s arguments against devolving the administration of the Crown Estate to Wales. The previous Government— his Government—devolved those same powers to Scotland. Can I ask him, very simply, why it works for Scotland, but is too complicated for Wales?

[James Wild]

We are dealing with the Bill in front of us today. To do so at the moment would be too complex for the licensing reasons and other reasons set out in Committee, which could undermine the returns that would be made for taxpayers, whether in Wales or other parts of the country.

The hon. Member for Mid and South Pembrokeshire spoke to amendment 5, a version of which was moved in Committee on his behalf. We recognise that the amendment has been revised. However, as I said in Committee, we are cautious about putting more obligations on the Crown Estate than clause 3 already does; there is danger of the overreach that he spoke about. I am sure he will be listening to the Minister’s speech with some interest.

The kernel of the Bill is the expansion of the power of the Crown Estate to borrow, but there is a lack of parliamentary oversight on borrowing levels. Amendment 4, which appears in my name, would limit borrowing to a net debt-to-asset value ratio of no more than 25%, which could be amended by affirmative regulations. That would, I believe, be a proportionate check on this new borrowing power. When pushed in Committee, the Government again stated that limits on borrowing are best set outside legislation in a memorandum of understanding, but a memorandum of understanding is all too easily altered at the stroke of a pen—a point the Minister did not address in Committee. Will he give an undertaking, at the very least, that any changes to a memorandum of understanding would be reported to Parliament?

Given that Parliament is being asked to remove the restriction on borrowing and that the Government agree there should be a limit, I struggle to see why the cap should not be set in legislation, with the ability to amend it. Borrowing more than 25% carries risk, which could ultimately affect the sustainability of the estate. That is why the Government themselves have accepted that there should be a limit. As this new power affects assets held on behalf of the nation, it should be subject to control. This would be a perfectly reasonable check, and I hope Members will back it.

New clause 5 would require the Crown Estate to seek Treasury approval for disposals amounting to 10% or more of its total assets, and then to lay a report before Parliament. Disposal of assets has been an important part of the discussions throughout the proceedings on the Bill, both here and in the other place. Indeed, clause 5 was introduced after pressure to require Treasury consent before disposing of any of the Crown Estate’s rights or privileges in relation to the territorial seabed. That is a welcome safeguard, but can the Minister conceive of any circumstances in which the Government would approve of such a sale? Can he give a commitment that national security would be at the fore in any consideration of such a proposal? Would Ministers come to the House before agreeing to any such disposal?

In Committee, the Minister stated that the current process dictates that the Government will be consulted on any potential sale of a nationally significant asset. How does he define nationally significant? He also argued that requiring Treasury consent for large disposals would undermine the flexibility that the Crown Estate needs to operate commercially, but the proposed new clause simply requires Treasury consent to be sought and then reported to Parliament. The Crown Estate will not suddenly decide tomorrow to dispose of an asset; it will go through its internal processes and business cases. A version of those papers could be provided to Ministers and, depending on the Ministers, there could be a very rapid approval process that does not compromise flexibility but ensures accountability. These assets are held for the benefit of the nation, and we should ensure some form of transparency and scrutiny.

New clause 6 would require the Chancellor to lay before Parliament any partnership agreement between the Crown Estate and GB Energy. That is fundamental, as without being able to see details of the agreement, we do not know what has been agreed. There is a lack of clarity over how this new partnership will work. We are still concerned that it has been created for political rather than economic reasons. The Opposition are sceptical about what the Government say about GB Energy, because during the election Labour claimed that GB Energy would cut energy bills by £300, but bills are going up. The chairman of GB Energy has refused to say when people can expect £300 off their energy bills. We know that GB Energy will spend £8.3 billion of taxpayers’ money, but will not generate any energy, be an energy supplier or save families £300.

We are concerned that at all stages the Government have resisted greater transparency. When pushed on Second Reading and in Committee, the Exchequer Secretary said that while the partnership agreement itself will not be published since it will be commercially sensitive, the Crown Estate is committed to publishing information relating to the partnership as part of its existing annual report. However, the provisions to include that in an annual report could result in a considerable lag after such an agreement becomes operational and in only limited detail being published. Frankly, that is not good enough, which is why we have tabled new clause 6.

Transparency is important because we do not know how much the Crown Estate may invest in GB Energy’s projects. We do not know what level of funds from this borrowing power could be used for that purpose. When I asked the Crown Estate how it would decide between projects that GB Energy favours and others that may have a higher rate of return, I was told that there would be a business plan for the partnership. That shows a further lack of transparency, as I assume the Minister will not place that before the House. I also asked about decision making for the partnership, and the response was:

“The intention is that both parties will seek agreement on investment decisions whilst retaining their own independence. The Crown Estate will not be compelled to agree to anything which it does not wish to agree to in fulfilment of its statutory duty.”

I note the use of “intention” and “compelled”.

There is a lingering concern that Ministers may pressure GB Energy and the Crown Estate to invest in the Energy Secretary’s pet projects. Clearly, the chairman of GB Energy is very close to the Labour party, and nominating a Labour party donor as the chairman of the Crown Estate adds to this concern. Publishing the agreement could help allay concerns about the Government’s intentions.

If the Minister contends that the agreement, which does not yet exist, is too commercially sensitive, will he consider making a redacted version available? As I said in Committee, will he consider providing the agreement to the Public Accounts Committee on a confidential basis? As a former member of that Committee, I know of a precedent for that: in January 2018, the Cabinet Office provided a risk register of strategic suppliers to Government—a very sensitive document—to that Committee, which provided assurance on behalf of the House. I remain concerned about political pressure being put on the Crown Estate and urge Members to support our new clause 6, which would simply require the Chancellor to lay the partnership agreement before Parliament.

The Crown Estate Bill will deliver the modernisation of the Crown Estate. Our amendments and new clauses would ensure appropriate oversight and transparency as it delivers on its primary duty to maintain and enhance the value of the assets and the return for taxpayers.

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[The Exchequer Secretary to the Treasury (James Murray)]

I thank all hon. Members who have contributed to the debate, and provided further detail about their amendments or concerns.

I start by making it clear that the Government have carefully considered all amendments throughout the passage of the Bill. Where we have agreed with the intent behind an amendment, we have worked hard to find an appropriate way forward. That was evidenced in the changes made by this House to ensure appropriate protections for our seabed. As a result of changes made to the Bill, the Crown Estate will now be required to seek the approval of the Treasury for any permanent disposal of the seabed. I thank the Opposition for a constructive debate on that matter. Alongside that, further changes made in the other place have helped to strengthen the Bill, including changes to require the appointment of commissioners with special responsibility for giving advice about England, Wales and Northern Ireland; a reporting requirement in respect of activities with Great British Energy; and a requirement relating to sustainable development. In that spirit, I have considered the amendments that are before us.

I thank the hon. Member for Ynys Môn (Llinos Medi) for tabling new clause 1, under which, within two years of the day on which the Act commences, the Treasury must have completed the transfer of responsibility for management of the Crown Estate in Wales to the Welsh Government. It would allow the Treasury, by regulations, to make provision about the transfer relating to reserved matters as necessary, and would require it to ensure that no person in Crown employment has their employment adversely affected by the transfer of responsibility.

I also thank the hon. Member for South Cambridgeshire (Pippa Heylings) for tabling new clause 4, to which her colleague, the hon. Member for Brecon, Radnor and Cwm Tawe (David Chadwick), also spoke. It would require the Treasury to set out a scheme for transferring all Welsh functions of the Crown Estate commissioners to Welsh Ministers or a person nominated by Welsh Ministers. The Welsh functions would consist of the property, rights or interests in land in Wales, and rights in relation to the Welsh zone. As I set out in Committee, the Government believe that there is greater benefit for the people of Wales and the wider United Kingdom in retaining the Crown Estate’s current form.

New clause 4 would most likely require the creation of a new entity to take on the management of the Crown Estate in Wales—an entity that, by definition, would not benefit from the Crown Estate’s current substantial capability, capital and systems abilities. It would further fragment the UK energy market by adding an additional entity and, as a consequence, it would risk damaging international investor confidence in UK renewables. It would also risk disrupting the National Energy System Operator’s grid connectivity reform, which is taking a whole-system approach to the planning of generation and network infrastructure. Those reforms aim to create a more efficient system and reduce the time it takes for generation projects to connect to the grid.

[Ben Lake]

I am grateful to the Minister for outlining his concerns about devolving the Crown Estate to the Welsh Government—he listed a number of them. Am I right in saying that he believes that the devolution of powers from the Crown Estate to Scotland has fragmented the market, and is in some way to the disbenefit of people in Scotland?

[James Murray]

The matter that we are considering today, through the two new clauses that I have mentioned, is the proposal by Opposition parties for devolution to Wales. We are not analysing what may have happened in Scotland, historically; we are looking at the proposals put to us in those new clauses, which I am addressing.

To be clear, the cumulative impact of the changes that the hon. Member for Ynys Môn is suggesting in her new clause would likely be to significantly delay the pathway to net zero.

Inheritance Tax Relief: Farms

Ben Lake Excerpts

Monday 10th February 2025 Westminster Hall

[Charlie Dewhirst]

rose—

[Ben Lake (Ceredigion Preseli) (PC)]

rose—

[James Murray]

I will respond fully to the point made by the hon. Member for Angus and Perthshire Glens (Dave Doogan) first. As I was saying before he intervened, the data from HMRC, to which other Members have referred, shows that 40% of agricultural property relief benefits the top 7% of estates. It is a similar picture for business property relief, more than 50% of which is claimed by just 4% of estates—that equates to 158 estates claiming £558 million in tax relief. Given the wider pressures on the public finances, we do not believe that that is fair or sustainable, and we felt it was appropriate to reform how the reliefs operate.

--- Later in debate ---

[James Murray]

I thank the right hon. Gentleman for his further intervention. In understanding how the reliefs are reformed, the important point is to focus our conclusions on the data on claims. In understanding how many estates are likely to be affected by the changes, the data that matters is the data on claims. That is why the information that I was setting out around where the bulk of the relief currently goes is based on claims data. In a moment I will come to some other statistics that were referred to in the debate.

[Ben Lake]

rose—

[Mr Carmichael]

rose—

--- Later in debate ---

[James Murray]

I thank the right hon. Gentleman for his intervention, but let us consider those who will still have generous protection from inheritance tax under the reformed system that we have announced. I point the right hon. Gentleman towards the fact that the reliefs in the reformed system, when taken together with the spousal exemptions and the nil-rate bands, will mean that, depending on people’s individual circumstances, up to £3 million can be passed on by a couple to their children or grandchildren, free of any inheritance tax.

[Ben Lake]

There has been much debate about the discrepancies between the estimate of the Treasury, which states that some 500 farms will be affected every year, and the estimates from the NFU, the Farmers’ Union of Wales, the CAAV, the AHDB—I could name a few more. Is the Minister not concerned, and should it not give the Government pause for thought, that the Central Association for Agricultural Valuers has estimated that in Wales alone the proposals will make an extra 200 family farms subject to an inheritance tax liability? If we are to believe the Government’s estimates, that would constitute 40% of the UK total.

[James Murray]

I am about to come to some of the statistics to which the hon. Gentleman and others referred. I do not have much time, so I will make a little progress before answering some of those questions.

On the point of how the nil-rate band and spousal exemption allowances work together, anything beyond the nil-rate band, the spousal transfers and the 100% full relief will receive unlimited 50% relief, and heirs can spread any payments due over 10 years, interest free. That is a benefit not seen anywhere else in the inheritance tax system.

Growing the UK Economy

Ben Lake Excerpts

Wednesday 29th January 2025 Commons Chamber

[Darren Jones]

Well, I thank my hon. Friend for coming to the House today to inform us of those interesting statistics—I am sure Opposition Members are listening closely. He is right: behind the support for the plans for Heathrow coming forward is not only that we think that we are losing investment and jobs to other countries, but that we are offshoring the emissions of goods being brought in from around the world via other places before they come the UK by other means. That is why we think this plan is good for the country but can also be in line with our net zero commitments. As I say, those details will be set out further in due course.

[Ben Lake (Ceredigion Preseli) (PC)]

It was heartening to hear the Chief Secretary talk about the importance of inclusive growth in every nation and region of the United Kingdom, and that regional growth will be hardwired into the comprehensive spending review and the Government’s infrastructure plans. However, he will be aware that such promises have previously been made to areas such as Ceredigion Preseli, but remain unfulfilled. Will the Chief Secretary therefore explain what investment the people of mid and west Wales can expect to see under his Government’s plans?

[Darren Jones]

I thank the hon. Gentleman for his question and his campaigning on behalf of his constituents. As I am sure he will have seen, the Government recently announced hundreds of millions of pounds of inward investment for skills in the green economy in his side of Wales, in Pembrokeshire, where there is enormous potential both for onshore and offshore wind development, and training people to be able to build those bits of infrastructure. That was the first of what I am sure will be many announcements to benefit his constituents.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Ben Lake Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Ben Lake (Ceredigion Preseli) (PC)]

It is a pleasure to follow the hon. Member for Rochdale (Paul Waugh). I rise to relay some of the concerns that have been raised with me by constituents and businesses. They are concerned not only about the impact of the Bill’s proposals on small businesses in my constituency, but about the provision of public services there.

It has been interesting to listen to various opinions on this matter, but I will begin by pushing back on the implication made by some that the changes in the Bill will not have an impact on small businesses. The fact is that the Office for Budget Responsibility estimates that from 2026-27 onwards, 76% of the total cost of the increased employer national insurance contributions will be passed on through lower real wages. That tells us not only that there will be an impact on businesses, but that contrary to what has been suggested by some in the Chamber, there will be an impact on workers.

Much has been said about the impact on businesses, and I very much agree with those concerns, but I will concentrate my remarks on the impact on public services in Wales. It is worth noting that 30% of the Welsh workforce is employed in the public sector—a much higher proportion that the rest of the UK—so the proposed increase in employer national insurance contributions equates to some £380 million. Clearly, the Bill will therefore have significant consequences for the provision of public services, and it remains unclear whether the additional Government support—or the reimbursement—will meet the increased cost.

Local authorities across Wales already face budget shortfalls of over half a billion pounds. At a time of significant budgetary pressure, Ceredigion county council—one of the county councils in my constituency—estimates that the increase in NICs will total over £4 million in one year alone. Communities deserve assurances that essential services will not be further jeopardised because funding gaps are exacerbated by the changes in the Bill. Can the Minister confirm that the full cost of the increased national insurance contributions will be reimbursed to local government in Wales? Furthermore, will that additional support be recurring? The last thing we want is for additional costs to be covered in years one, two and three, only for local government to face a funding cliff edge after that.

In addition to the direct cost to public authorities, for which the Government have suggested they will provide additional support, we should also bear in mind the other organisations—public and third sector organisations—that are integral to delivering many of the public services that we consider valuable to society. Social care providers are one example. They care for the vulnerable and help to alleviate pressure on the NHS, yet the cost of the NICs increase could be devastating for them. Care Forum Wales estimates that the cost to its members across Wales will total a staggering £45 million. I heard what was said from the Treasury Bench about additional support being allocated in the usual way, but I would like to know how that additional cost will be allocated to Wales. I understand that, in their conversations with the Welsh Government, the Government in Westminster are discussing the additional costs of only the public sector organisations that will be reimbursed directly. There are other examples in the third sector, including citizens advice bureaux, which, although they provide invaluable support to some of the most vulnerable in society, are facing significant additional costs without there being any talk of Government support.

[Graham Stuart]

The hon. Gentleman may have noticed that the OBR had to amend the numbers that it produced after the Budget because it had reduced the cost of compensating the public sector and social care by around £800 million a year. Does he, like me, want the Minister to clarify whether the Government intended to put nearly £1 billion extra into social care costs, and when it was decided, and by whom, that they should not go ahead and should leave social care in the parlous position it now finds itself in?

[Ben Lake]

I very much agree. I hope that the Minister will return to that in her summing up.

I labour the point about the third sector and public sector organisations that do not stand to receive reimbursement from the Government because they are so crucial to delivering many of the public services that we have heard so much about in the debate. There is a real risk that if our social care hubs, hospices, dentists and GPs are not adequately reimbursed, all the Government will do is erode the value of the investment that they claim to be making in those services.

I could also say a little bit about the university sector. Higher education is a very important sector in my constituency: Ceredigion Preseli is home to two universities, Aberystwyth University and the University of Wales Trinity Saint David. Both organisations are currently facing very difficult times, as are most higher education institutions, and both state that they will be dealing with quite significant additional costs next year when the Government’s proposals come into force. There is no talk of additional support for those institutions, so I worry very much that we will lose the incredible economic contribution they make to my constituency, let alone their important social and cultural contribution.

[Luke Murphy]

Is the hon. Member about to come on to the part where he welcomes the largest real-terms settlement for Wales since devolution?

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[Ben Lake]

I am very grateful to the hon. Gentleman for his intervention—we have been blessed with many of his contributions this afternoon. With the Barnett formula, I am not going to thank the hon. Gentleman’s Government for a larger settlement, because that settlement is only a function of spending decisions made to address the needs of public services in England. If they had proposed a reform of the Barnett formula to make it a proper needs-based formula, I would very much congratulate the hon. Gentleman and his Government on doing so.

We all recognise the need to raise revenue to meet the challenges facing our economy. We have heard some alternative suggestions this afternoon—the Government could well have decided to look again at corporation tax, or at least to tackle businesses on the profits they make. Other proposals that the Government might have considered include changes to capital gains tax; for example, a full equalisation of capital gains tax rates could raise £14 billion a year. There has also been no mention by the Government of exploring a wealth tax on the ultra-rich. It is not fair that wealth inequality continues to grow at the expense of our public services and communities. It has been suggested by some that a 2% tax on assets over £10 million, which would target the top 20,000 richest people in the country, could raise £24 billion.

I fear that the proposals in this Bill will have a significant impact on both the workers and the businesses in my constituency, as well as—quite importantly—the provision of public services. We have already heard in this debate many alternative proposals that the Government could have implemented, but decided not to.

Finance Bill

Ben Lake Excerpts

2nd reading
Wednesday 27th November 2024 Commons Chamber

[James Murray]

I will make some progress. That is the impact the changes have on domestic flights and short-haul destinations in economy class. However, in addition to the broad changes in air passenger duty rates, the higher rates for larger private jets will also increase by a further 50% to ensure they contribute fairly to the public finances.

The Bill also renews the tobacco duty escalator and enables His Majesty’s Revenue and Customs to prepare for the introduction of a new duty on vaping products. The Bill increases the soft drink industry levy over the next five years to reflect the 27% increase in consumer prices index inflation between 2018 and 2024, as well as increasing the rate in line with CPI each year from 1 April 2025. Finally, while the Bill increases alcohol duty for non-draught products, in line with retail prices index inflation, duty on qualifying draught products will be cut by 1.7% in cash terms to support pubs, and we will increase the duty discount on products that qualify for small producer relief from 1 February 2025.

The Chancellor has been clear that the Budget was a once-in-a-generation event, at which the Government took difficult but necessary decisions. By taking those tough decisions, the Budget delivers economic stability, sound public finances and stronger public services. On those foundations, we will work day in, day out across the rest of this Parliament to boost investment and growth.

Many of the measures to boost investment are being delivered outside of the Finance Bill, from the planning reform that we got under way within days of taking office to the creation of mega-funds for pension investments, which the Chancellor announced at Mansion House. The Bill introduces additional reliefs for our creative industries, for visual effects within film and high-end TV, which will play a key role in strengthening the UK as a global hub for film and TV. Likewise, the Bill introduces measures to support the transition to electric vehicles, through higher vehicle excise duty first-year rates for hybrid and internal combustion engine vehicles, which boosts the incentive for EVs, and by an extension of first-year allowances for electric cars and charge points until 2025-26.

Above and beyond any individual measures, the impact of the Bill and the Budget that it follows is to lay the foundation for greater investment and growth, through fiscal responsibility, stronger public services and economic stability. We have laid the foundations for creating wealth, jobs and opportunity in every part of this country, enabling people to meet their aspirations for themselves and their families, and making people across Britain better off.

[Ben Lake (Ceredigion Preseli) (PC)]

One of the measures that has a bearing on the provision of public services is the increase to the employer national insurance contributions. I understand the Treasury is in discussion with the devolved Governments and local Government across England to ascertain precisely how much extra funding support is required to offset the increased cost upon their services. Will the Minister give us an update on those discussions and when he believes local authorities and, indeed, the devolved Governments will know how much money in additional support they will receive?

[James Murray]

I am afraid I will not give the hon. Gentleman inside information on any ongoing discussions between the Treasury and devolved Governments. The policy for reimbursing increases in employer national insurance contributions is well established. The last Government followed a similar process in relation to the health and social care levy, whereby Departments, employees and other direct public sector employees are typically refunded the entire increase and third parties, contractors and so on are not. As for the devolved Governments’ settlements, they have their own process to go through with the Treasury. I am sure the hon. Gentleman will understand why I cannot give a running commentary on that, but I am sure that his colleagues will pick that up.

Public Spending: Inheritance

Ben Lake Excerpts

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for raising this issue. I will ask my right hon. Friend the Transport Secretary to meet him and discuss it further.

[Ben Lake (Ceredigion Preseli) (PC)]

I am grateful for the Chancellor’s clarity on the state of the public finances and for confirming that the Government will accept the recommendations of the independent pay review bodies. She explained that doing so incurs an additional in-year cost of £9 billion and that Departments will be tasked with finding savings of up to £3 billion. Can she outline whether she anticipates that they will have to cover the entire cost of the pay review bodies’ recommendations, or does she anticipate that the Treasury will need to make additional funds available to make up the shortfall?

[Rachel Reeves]

I thank the hon. Gentleman for the question. We have asked Departments to absorb £3.2 billion of the pressures, but it will be different in different Departments. We know that in the Department of Health and Social Care and the Department for Education, for example, it will be harder to absorb those pay pressures, given the huge challenges that they face. It will be different in different Departments, as we will set out in written ministerial statements by the relevant Secretaries of State.

Finance (No. 2) Bill

Ben Lake Excerpts

Committee of the whole House
Wednesday 8th May 2024 Commons Chamber

[Drew Hendry]

Had the right hon. Gentleman done any real research, he would know that the figures for the UK are skewed dramatically by the overheated economy of London and the south-east, which buck the UK trend. If he looks at the figures for all the counties of England, including those in the north of England, he will see how the Government are letting down the people of England across the piece. But of course he does not want to do that. He just wants to make a lazy characterisation of what is happening, saying nothing about people’s potential, which is being ignored and run down by this place, this Government and the official Opposition, who have no idea how to change that.

Clauses 1 to 4 aim to maintain the current rates of income tax, including the savings rates, for another financial year. However, they do little to mitigate the Government’s broader fiscal missteps. In contrast, Scotland’s progressive approach to income tax under the SNP— I almost choked when we heard about progressive taxation earlier—has not only shielded public services from Westminster’s austerity but enhanced them, generating approximately £1.5 billion in additional revenue. We are protecting those on lower incomes, because most people in Scotland pay less income tax and dramatically less council tax than people in England.

All the scare stories about people leaving Scotland because of its progressive policies have proved to be rubbish. The report from His Majesty’s Revenue and Customs has shown that more higher-rate taxpayers have moved to Scotland. The revenue that the Scottish Government are attracting supports a wide array of social benefits, from free prescriptions to university tuition, which significantly reduces the cost of living for Scottish residents. Those are all things that this Parliament would attack, and Kezia Dugdale has today posted a warning about what would happen if Labour got its hands on the Scottish Parliament.

[Ben Lake (Ceredigion) (PC)]

New clause 5, in my name, would require the UK Government to review the impact of the tax measures announced in the spring Budget on Wales, Scotland and Northern Ireland. The Committee will, of course, recognise that the nations and regions of the UK differ in key respects—in their strengths, their weaknesses and their needs. To a large extent, the UK tax system operates as though economic and social conditions are uniform across these isles, so I would like the Government to consider what impact this universal approach to central taxation is having on different parts of the UK, in the hope that a better understanding of such matters will help to inform and improve tax policy decisions.

The laudable ambition to level up the nations and regions of the UK is testament to the different circumstances prevailing across these isles. The Welsh tax base is different from others in the UK. Wages in Wales are much lower than the UK average, productivity is lower, and our proportion of elderly citizens is higher. We should ensure that the tax system reflects that reality and, at the very least, we should make sure that we fully understand the differential impact of tax decisions, whether it be the freezing of the personal allowance, reductions to national insurance contributions, or decisions on corporation tax, on different areas.

I concede, of course, that some fiscal devolution has taken place and that the Welsh Government have the power to set supplementary Welsh rates of income tax. However, these powers are not as advanced as those possessed by the Scottish Parliament, which allow the Scottish Government to create new income tax band thresholds to better tailor their tax system to the specific needs of the Scottish people.

A review of the impact of income tax policy specifically on Wales could include looking at how it interacts with the current Welsh rates of income tax and inform the debate on any further devolution of tax-raising powers to Wales in the future. Extending the reviews to other devolved nations would allow for a comparative study on how UK tax policy interplays with the different fiscal devolution settlements in place across these islands, which would also be to the benefit of future tax policy decisions and any Government levelling-up strategy.

[Jonathan Edwards]

Following Brexit, the UK Government could have been extremely radical: they could have devolved corporation tax to Wales, Scotland and Northern Ireland, and they could have fully devolved income tax and VAT. Is it not amazing that following Brexit, and all the pain that it has caused, there is a complete lack of ambition about using any powers that Brexit enables?

[Ben Lake]

I could not agree more. We were told that one of the supposed benefits of withdrawing from the European Union would be the liberty to tailor our tax powers; to devolve them to different parts of the UK in a bespoke way, so as to promote growth and better reflect the needs of the people. I agree that it is remarkable that the UK Government have thus far failed to make real the supposed benefits of Brexit. This review of tax policy could touch on those things. It would also be useful given the important link between tax decisions and public spending and, indeed, economic growth.

[Sir John Redwood]

Were a future Parliament to grant these tax powers to Wales, would the hon. Gentleman think that in order to promote faster growth in Wales he should cut taxes below English rates, or would he put them higher than English rates?

[Ben Lake]

I am not one to make up policy on the hoof, but the review could look at that, and if the evidence shows that tax decisions could be made to promote growth and to level up, which I think the right hon. Gentleman is in favour of, we should follow that evidence and do so.

Our continued reliance on the Barnett formula to allocate funds between the UK’s nations is problematic not only due to its flaws, but because of its inconsistent application in recent years, which has meant that Wales has lost out on billions of pounds of much-needed public investment. Members will be familiar with the concerns raised by communities across Wales regarding the way in which HS2 spending has been classified. Although not a single inch of track or rail was to be laid in Wales itself, it was categorised as an England and Wales project under the statement of funding policy, thus depriving Wales of significant consequential funding that the Barnett formula would otherwise have provided. The latest estimates suggest that Wales has lost £4 billion in consequential funding—money that could have transformed the country’s public transport infrastructure.

I understand that there will be reluctance within Government to move away from the Barnett formula, not least because devising a needs-based formula is far from simple. However, if we are to retain the Barnett formula, the funding floor should at the very least be updated to use census data from 2021 rather than the 2001 data it currently uses. I am sure the Minister will agree that much has changed since 2001—when I was actually still in primary school. The needs and population of Wales have changed considerably, so it is only reasonable that the funding floor element of the Barnett formula is at least brought up to date.

Such a consideration could be included in the review that I propose, as well as a review of the implications of UK tax policy in Wales. Again, all of this analysis and information could help inform debate for future tax policy decisions and ultimately ensure that we have a tax system that is fit for purpose and meets the needs of people in Wales.

[Nigel Huddleston]

I thank the Members who have spoken for their contributions to the debate. As we have discussed, the Government have shown their commitment to keeping taxes low in order to support people to keep more of what they earn. That is why we have nearly doubled the income tax personal allowance since 2010, ensuring that some of the lowest earners do not pay income tax, while also benefiting higher-rate taxpayers.

The Government have shown that we are also committed to ensuring that older people can live with the dignity and respect they deserve, and the state pension is the foundation of state support for them. Thanks to the Government honouring our commitment to the triple lock, the basic and new state pensions increased by 8.5% this April—one of the largest ever cash increases in the state pension. Those on the new full state pension will therefore be £900 per year better off. That £900 figure is significant, because of course that is the average amount by which 27 million employees will benefit from the national insurance cut: £900 additional for many pensioners and £900 additional for 27 million workers. I think most people will agree that is fair.

Oral Answers to Questions

Ben Lake Excerpts

Tuesday 14th November 2023 Commons Chamber

[Bim Afolami]

As the hon. Member has already heard from the Chancellor, the economy is still growing. The latest labour market data shows that incomes are going up at a higher rate than inflation, so I do not recognise the picture that he paints.

[Ben Lake (Ceredigion) (PC)]

22. What assessment he has made of the financial position of households during winter 2023-24.

[The Exchequer Secretary to the Treasury (Gareth Davies)]

The Government continue to stand by households with one of Europe’s largest support packages, amounting to some £3,300 a household on average across 2022-23 and 2023-24.

[Ben Lake]

The Minister will be aware that a big concern for rural constituencies is the cost of fuel. The RAC has found that the margin enjoyed by the big supermarkets on fuel sales in October was double the figure for the year to date at 14p per litre. That reflects concerns raised by the Competition and Markets Authority that although wholesale fuel prices fell in September and October, retail prices did not. What is the Treasury’s assessment of the impact that these higher margins will have on households in the coming winter?

[Gareth Davies]

Fuel duty is a major cost for households and businesses. We recognise that. That is why in the spring Budget 2023, the Chancellor extended the 5p temporary duty cut. That was a £5 billion saving for motorists, worth £100 for the average motorist, but we always keep these things under review.

Oral Answers to Questions

Ben Lake Excerpts

Tuesday 20th June 2023 Commons Chamber

[Jeremy Hunt]

I will happily look into what has happened. We strongly support all rural areas having access to gigabyte broadband, as an important part of our policy. We have made a lot of progress on that. I will look into detail of what is happening in the hon. Gentleman’s area and get back to him.

[Ben Lake (Ceredigion) (PC)]

11. What fiscal steps he is taking to support hospitality businesses.

[The Financial Secretary to the Treasury (Victoria Atkins)]

Hospitality businesses play an important role in local communities and the UK economy. They will benefit from business rates support worth £13.6 billion over the next five years, which includes increased generosity from the retail, hospitality and leisure relief scheme from 50% to 75% in 2023-24. There is also our Brexit pub guarantee, which means that the duty on a draught pint in a pub will always be lower than its equivalent in the supermarket.

[Ben Lake]

The Minister will be aware of long-standing calls from the sector to reduce VAT to bring it into line with European equivalents. Will the Treasury undertake an assessment of the economic benefits of doing so? Will it consider that as part of a package, alongside increasing the threshold for VAT registration from £85,000 to £100,000 to support smaller businesses?

[Victoria Atkins]

The hon. Gentleman poses many questions for me, some of which are very complicated. VAT relief for the hospitality sector was important in the aftermath of the pandemic, but it cost us a great deal of money and we have had to raise it back up to 20%. We keep the other VAT matters under review, and I would be delighted to meet him to discuss the complexities behind them.